BILL NUMBER:  S6060

 TITLE OF BILL :  An act to amend the civil practice law and rules, in
relation to vacating arbitration awards on the basis of arbitrator
disregard of the law

 PURPOSE OF BILL :

To permit an arbitration award to be vacated as a result of an
arbitrator's manifest disregard of the law.

 SUMMARY OF PROVISIONS OF BILL :

This bill would add a new subdivision to CPLR 7511, which would permit
an arbitration award to be vacated due to arbitral manifest disregard
of law.

 JUSTIFICATION :

Under existing law, an arbitration award can be vacated if "completely
irrational", a high standard for the losing arbitral litigant to
overcome. As noted by Professor Siegel, even an arbitrator's "manifest
disregard of the law" is not a basis for vacating an award in New York
State. New York Practice, Firth Edition, Sec. 602. While arbitration
can be a useful tool for persons to settle disputes in a more timely
and cost-effective way, such resolutions should not be totally
              

divorced from applicable standards of law.

Thus, a measured and prudent way in which arbitrators should be
required to reasonably follow applicable legal standards in resolving
disputes would be permit awards to be vacated if arbitrators evidence
a "manifest disregard of the law".

This standard has been used in federal practice for many years as a
basis to vacate arbitration awards. In fact, the Circuit Court of
Appeals, Second Circuit has well-honed this standard as follows:
"...first, whether the governing law alleged to have been ignored by
the arbitrators was well defined, explicit, and clearly applicable,
and, second, whether the arbitrator knew about the existence of a
clearly governing legal principle but decided to ignore it or pay no
attention to it".  internal citations omitted  Schwartz v. Merrill
Lynch & Co., Inc., 665 F. 3d 444 (2011).

In setting such a clear standard of law for the vacating of
arbitration awards, this bill would provide greater clarity to the
Courts in determining whether an award would be subject to vacatur due
to failure to follow applicable law. Such a standard would also compel
arbitrators to make a good faith and reasonable attempt to follow
provisions of substantive law, which they presently are not required
to do.

 LEGISLATIVE HISTORY :

2017: A.1370 (Weinstein)
2016: A.9993 (Weinstein)

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS :

None.

 EFFECTIVE DATE :
This bill shall take effect on the one hundred eightieth day after it
shall become law.