New York Supreme and/or Appellate Courts Appellate Division, First Department
February 21, 2012
IN RE JACK J. GRYNBERG, ET AL.,
BP EXPLORATION OPERATING COMPANY LIMITED, ET AL.,
Matter of Matter of Grynberg v BP Exploration Operating Co. Ltd.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Decided on February 21, 2012
Mazzarelli, J.P., Friedman, Catterson, Renwick, DeGrasse, JJ.
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 NY2d 321, 326 ; Matter of Crosstown Operating Corp. [8910 5th Ave. Rest.], 191 AD2d 384 ; 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 NY2d 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 NY2d 354, 356 ; Matter of MKC Dev. Corp. v Weiss, 203 AD2d 573, 574 ).
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.
ENTERED: FEBRUARY 21, 2012
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