If you learn nothing else from my blog series on Arbitrations in the Bais Din, remember this one caveat: do not sign an Agreement to Arbitrate without the advice of counsel. Doing so could prove catastrophic for you, your case, and your ability to enforce the arbitration down the line.
As discussed in a prior post, Arbitration Questionnaire Versus Umpire/Arbitrator’s Disclosure, New Jersey Court Rule 5:1-5 requires the parties to execute and file with the Court the Arbitration Questionnaire set forth in Appendix XXIX-A which should be incorporated into an agreement or consent order to arbitrate. The parties are not required to agree to all provisions in the form agreement, provided that certain requirements are met in the body of the agreement itself.
However, what happens when an Agreement to Arbitrate purports to fulfill the requirements of the Arbitration Questionnaire but falls short?
The following is a real Agreement to Arbitrate that is routinely used with the expectation that it will be enforced by a Court. It contains the following acknowledgments that are intended to fulfill the requirements of the Arbitration Questionnaire:
The parties acknowledge and agree to the following:
- The parties understand their legal entitlement to a judicial adjudication of their dispute and are willing to waive that right.
- The parties are aware of the limited circumstances under which a challenge to the award may be advanced and agree to those limitations;
- The parties have had sufficient time to consider the implications of their decision to arbitrate;
- The parties have entered into this arbitration agreement freely and voluntarily. after due consideration of the consequences of doing so; and
- The parties acknowledge that they have had the opportunity to consult with an attorney and/or rabbinic advisor prior to signing this Agreement.
This looks similar to the Arbitration Questionnaire. But is this good enough to fulfill the legal requirements?
Arguably, no.
It is this one, singular phrase that would leave this entire agreement open to attack: “The parties acknowledge that they have had the opportunity to consult with an attorney and/or rabbinic advisor prior to signing this Agreement.”
Don’t get me wrong, a Toen is indispensable to most Bais Din proceedings. However, a Toen is a rabbinic advisor, not a lawyer, and there is no clear and specific waiver that the parties agree not to consult with lawyers.
Recall the phrase from the Arbitration Questionnaire:
Have you had sufficient time to have all of your questions answered by your attorney (if you have one) and if not represented by an attorney are you waiving your right to have an attorney answer any questions you may have regarding the arbitration/alternative dispute resolution agreement?
Do you see the difference in the language? In the Arbitration Questionnaire, there is a waiver of the right to consult with an attorney. In the above example of the ubiquitous Agreement to Arbitrate, there is none.
What does this mean for the overall viability of the Agreement to Arbitrate?
A similar situation was confronted in the unreported/non-precedential 2022 decision of Pjeternikaj v. Peters. There, the Appellate Division reversed the confirmation of an arbitration award, concluding that there were errors in the conduct of the arbitration hearing, including improper representation of parties and corporate entities, and therefore, the award was procured by “other undue means.” The corporate LLCs in that matter were represented by an individual not licensed to practice law in the State of New Jersey.
In reversing the trial court’s approval of the arbitration award, the Appellate Division concluded that it is clear that if these were court proceedings, the LLCs had to be represented by a licensed attorney.
While the Appellate Division noted that “[b]ecause the parties agreed to arbitration in a private forum, the concerns underlying the court rules to protect the integrity of the proceeding may not be as critical…”, but if a choice is made to be represented by a non-attorney, there must be a clear indication that such party “relinquished their right to representation.”
Waiver must be voluntary and there must be a clear act showing the intent to waive the right.
In the above example of a commonly used Agreement to Arbitrate, there is no indication that there was a specific waiver of the right to consult with counsel. Pursuant to the terms of that agreement, the parties would not necessarily have had an opportunity to consult with an attorney regarding the substance or effect of the Agreement to Arbitrate and there is no waiver of that right.
As in Pjeternikaj, deferring to the advice of a non-lawyer lay person without a valid and knowing waiver of the right to representation could constitute the unauthorized practice of law by the rabbinic advisors and casts aspersions on the entire proceeding.
As a result, playing it safe means making sure you have an opportunity to ask a lawyer for advice about entering into the Agreement to Arbitrate, and even having a lawyer look the agreement over, before signing.
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