Commercial Division of the New York State Supreme Court Adopts New Rule Permitting Accelerated Adjudication

The Commercial Division of the New York State Supreme Court has issued Rule 9, which governs a new accelerated adjudication process between parties who choose it in a contract. The Commercial Division is available for disputes that are commercial in nature and in which the amount disputed is greater than US$500,000. Parties drafting contracts contemplating New York as the potential forum for significant commercial disputes may consider accelerated adjudication of disputes in the Commercial Division of New York state trial courts.¹

Rule 9 provides for all pre-trial proceedings (including discovery, pre-trial motions and mandatory mediation) to be completed, and the parties to be ready for trial, within nine months from the date of filing of a Request for Judicial Intervention (a document that may be filed early in a case to request a preliminary conference with a judge). Rule 9 is intended to streamline litigation and reduce costs by limiting discovery and waiving certain substantive rights.  

Under Rule 9, document production is limited to documents relevant to a claim or defense and is restricted by time frame, subject matter and person or entity to which the request pertains. Electronic discovery is limited to only those custodians "whose electronic documents may reasonably be expected to contain evidence that is material to the dispute." Other discovery is limited to a maximum of seven one-day depositions, seven interrogatories, and five requests to admit per side. Rule 9 also allows for the potential of cost-shifting with respect to electronic discovery.

The parties to an accelerated action pursuant to Rule 9 agree to waive the following:

• any objections based on lack of personal jurisdiction or forum non conveniens;
   
• the right to a jury trial;
   
• the right to recover punitive or exemplary damages; and
   
• the right to interlocutory appeal (i.e., the appeal of non-final orders, such as certain motions to dismiss and motions for summary judgment).

Rule 9 suggests the following contract language for parties who wish to take advantage of its process:

Subject to the requirements for a case to be heard in the Commercial Division, the parties agree to submit to the exclusive jurisdiction of the Commercial Division, New York State Supreme Court, and to the application of the Court’s accelerated procedures, in connection with any dispute, claim or controversy arising out of or relating to this agreement, or the breach, termination, enforcement or validity thereof.

Rule 9 allows for alternative language as long as the provision makes clear that the parties intend for disputes to be governed by it. Further, parties to a dispute can agree to Rule 9 proceedings even if the contract at issue does not contemplate its use.

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¹ Pursuant to New York General Obligations Law §§ 5-1401-1 and 5-1401-2, parties may include a New York choice of law provision in any contract arising out of a transaction of at least US$250,000 in value, and may select New York as the forum for disputes exceeding US$1,000,000, regardless of whether the parties have any contacts with New York.