You only have a year to do that. Since arbitration is an expedited process, you get a relatively short period to confirm the award in New York. Confirming the arbitration award has a 12-month statute of limitations. And the clock starts ticking the date of the arbitrator’s final determination, not the date of the arbitration award.
While confirming the award sounds simple and straightforward, there can be bumps in the road. Make certain not to drive into a pothole, causing damage beyond repair that prevents you from confirming your award on time.
Confirming the Arbitration Award Can Prove Difficult
Take, for example, our client who had obtained an arbitration award against his former customer, now the debtor. Their client rang up quite a bill before our client shut them off. Knowing that the non-payer was judgment proof did not deter our client from pursuing arbitration and obtaining an award, because the client knew that the non-payer was in line to inherit hundreds of thousands of dollars.
If our client pursued arbitration and confirmed the award, they could convert the award into a judgment good for 20 years. It was certain that the non-payer would inherit within those 20 years. Further, as with any judgment, the client can recover interest at 9% on the unpaid judgment, a rate better than any bank was paying.
The client didn’t bargain for the debtor continuing to elude being served by the independent process server with the papers needed to confirm the award. The debtor had gone to great lengths to prevent anyone from finding him. He moved from New York to Connecticut, outside the former marital home, and kept moving every few months.
Reasons Creditors Miss the Confirmation Deadline
There are two common reasons for creditors to miss the deadline in confirming an award. Both reasons having to do with their former customer’s behavior.
Reason # 1 is the empty promise of payment.
Understand that former non-paying clients will attempt to convince you to delay the process of converting the award into a judgment. They will make empty promises of payment or will offer on-account payments. To convince a creditor not to enter judgment, the debtor may offer dated checks, continued negotiations and more. They may offer small payments on account with larger payments towards the year-end, the creditor’s deadline to confirm the award. By the time the unpaid, dated checks come back to the creditor, time to confirm the award has expired. They missed the opportunity to confirm the award with the court. The debtor delayed the process long enough for the creditor to miss the chance to convert that award into a judgment.
Reason #2 is the debtor’s continued escape of service.
To confirm the award, you must file the application and then serve it on the debtor. Make service within a specified period for your application to be effective. With a corporation or LLC, service can be made upon an agent of the entity. With an individual, it can be more difficult. You must make service at the last known address. If you have an individual with 5 or 6 addresses, serving the debtor at their last known residence in person or by substituted service as the court allows at the last known address.
All of this can take time. Time to say no for some, time to locate and confirm a valid address and effectuate service of process on the non-paying client.
Time Is of The Essence
As you can see, time is of the essence when converting an arbitration award to a judgment. The process can be challenging, consuming time and resources. The risk of missing the one-year deadline and potentially losing your ability to collect at all is very real. This is another way that an experienced collection attorney can be a valuable asset to your company. Get in touch with us as soon as possible to review your case and examine your options.
