New York Adopts Rule Allowing Parties to Agree to ‘Accelerated Adjudication’ of Lawsuits in the Commercial Division of New York State Supreme Court

The New York state court has adopted a rule that will allow parties to agree to have a Commercial Division lawsuit heard on an expedited basis. The rule permits parties to agree in a contract that any lawsuit arising out of or related to the contract will be heard under the Commercial Division’s new “accelerated adjudication” process. The accelerated adjudication rule sharply limits discovery and requires that a case be ready for trial within nine months. The rule also deems both parties to have waived important rights (including the right to any interlocutory appeal and the right to a jury trial).

Companies entering into a contract that provides for a New York state court forum for any dispute should give serious consideration to having the forum selection clause in their contract specify that the new accelerated adjudication process will apply to any lawsuit.

Please see full memo below for more information.

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collection action that wants to keep a delinquent borrower from dragging out a lawsuit) and not want the procedure in
other situations (e.g., where the plaintiff would want a jury trial, the threat of punitive damages, or full discovery).
Similarly, a party to a contract that sees itself as likely being a defendant in a lawsuit will need to decide whether the pros
of the accelerated procedure (e.g., no jury, no punitive damages, and limited discovery) are outweighed by the loss of the
right to any interlocutory appeal (which could have the effect of increasing rather than limiting the time and expense of
litigation).
It is obviously important that anyone signing a contract with a New York state court forum selection clause realize that, if
the clause mentions “accelerated procedures” or similar words, the party is agreeing to a process that waives several
important, substantive rights. Indeed, some parties will no doubt try to insert these words into a contract’s forum
selection clause as a backdoor way of eliminating the right to a jury or punitive damages.
This new rule is intended to allow parties to agree in advance that a Commercial Division lawsuit would be put on that
Court’s “rocket docket.” It provides an alternative to the choice between arbitration and full-blown litigation. And it is a
choice that may be particularly attractive to foreign companies that hesitate to agree to a U.S. forum because of a fear of
juries, punitive damages, and extensive discovery. Time will tell if the New York Commercial Division’s new accelerated
adjudication procedure will cause more companies to elect a New York forum for contract disputes. And the ultimate test
of this new procedure will be how the Judges of the Commercial Division interpret the limitations on discovery and how
quickly they actually schedule trials.

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This memorandum is intended only as a general discussion of these issues. It should not be regarded as legal advice. We would be pleased to provide additional details or advice about specific
situations if desired.
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Copyright © 2014 Shearman & Sterling LLP. Shearman & Sterling LLP is a limited liability partnership organized under the laws of the State of Delaware, with an affiliated limited liability partnership
organized for the practice of law in the United Kingdom and Italy and an affiliated partnership organized for the practice of law in Hong Kong.

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