INDEMNITY INSURANCE COMPANY OF NORTH AMERICA v. MANDELL (2006)

Order, Supreme Court, New York County (Shirley Werner Kornreich, J.), entered on or about December 29, 2005, which, inter alia, granted plaintiff's motion to compel defendants to execute a hold harmless agreement in favor of the arbitrators in a pending arbitration, unanimously affirmed, with costs.

Having ordered arbitration, the motion court properly directed execution of a hold harmless agreement as demanded by the arbitration panel.   To require the parties to expend additional time and effort constituting a new panel that would not insist on a hold harmless agreement would be to contravene the underlying purpose of arbitration of providing an expeditious forum.   It would also indirectly and prematurely validate defendants' unsubstantiated allegation of wrongful conduct on the part of the umpire, an allegation that should await full evidentiary submissions on motions to confirm or vacate the award.   Given these circumstances and indications of dilatory conduct by defendants in the arbitrator selection process, and also given that the hold harmless agreement demanded by the arbitrators gives them no more protection than they are already entitled to under the prevailing rule that arbitrators are immune from liability for acts performed in their arbitral capacity (see John St. Leasehold v. Brunjes, 234 A.D.2d 26, 650 N.Y.S.2d 649 [1996], citing, inter alia, Austern v. Chicago Bd. Options Exch., 898 F.2d 882 [2d Cir., 1990] [citing authority from six other circuits], cert. denied 498 U.S. 850, 111 S.Ct. 141, 112 L.Ed.2d 107 [1990] ), compelling execution of such agreement is not to add a term to the parties' arbitration agreement but, rather, under governing Pennsylvania law, to enforce a necessarily implied obligation (see John B. Conomos, Inc. v. Sun Co., 2003 PA Super 310, 831 A.2d 696, 705-706 [2003], appeal denied 577 Pa. 697, 845 A.2d 818 [2004];  see also 511 W. 232nd Owners Corp. v. Jennifer Realty Co., 98 N.Y.2d 144, 153, 746 N.Y.S.2d 131, 773 N.E.2d 496 [2002] ).