Nonsignatory of Agreement Containing Arbitration Clause Can Compel Arbitration Because of its Close Relationship to Signatory

On May 4, 2021, the First Department issued a decision in Matter of Berger v. Signac Invs. Ltd., 2021 NY Slip Op. 02737, holding that the nonsignatory of an agreement containing an arbitration clause could compel arbitration because of its close relationship to signatory, explaining:

Respondent Signac Investments Ltd., although a nonsignatory to the agreement containing the arbitration clause, is entitled to invoke the arbitration provision to compel arbitration of petitioner's claim concerning the validity and enforceability of a certain financing arrangement because of its close relationship to the other signatory to that agreement. As the court noted, in the reverse situation, petitioner would undoubtedly be entitled to enforce the same arbitration provision against Signac, given that both parties enjoyed the benefits of the agreement.

(Internal citations omitted).

Commercial litigation involves more than courts. Disputes often are--by agreement--decided by private arbitrators. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have a question regarding a dispute that is subject to an arbitration agreement.