IN RE: Jack J. Grynberg (2012)

Law Offices of Daniel L. Abrams, PLLC, New York (Daniel L. Abrams of counsel), for Jack J. Grynberg, appellant-respondent.

Frankfurt Kurnit Klein & Selz, P.C., New York (Ronald C. Minkoff of counsel), for Grynberg Production Corporation (Texas), Inc., Grynberg Production Corporation (Colorado), Inc. and Pricaspian Deveopment Corporation (Texas), appellants-respondents.

Sullivan & Cromwell LLP, New York (John L. Hardiman of counsel), for BP Exploration Operating Company Limited, respondent-appellant.

Emmet, Marvin & Martin, LLP, New York (Kenneth M. Bialo of counsel), for Statoil ASA, respondent-appellant.

_

Order and judgment (one paper), Supreme Court, New York

County (Jane S. Solomon, J.), entered January 6, 2011, which, to the extent appealed from, granted respondents' motion to confirm Award 2 and Award 4 of the Final Decision and Award in Arbitration and granted the cross motion of petitioner Jack J. Grynberg to vacate Award 11 for sanctions against him, unanimously modified, on the law, to the extent of granting petitioners' cross motion to vacate Award 4 and remanding this matter to the arbitrator for reconsideration of Award 4 consistent with this opinion, and otherwise affirmed, without costs.

The arbitrator's failure to determine the nature of the disputed payment warrants the vacatur of Award 4. Petitioners claim that this payment constituted a bribe.   Respondents assert it was a bona fide cost of doing business.   We remand for the arbitrator to determine the nature of the payment.   Contrary to the arbitrator's finding, deducting a payment intended to be a bribe to a public official is unenforceable as violative of public policy (see Matter of New York State Correctional Officers & Police Benevolent Assn. v State of New York, 94 N.Y.2d 321, 326 [1999];  Matter of Crosstown Operating Corp. [8910 5th Ave. Rest.], 191 A.D.2d 384 [1993];  Penal Law art 200).

We reject petitioners' argument that the arbitrator was required to hear expert valuation evidence related to Award 2 and

deemed important by petitioners;  the arbitrator's findings of fact rendered such evidence moot (New York State Correctional Officers & Police Benevolent Assn., 94 N.Y.2d at 326 [“even in circumstances where an arbitrator makes errors of law or fact, courts will not assume the role of overseers to conform the award to their sense of justice”] ).   Therefore, any failure by the arbitrator to consider such evidence neither renders the final award incomplete nor constitutes misconduct under CPLR 7511.

The arbitrator's imposition of the $3 million award in sanctions against Jack Grynberg (Award 11) was punitive in nature, regardless of the label attached.   Accordingly, the award violated public policy and was properly vacated (see Garrity v. Lyle Stuart, Inc., 40 N.Y.2d 354, 356 [1976];  Matter of MKC Dev. Corp. v. Weiss, 203 A.D.2d 573, 574 [1994] ).

We have considered the parties' remaining contentions and

find them unavailing.

THIS CONSTITUTES THE DECISION AND ORDER

OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

_

CLERK