The irony of arbitration provisions is that they often result in a race to the courthouse. This is because New York CPLR 7502(c)[1]� allows a party to initiate a special proceeding to obtain an attachment or preliminary injunction in aid of arbitration. The outcome of the special proceeding often has important ramifications for the arbitration and settlement leverage.
Take, for example, an account representative who leaves his brokerage firm for a competing firm. Typically, employment disputes between firms and their account representatives are arbitrable. The jilted firm will often start a CPLR 7502(c) proceeding to preliminary enjoin the broker from soliciting the firm’s clients. If the jilted firm were to obtain the preliminary injunction, it could use its exclusive customer access to cultivate a new account representative’s customer relationships without interference from the customers’ former, now sidelined, account representative.
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