Article XVII further imposes restrictions on the scope of any questioning concerning personal behavior outside of work except with respect to matters related to official business, extra-departmental employment, conflict of interest, injuries or illness, residency, performance as a volunteer firefighter or loss or improper use of departmental property. Non-suspect employees are required to cooperate and their statements may not be used against them. Finally, where the City fails to comply with the provisions of Article XVII, any questions put to an employee shall be withdrawn and the refusal to answer any such questions shall not be prejudicial to the employee.

During one of the February 1996 DOI interviews, a fire officer's union representative was excluded over objections of the union counsel. At another interview, the union counsel questioned the adequacy of the notice under Article XVII. The Union thereafter filed a request for arbitration of the grievance, claiming that the City was violating Article XVII by the failure of its agency, DOI, to abide by Article XVII. The City challenged the arbitrability of the request before appellant New York City Board of Collective Bargaining (BCB). The BCB issued a determination finding the dispute to be arbitrable.

The City thereafter commenced this special proceeding pursuant to CPLR articles 75 and 78 in Supreme Court, seeking to annul the BCB's determination and to enjoin arbitration of the dispute. According to the City, it never agreed to arbitrate the procedures employed by the DOI in conducting its criminal investigations; the CBA cannot, as a matter of public policy, supplant or impair those procedures; and the grievances are not arbitrable because to do so would violate public policy.

Supreme Court set aside the BCB's determination and enjoined arbitration, stating that “the core function of ensuring governmental integrity is a public policy sufficiently strong as to preclude referral of this dispute to arbitration.”

The Appellate Division unanimously affirmed, holding that public policy, as reflected in the New York City Charter and in decisional law, prohibits any interference with DOI's authority to question public employees in the course of an investigation. We now affirm.

Determining arbitrability requires a two-pronged inquiry (Matter of Bd. of Educ. [Watertown Educ. Assn.], , 93 NY2d 132, 137 [citing Matter of Acting Supt. Of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.), , 42 NY2d 509]). First, a court must decide whether "arbitration claims with respect to the particular subject matter of the dispute [are] authorized" (New York City Dept. of Sanitation v MacDonald, , 87 NY2d 650, 656; see also, Matter of Bd. of Educ. [Watertown Educ. Assn.], supra, 93 NY2d, at 137); i.e., that the claims are “lawfully fit for arbitration” (Matter of Barnes [Council 82, AFSCME], , 94 NY2d 719, 723). Second, the court must ascertain whether the authority to arbitrate was in fact exercised and the parties consented by the terms of their particular agreement to refer disputes in this specific area to arbitration (Matter of Bd. of Educ. [Watertown Educ. Assn.], supra, 93 NY2d at 138 [quoting Matter of Acting Supt. of Schools of Liverpool Cent. School Dist. (United Liverpool Faculty Assn.), supra, , 42 NY2d 509, 513]).

Under the first prong, the subject matter of the dispute controls the analysis (Matter of Bd. of Educ. [Watertown Educ. Assn.], supra, 93 NY2d, at 137; Matter of Blackburne [Governor's Off. of Empl. Relations], , 87 NY2d 660, 665). The court must determine “that there is nothing in statute, decisional law or public policy which would preclude the municipality and its employee or group of employees from referring the dispute to arbitration” (Matter of Committee of Interns and Residents [Dinkins], , 86 NY2d 478, 484). If there is some statute, decisional law or public policy that prohibits arbitration of the subject matter of dispute, “then the answer to the first inquiry is no, and the claim is not arbitrable regardless of the answer to the second question” (id.; see, Matter of Blackburne [Governor's Off. of Empl. Relations], supra, 87 NY2d, at 665). We have recognized limited instances where arbitration is prohibited on public policy grounds alone (see, e.g., Matter of Blackburne [Governor's Off. of Empl. Relations], , 87 NY2d 660 [termination of an employee who violated the Hatch Act]; Honeoye Falls-Lima Cent. School Dist. v Honeoye Falls-Lima Educ. Assn., , 49 NY2d 732 [school district's ability to layoff those with the least seniority to maintain academic standards]; Board of Educ. Great Neck Union Free School Dist. v Areman, , 41 NY2d 527 [school board's right to inspect teacher personnel files]; Matter of Cohoes City School Dist. v Cohoes Teachers Assn., , 40 NY2d 774 [school board's ability to terminate probationary teachers and make tenure decisions]).

The public policy at stake here is DOI's ability to conduct criminal investigations. We have recognized that “[p]ublic policy whether derived from, and whether explicit or implicit in statute or decisional law, or in neither, may * * * restrict the freedom to arbitrate” (Matter of Susquehanna Val. School Dist. v Susquehanna Val. Teachers Assn., , 37 NY2d 614, 616- 617). From our review of the statutory and decisional law concerning the DOI, its purpose and its powers, we conclude that a strong public policy enjoins the arbitration of the grievance here.

The Legislature has recognized the importance of allowing a city to conduct investigations into its internal affairs. General City Law § 20(21) empowers every city in the State to “investigate and inquire into all matters of concern to the city or its inhabitants, and to require and enforce by subpoena the attendance of witnesses at such investigations.” DOI is the entity charged by the City of New York with the critical responsibility of investigating possible criminal conduct and conflicts affecting City agencies or City employees (New York City Charter § 803). The power to investigate matters pertaining to corrupt or other criminal activity, conflicts of interest, gross mismanagement or abuse of authority within the City, is firmly vested with DOI (see, New York City Charter § 803[b]; Executive Order No. 16, § 1; Executive Order No. 78, § 4[f]). To effectuate this mandate, DOI is authorized “to compel the attendance of witnesses, to administer oaths and to examine such persons as [it] may deem necessary” (New York City Charter § 805[a]; see also, Matter of Edge Ho Holding Corp., 256 NY 374).

It is evident from the Charter that DOI enjoys full latitude in conducting its investigations; section 1128(a) of the City Charter prohibits any person from preventing, interfering with, obstructing or hindering in any way, an investigation conducted pursuant to the Charter and renders any attempt to do so cause for suspension or removal from office or employment. Moreover, section 1128(b) of the Charter mandates full cooperation with the Commissioner of the DOI.

The courts have also recognized the important role DOI plays in facilitating the honest workings of the City of New York. As Chief Judge Cardozo noted in sustaining the broad investigatory powers of the Commissioner of Accounts (the predecessor to the Commissioner of the DOI), “[t]he powers devolved by the charter upon the Commissioner of Accounts are of great importance for the efficient administration of the huge machinery of government in the city of New York” (Matter of Edge Ho Holding Corp., supra, 256 NY, at 381; see also, Matter of Hertle [In re Ahearn], 120 App Div 717, 721 affd 190 NY 531 [“In a great city like New York, working under a charter as complex as its charter is, public policy requires that every available means of examining the administration of the various departments and offices of the city government be utilized to their fullest extent, and statutes having this object in view should be liberally construed”]).

The City (and its residents) has a significant interest in ensuring that the inner workings of the machinery of public service are honest and free of corruption. We conclude that this public policy restricts the freedom to arbitrate under the circumstances presented here (see, Matter of Susquehanna Val. Cent. School Dist. [Susquehanna Val. Teachers' Assn.], supra, , 37 NY2d 614, 616-617). To allow an arbitrator to grant a city employee or a union the ability to restrict the DOI's investigatory procedures by invoking the employee rights provisions of a CBA would amount to an impermissible delegation of the broad authority of the City to investigate its internal affairs (see, Matter of Blackburne [Governor's Off. of Empl. Relations], supra, 87 NY2d, at 666). It is DOI, and not an arbitrator, that is the entity mandated by law to control all aspects of the criminal investigation; permitting an arbitrator, who may not have any background information on the nature or complexity of the DOI investigation or the severity of the offense, to dictate the procedures over who should be present at a DOI interview or to direct that notice be given to an employee concerning the subject matter of the DOI investigation would only hinder the DOI's role as a fact investigator and would contravene the City Charter's prohibition against interference with an investigation (New York City Charter § 1128[a]). Moreover, subjecting DOI inquiries to the arbitration process would introduce elements that could compromise criminal investigations.

We further reject the contention of the Union and our dissenting colleague that the courts below acted too quickly in staying the arbitration in that an arbitrator could fashion an award to determine the dispute in a manner that would not offend public policy considerations.

We have recognized that judicial intervention to stay arbitration on public policy grounds is not without restrictions (see, New York City Dept. of Sanitation v MacDonald, supra, , 87 NY2d 650, 656; Matter of Port Washington Union Free School Dist. v Port Washington Teachers Assn., , 45 NY2d 411, 418). For example, we have noted that although a school district's statutory authority in certain areas of school operation may not be bargained away or otherwise delegated, the violations of the procedural and substantive aspects of those reserved powers must nevertheless be treated separately (see, Matter of Port Washington Union Free School Dist. v Port Washington Teachers Assn., supra, , 45 NY2d 411, 417-418). While a board of education may not surrender its ultimate responsibility for making tenure decisions or restricting its exclusive right to terminate probationary teacher appointments, the courts may not nullify the bargained-for procedural steps preliminary to the board's final action to grant or withhold tenure (id., at 418 [quoting Matter of Cohoes City School Dist. v Cohoes Teachers Assn., , 40 NY2d 774, 778]).

Thus, in Port Washington, we acknowledged that situations may exist in which although public policy would be violated by granting the remedy requested by one or more of the parties, it may still be premature for a court to intercede because the arbitrator may be able to fashion a remedy not in violation of public policy (see, Matter of Port Washington Union Free School Dist. v Port Washington Teachers Assn., , 45 NY2d 411, 418; see also, Matter of Committee of Interns and Residents [Dinkins], supra, , 86 NY2d 478, 484). However, we have also recognized other situations in which no remedy could be granted without violating public policy (see, Matter of Blackburne [Governor's Off. of Empl. Relations], supra, , 87 NY2d 660). In Blackburne, an employee, who had violated the Federal Hatch Act, claimed that he was terminated in violation of the procedural guarantees found in the CBA. This Court held that the arbitrator could not mandate compliance with the CBA's procedural guarantees concerning employee termination without subjecting the State to loss of Federal funds for the Hatch Act violation (id., at 666). To allow the arbitrator to make such a decision constituted an impermissible delegation of the State's sovereign authority (id.). Thus, where a court examines an arbitration agreement or an award on its face and concludes that the granting of any relief would violate public policy without extensive fact-finding or legal analysis, courts may then intervene and stay arbitration (see, Matter of Committee of Interns and Residents [Dinkins], supra, , 86 NY2d 478, 484; Matter of Sprinzen [Nomberg], , 46 NY2d 623, 631).

In this case, the procedural protections afforded a City employee under Article XVII of the CBA cannot be separated from their impact on a DOI criminal investigation. The granting of any relief under the procedural protections of the CBA would not only impinge on DOI's ability to conduct a criminal investigation (see, Matter of the Arbitration of Committee of Interns and Residents [Dinkins], supra, , 86 NY2d 478, 484), but would add another layer of process, decision-making and potential conflict. Thus, to the extent that public policy considerations preclude arbitration here, the courts below did not act precipitously and arbitration must be permanently stayed.

Finally, we conclude that, in this case, BCB's determination that the dispute is arbitrable is not entitled to due deference. The determination of the BCB, the statutorily authorized neutral adjudicative agency charged with making determinations under the New York City Collective Bargaining Law, will not be disturbed unless it is arbitrary and capricious or an abuse of discretion, or unless arbitration of the dispute offends public policy (New York City Dept. of Sanitation v MacDonald, supra, , 87 NY2d 650, 656; see also, Levitt v Board of Collective Bargaining of City of New York, , 79 NY2d 120, 127-128). Because we conclude that the arbitration here is prohibited by public policy, the courts did not err in overturning the BCB's determination.

Contrary to the dissent, we feel that it is clear from the record that DOI was conducting a criminal investigation; the investigations did not involve the conduct of the fire officers themselves but concerned their observations as witnesses to allegations of fraud. Moreover, the Union does not contest that the DOI investigations conducted here began as criminal investigations. Rather, the Union contends that there is no distinction between DOI's power to conduct criminal investigations and its power to conduct disciplinary investigations (Betheil Affirm in Opp to Mot, Joint Rec on App, at 205 [“There is no substantive difference as far as the subject matter of an investigation between a criminal investigation and a departmental investigation which may be the basis for departmental charges”]). The Union therefore seeks arbitration of all investigation-based claims (criminal and disciplinary).

Lastly, we agree with our dissenting colleague that there is no concern in this case that arbitration could delay criminal investigations. The courts below granted the City's stay, avoiding any further possible interference with the criminal investigation through after-the-fact remedies. To the extent that the dissent contends that the Union is merely seeking a post-deprivation remedy, that belies the fact that the Union is seeking to restrict all future DOI investigations involving its members (see, UFOA Request for Arbitration, id., at 217). The Union seeks the remedy of “[c]ompliance by the Department of Investigation with contractual requirements when noticing and conducting investigations involving members of the UFOA bargaining unit” (id.). The Union is not seeking the immunization of statements already given by its member officers in this case (although an arbitrator might decide that is a remedy); rather the remedy sought is for an arbitrator to determine when and how DOI investigations involving UFOA members are to be conducted. That is a power the City cannot give.

Accordingly, the order of the Appellate Division should be affirmed, with costs.