On June 21, 2023, Justice Chan of the New York County Commercial Division issued a decision in Employers Ins. Co. of Wausau v. Dominion Ins. Receivable LLC, 2023 NY Slip Op. 32097(U), holding that a party’s participation in an arbitration by selecting an arbitrator waived its objection to it, explaining:
Parties to a commercial transaction will generally not be compelled to arbitrate in the absence of an express, unequivocal agreement to that effect nevertheless, a party otherwise entitled to a judicial determination of the arbitrability of a dispute may waive that right by actively participating in the arbitration without seeking a stay pursuant to CPLR 7503(b) or otherwise preserving their right to have the issue of arbitrability judicially determined.
Petitioner’s application to stay the arbitration is denied and Respondent’s cross-motion to compel arbitration is granted. The court need not determine whether a valid agreement to arbitrate here exists because of Petitioner’s participation in the arbitrator selection process. Petitioner fails to explain why its string citation of cases going to general principles of waiver all outside the context of arbitration, apply to contravene the well settled law as to participation. Against Petitioner’s argument that even if there were a waiver, it withdrew that waiver when it filed this action there are countless cases compelling arbitration where the requisite level of participation has already occurred, not to mention the clear statutory text of CPLR 7503(b). Petitioner’s argument that its provisional selection of an arbitrator did not reach the level of participation that would trigger a waiver is without merit. Petitioner’s selection in its June 10, 2022 letter was only provisional as to Respondent’s agreement regarding consolidating arbitration under the Retrocessional Agreements into one arbitration proceeding. And Petitioner shared along with its June letter its proposal for a proposed consolidation agreement, which itself states that Petitioner appointed its party-appointed arbitrator on June 10, 2022. These actions of Petitioner are inconsistent with its present claims that it did not participate in arbitration.
Petitioner cites no case law to support the argument that waiver can be avoided by framing its actions as being simply to protect its interests from the anticipated claim that it had failed timely to appoint its arbitrator. At any rate, Petitioner’s characterization of its appointment is inconsistent with its June letter indicating that if there is no prompt resolution the party-appointed arbitrators can proceed with umpire selection after the qualification and consolidation issues are addressed. Petitioner argues that any claim that it participated is illusory where the arbitrators never discussed appointment of, let alone selected, an umpire. This argument is without merit. Petitioner’s reliance on Trafelet misses the point because that court expressly held that selecting the arbitrator is one of the actions that constitute participation. Petitioner’s reliance on its May 2022 letter stating that it fully reserves and non-·waives all of its rights with respect to the claims made and relief sought by DIR through its demand is unavailing. Petitioner’s reservation as to the merits of the claim therein did not mention its present objection to arbitration being the proper forum. Petitioner is mistaken in suggesting that it is difficult to imagine a clearer expression of an intent not to waive and expressly preserve Petitioner’s rights and objections to the demand. Rather, it is easy to imagine a reservation of rights explicitly disputing the arbitrability of the dispute and expressing the intention to seek a stay.
(Internal quotations and citations omitted).