In 1993, the Supreme Court, Civil Branch, NY County, under the leadership of then-Administrative Judge Stanley S. Ostrau, established four Commercial Parts on an experimental basis. The aim was to test whether it would be possible, by concentrating commercial litigation in those Parts, to improve the efficiency with which such matters were addressed by the court and, at the same time, to enhance the quality of judicial treatment of those cases. The court’s experience with the Commercial Parts was positive and the reaction of commercial practitioners to the Parts was very favorable.
In January 1995, a task force of the Commercial and Federal Litigation Section of the New York State Bar Association recommended expansion of the Commercial Parts. Specifically, the Section proposed establishing a Commercial Division of the Supreme Court in those areas of the State in which there are significant amounts of commercial litigation.
Shortly thereafter, then-Chief Judge Judith S. Kaye created the Commercial Courts Task Force, headed by Hon. E. Leo Milonas and Robert L. Haig, Esq., to examine the Section’s report and make recommendations. The Task Force proposed that a Commercial Division be established in appropriate jurisdictions and also made recommendations regarding case management, technology and other issues to promote the efficient resolution of commercial cases. The Chief Judge thereafter established the Commercial Division on a statewide basis.
In November 1995, the Commercial Division opened in Monroe County (Rochester) and in New York County. Over the course of the ensuing years, the Division has steadily expanded in response to requests of the commercial Bar and the Office of Court Administration’s analysis of case data and statistics. As of the present, two decades after the establishment of the Commercial Parts, there are 28 Commercial Division justices statewide and the Commercial Division spans ten different jurisdictions: Albany, Kings, Nassau, New York, Onondaga, Queens, Suffolk and Westchester Counties as well as the entire Seventh and Eighth Judicial Districts.
The Commercial Division serves as a forum for resolution of complicated commercial disputes. Successful resolution of these disputes requires particular expertise across the broad and complex expanse of commercial law. Because disclosure in commercial cases can be complicated, protracted and expensive, particularly in light of electronic discovery, the Division makes use of vigorous and efficient case management. The court sets deadlines and enforces them, managing discovery as needed to protect the rights of the parties to fair disclosure while minimizing expense and delay. Motion practice, especially in the form of motions to dismiss or for summary judgment, is common in commercial cases. The caseload of the Division is thus very demanding, requiring of the court scholarship in commercial law, experience in the management of complex cases, and a wealth of energy.
The Commercial Division has actively sought to employ advanced technology to assist in handling its caseload effectively. The Commercial Division, for instance, contributed to the development of and pioneered implementation of case management software, now widely used in New York State. New York County’s Commercial Division has long used the Courtroom for the New Millennium, which is dedicated to the memory of former Commercial Division Justice Lewis R. Friedman, and which is equipped and wired with advanced technology, to assist in commercial trials.
The Commercial Division has been a leading force in electronic filing of court documents in New York State. Electronic filing began in commercial cases in the Commercial Division in New York County and the Division has been very active in the expansion of e-filing since then. All newly-filed Commercial Division cases in Erie, Kings, Nassau, New York, Suffolk, and Westchester Counties, for instance, are subject to electronic filing pursuant to the New York State Courts Electronic Filing System (“NYSCEF”). This expansion of e-filing has been recommended by many Bar groups over recent years, such as, in 2007, the New York State Bar Association, the New York County Lawyers’ Association, and the Association of the Bar of the City of New York.
The Commercial Division also utilized an Alternative Dispute Resolution Program ("ADR") first established in New York County in early 1996. Justices may send matters to ADR at any time upon an order of referral. Detailed rules and protocols and rosters of seasoned ADR neutrals have been established in many jurisdictions around the State.
As with the Commercial Parts, the Bar has responded very favorably to the work of the Division, as have leading representatives of the business community. For example, the Commercial and Federal Litigation Section referred to the Division as "a case study in successful judicial administration." The Business Council of New York State applauded the work of the Division, describing the court in 2000 as "the envy of businesses in other states." The American Corporate Counsel Association has expressed its appreciation and support for the Division and urged other states to follow New York’s lead. The American Bar Association’s Business Law Section described the Division in 2000 as "a model of a specialized court devoted to the resolution of business disputes." The 87th Annual Dinner of the New York County Lawyers' Association in December 2001 saluted the Division and honored the Division Justices.
In 2006, the Commercial and Federal Litigation Section awarded its prestigious Stanley H. Fuld Award to the entire Commercial Division at its Annual Meeting.
In January 2006, the Commercial Division adopted Statewide Standards for Assignment of Cases and Rules of Practice. These Standards provide clarity as to which cases are heard in the Commercial Division and which are not and established uniform practices and procedures for cases once they are within the Commercial Division.
As the foregoing indicates, the Commercial Division has benefitted from extensive communications with the commercial Bar and Bar associations across the State over the years. In 2006, this process of exchange of ideas saw the completion of an important step with the release of a report by the Commercial Division Focus Group Project. The Office of Court Administration structured the Focus Groups to promote candid dialogue among judges, lawyers and clients to generate new ideas, identify potential areas of improvement and assess application of “best practices” that have evolved in the Commercial Division to the court system as a whole. Focus Group sessions spanned the State, bringing together lawyers, former and current judges and in-house counsel of major corporations. The Report to the Chief Judge on the Commercial Division Focus Groups (July 2006), summarized the work and conclusions of the Focus Groups. The Report contained two types of findings: a list of “good ideas” that had developed within the Commercial Division that could be considered for exportation and use elsewhere within the court system and suggestions for improvements to the Commercial Division itself.
In his State of the Judiciary Address in 2012, Chief Judge Jonathan Lippman announced the creation of the Chief Judge’s Task Force on Commercial Litigation in the 21st Century. The Task Force, co-chaired by former Chief Judge Kaye and distinguished commercial practitioner Martin Lipton, was charged with, in the Chief Judge’s words, taking “a fresh look at ways to enhance our stellar Commercial Division.” “It is time,” the Chief Judge said, “to set a new vision for how we in the New York State court system might better serve the needs of the business community and our state’s economy.”
In June 2012, the Task Force issued its Report and Recommendations to the Chief Judge of the State of New York. In the Report, the Task Force offered numerous suggestions in six areas for the improvement of the Commercial Division and the processing of commercial litigation in New York State in the coming years.
In 2013, Chief Judge Lippman, following one of the recommendations of the Task Force, established a permanent Commercial Division Advisory Council to advise him on all matters pertaining to the Commercial Division. The Council is composed of distinguished commercial practitioners and Judges from around the state and is chaired by Robert L. Haig, Esq.
The Task Force and the Advisory Council recommended that the monetary threshold of the Division in New York County be increased from $150,000 to $500,000. By order of the Chief Administrative Judge, with the advice and consent of the Administrative Board, this recommendation was implemented effective February 17, 2014.
At present, several other recommendations have been published for public comment or are pending, including a proposal to institute in the Commercial Division in New York County a pilot program of mandatory mediation for certain newly-filed cases.
Out of the consultative and advisory experience just described there recently emerged developments regarding international arbitration proceedings. The Chief Administrative Judge of the State of New York issued an Administrative Order (AO 224/13) directing that all international commercial arbitration matters as defined therein proceeding before the New York County Commercial Division be assigned to Commercial Division Part 53 (Hon. Charles E. Ramos). The Administrative Judge for Civil Matters of the First Judicial District, Hon. Sherry Klein Heitler, thereafter issued an Administrative Order implementing this directive. These orders are posted on the Commercial Division website.