New Amendments to New Jersey Court Rules Will Make Orders Denying Arbitration Immediately Appealable

The amended Rules Governing the Courts of the State of New Jersey will take effect on September 4, 2012. Among the more important amendments are those concerning a party’s ability to appeal an arbitration order. Typically, only final orders that conclude a litigation as to all parties and all issues are immediately appealable. But, as a result of amendments made in 2010, the current version of Rule 2:2-3(a) expands the notion of a final order in the context of orders compelling arbitration, providing that “an order compelling arbitration, whether the action is dismissed or stayed, shall also be deemed a final judgment of the Court for appeal purposes.” The New Jersey Supreme Court in GMAC v. Pittella, 205 N.J. 572 (2011), expanded that Rule still further by holding that “orders compelling or denying arbitration are deemed final and appealable as of right as of the date entered.” To implement that decision, Rule 2:2-3(a) has been amended to state that “any order either compelling arbitration, whether the action is dismissed or stayed, or denying arbitration shall also be deemed a final judgment of the Court for appeal purposes.” An amendment to Rule 2:9-1(a) will permit the Trial Court to retain jurisdiction, pending appeal, over other parties and claims that remain in that court.

The Rules have been further amended to detail the right to seek a stay of arbitration pending appeal, with a presumption that a stay will be granted. To that end, Rule 2:9-5 will provide that “[i]f an order compelling arbitration is appealed as of right pursuant to R. 2:2-3(a), then any party subject to the order may move in the Trial Court for a stay of the arbitration pending appeal,” and “the stay of the arbitration shall be granted unless the Court finds that exceptional circumstances warrant the arbitration to proceed while the appeal is pending.” Furthermore, Rule 2:9-5(c) will also provide that if an order permitting or denying arbitration is appealed as of right, “any party may move in [the Trial] Court for a stay of proceedings pertaining to such remaining claims or parties pending appeal.” The Trial Court will have discretion to grant or deny the stay, and any party may appeal the Trial Court’s ruling on an application for a stay pending appeal. Additionally, Rule 2:11-1 will be amended to give preference in the Appellate Division to appeals from orders compelling or denying arbitration.

The practice in state courts differs from the practice in federal courts. In federal courts, pursuant to Green Tree Financial Corp. v. Randolph, an order compelling arbitration is immediately appealable only if the Court also dismisses all the claims before it. If the Court decides to stay the litigation pending arbitration or otherwise stops short of a complete dismissal, the order is not immediately appealable. 9 U.S.C. §16. When litigating a motion to compel arbitration in Federal Court, this difference should be kept in mind. The successful party seeking to compel arbitration may want the Court to stay the action in court so as to prevent an immediate appeal. The unsuccessful party resisting arbitration, on the other hand, may want the Court to dismiss all the claims so as to create an immediate right of appeal.

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