NY State Senate Bill 2023-S461

Senate Bill S461

2023-2024 Legislative Session

Relates to providing for vacation of an arbitration award on the ground that the arbitrator was affiliated with a party, or has a financial interest in a party or the outcome

download bill text pdf

Current Bill Status - In Senate Committee Judiciary Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

Please enter your contact information

First Name

Last Name

Email Address

A valid email address is required.

Home address is used to determine the senate district in which you reside. Your support or opposition to this bill is then shared immediately with the senator who represents you.

Optional services from the NY State Senate:

Create an account. An account allows you to officially support or oppose key legislation, sign petitions with a single click, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.

Include a custom message for your Senator? (Optional)

Enter a message to your senator. Many New Yorkers use this to share the reasoning behind their support or opposition to the bill. Others might share a personal anecdote about how the bill would affect them or people they care about.

Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 03, 2024	referred to judiciary
Jan 04, 2023	referred to judiciary

2023-S461 (ACTIVE) - Details

See Assembly Version of this Bill:: A925
Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Add §§7500 & 7505-a, amd §7501, CPLR
Versions Introduced in Other Legislative Sessions:: 2011-2012: A7002
2013-2014: A4789
2015-2016: A2742
2017-2018: S8710, A6637
2019-2020: S5669, A3337
2021-2022: S2100, A1605

2023-S461 (ACTIVE) - Summary

Requires disclosure of possible conflicts; provides for the vacating of an arbitration award on the ground that the arbitrator was affiliated in any way with any party, or has a financial interest directly or indirectly in any party or in the outcome of the arbitration.

2023-S461 (ACTIVE) - Sponsor Memo

                                 
BILL NUMBER: S461

SPONSOR: SEPULVEDA
 
TITLE OF BILL:

An act to amend the civil practice law and rules, in relation to grounds
for vacating an arbitration award on the basis of partiality of the
arbitrator

 
PURPOSE OR GENERAL IDEA OF BILL:

To clarify the intent and protect the purpose of the existing laws
regarding arbitration by creating a definition of the term arbitration

 
SUMMARY OF PROVISIONS:

Section One amends Article 75 Civil Practice Law and Rules by adding a
new section 7500 allowing for arbitration as an alternative to liti-
gation. Subdivision (b)of Section 7500 defines a neutral third party
arbitrator.

Section two amends Section 7501 CPLR which adds the fact that if an

arbitrator has been affiliated with any party or has a direct or indi-
rect financial interest in any party or in the outcome of the arbi-
tration, has grounds to vacate an arbitration award.

Section 3 amends civil practice law and rules by adding a new Section
7505-a requiring disclosure by the arbitrator prior to accepting their
appointment.

Section 4 sets the act to take effect immediately after it is signed
into law.

 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION APPLICABLE):

N/A

 
JUSTIFICATION:

The public policy in favor of arbitration which is codified in Section
7501 of the Civil Practice Law and Rules, is based upon the fact that
arbitration can be a more efficient and cost-effective method for
parties to resolve disputes. The presumption that an arbitration clause
is enforceable has, however, become a sword to wield against parties of
lesser means rather than a shield to protect against unnecessary liti-
gation. Currently, a party must prove, either during the course of
misconduct by the arbitrator or after an award by an arbitrator is
perceived to be unfair, that the arbitrator was biased even if the arbi-
trator clearly has an economic stake in the outcome of the dispute. This
outcome is in direct opposition to the reasons (efficiency and fairness)
why arbitration is favored. As arbitration is commonly thought to be a
dispute resolution procedure that occurs in front of a neutral third
party, codifying it as such will enforce the original intent of the law.

 
PRIOR LEGISLATIVE HISTORY:

S.2100 of 2021-22, Referred to Judiciary;

S.5669 of 2019-20, Referred to Judiciary;
S.8710 of 2018, Referred to Judiciary;

A.6637 of 2017, Referred to Judiciary;

A.2742 of 2015-16, Referred to Judiciary;

A.4789 of 2013-14, Referred to Judiciary;

A.7002-C of 2011-12, Referred to Judiciary

 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

None

 
EFFECTIVE DATE:
Immediately

2023-S461 (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                    461
 
                        2023-2024 Regular Sessions
 
                             I N  S E N A T E
 
                              January 4, 2023
                                ___________
 
 Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Judiciary
 
 AN ACT to amend the civil practice law and rules, in relation to grounds
   for  vacating  an  arbitration award on the basis of partiality of the
   arbitrator

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1.  Article 75 of the civil practice law and rules is amended
 by adding a new section 7500 to read as follows:
   § 7500. DEFINITIONS. AS USED IN THIS ARTICLE:
   (A) "ARBITRATION" MEANS A FORM OF DISPUTE RESOLUTION THAT IS AN ALTER-
 NATIVE TO LITIGATION, IN WHICH THE PARTIES AGREE  TO  BE  BOUND  BY  THE
 DETERMINATION OF A NEUTRAL THIRD PARTY ARBITRATOR.
   (B)  "NEUTRAL  THIRD PARTY ARBITRATOR" MEANS AN ARBITRATOR OR PANEL OF
 ARBITRATORS EACH OF WHOM DOES NOT HAVE AN UNDISCLOSED KNOWN, DIRECT, AND
 MATERIAL INTEREST IN THE OUTCOME OF  THE  ARBITRATION  PROCEEDING  OR  A
 KNOWN,  EXISTING, AND SUBSTANTIAL RELATIONSHIP WITH A PARTY, COUNSEL, OR
 REPRESENTATIVE OF A PARTY.
   § 2. Section 7501 of the civil practice law and rules, as  amended  by
 chapter 532 of the laws of 1963, is amended to read as follows:
   §  7501.  Effect  of  arbitration  agreement.   A written agreement to
 submit any controversy thereafter arising or any existing controversy to
 arbitration is enforceable without regard to the  justiciable  character
 of  the  controversy and confers jurisdiction on the courts of the state
 to enforce it and to enter judgment on an award; PROVIDED, HOWEVER, THAT
 ANY LANGUAGE REQUIRING THE CONTROVERSY BE SUBMITTED TO AN ARBITRATOR  OR
 ARBITRATION  ORGANIZATION  THAT IS NOT A NEUTRAL THIRD PARTY ARBITRATOR,
 AS THAT TERM IS DEFINED  IN  SUBDIVISION  (B)  OF  SECTION  SEVENTY-FIVE
 HUNDRED OF THIS ARTICLE, SHALL BE DEEMED VOID; PROVIDED THAT IT SHALL BE
 VALID  WITH  RESPECT  TO  THE  REQUIREMENT THAT THE CONTROVERSY BE ARBI-
 TRATED. THE REQUIREMENT THAT THE CONTROVERSY BE HEARD BY A NEUTRAL THIRD
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD00715-01-3

 S. 461                              2
 
 PARTY ARBITRATOR MAY NOT BE WAIVED BY PARTY PRIOR TO THE SERVICE ON SUCH
 PARTY OF A DEMAND FOR ARBITRATION. UPON DISCLOSURE PURSUANT  TO  SECTION
 SEVENTY-FIVE  HUNDRED  FIVE-A  OF  THIS  ARTICLE OF A KNOWN, DIRECT, AND
 MATERIAL  INTEREST  IN  THE  OUTCOME  OF THE ARBITRATION PROCEEDING OR A
 KNOWN EXISTING AND SUBSTANTIAL RELATIONSHIP WITH A  PARTY,  COUNSEL,  OR
 REPRESENTATIVE  OF  A  PARTY, A PARTY SHALL BE DEEMED TO HAVE WAIVED ANY
 OBJECTION TO THE ARBITRATOR OR COMPOSITION OF ANY ARBITRATION PANEL,  BY
 FAILING TO RAISE SAME PRIOR TO THE COMMENCEMENT OF THE ARBITRATION HEAR-
 ING.    In  determining any matter arising under this article, the court
 shall not consider whether the claim with respect to  which  arbitration
 is sought is tenable, or otherwise pass upon the merits of the dispute.
   §  3.  The  civil  practice  law  and rules is amended by adding a new
 section 7505-a to read as follows:
   § 7505-A. DISCLOSURE BY ARBITRATOR. (A) BEFORE ACCEPTING  APPOINTMENT,
 AN INDIVIDUAL WHO IS REQUESTED TO SERVE AS AN ARBITRATOR, AFTER MAKING A
 REASONABLE  INQUIRY,  SHALL  DISCLOSE TO ALL PARTIES TO THE AGREEMENT TO
 ARBITRATE AND THE ARBITRATION PROCEEDING AND TO  ANY  OTHER  ARBITRATORS
 ANY KNOWN FACTS THAT A REASONABLE PERSON WOULD CONSIDER LIKELY TO AFFECT
 THE  IMPARTIALITY  OF  THE  ARBITRATOR  IN  THE  ARBITRATION PROCEEDING,
 INCLUDING:
   (1) A FINANCIAL OR PERSONAL INTEREST IN THE OUTCOME OF THE ARBITRATION
 PROCEEDING; AND
   (2) AN EXISTING OR PAST RELATIONSHIP WITH ANY OF THE  PARTIES  TO  THE
 AGREEMENT  TO  ARBITRATE OR THE ARBITRATION PROCEEDING, THEIR COUNSEL OR
 REPRESENTATIVES, A WITNESS, OR ANOTHER ARBITRATOR.
   (B) AN ARBITRATOR HAS A  CONTINUING  OBLIGATION  TO  DISCLOSE  TO  ALL
 PARTIES TO THE AGREEMENT TO ARBITRATE AND THE ARBITRATION PROCEEDING AND
 TO  ANY  OTHER  ARBITRATORS  ANY  FACTS THAT THE ARBITRATOR LEARNS AFTER
 ACCEPTING APPOINTMENT WHICH A REASONABLE PERSON WOULD CONSIDER LIKELY TO
 AFFECT THE IMPARTIALITY OF THE ARBITRATOR.
   (C) IF AN ARBITRATOR DISCLOSES A FACT REQUIRED BY SUBDIVISION  (A)  OR
 (B)  OF  THIS  SECTION TO BE DISCLOSED AND A PARTY TIMELY OBJECTS TO THE
 APPOINTMENT OR CONTINUED SERVICE OF THE ARBITRATOR BASED UPON  THE  FACT
 DISCLOSED,  THE  OBJECTION MAY BE A GROUND FOR VACATING AN AWARD MADE BY
 THE ARBITRATOR.
   (D) IF THE ARBITRATOR DID NOT DISCLOSE A FACT AS REQUIRED BY  SUBDIVI-
 SION  (A)  OR (B) OF THIS SECTION, UPON TIMELY OBJECTION BY A PARTY, THE
 COURT MAY VACATE AN AWARD.
   (E) AN ARBITRATOR APPOINTED AS  A  NEUTRAL  ARBITRATOR  WHO  DOES  NOT
 DISCLOSE  A  KNOWN,  DIRECT, AND MATERIAL INTEREST IN THE OUTCOME OF THE
 ARBITRATION PROCEEDING OR A KNOWN, EXISTING, AND  SUBSTANTIAL  RELATION-
 SHIP WITH A PARTY IS PRESUMED TO ACT WITH EVIDENT PARTIALITY.
   § 4. This act shall take effect immediately.

Comments

Open Legislation is a forum for New York State legislation. All comments are subject to review and community moderation is encouraged.

Comments deemed off-topic, commercial, campaign-related, self-promotional; or that contain profanity, hate or toxic speech; or that link to sites outside of the nysenate.gov domain are not permitted, and will not be published. Attempts to intimidate and silence contributors or deliberately deceive the public, including excessive or extraneous posting/posts, or coordinated activity, are prohibited and may result in the temporary or permanent banning of the user. Comment moderation is generally performed Monday through Friday. By contributing or voting you agree to the Terms of Participation and verify you are over 13.

Create an account. An account allows you to sign petitions with a single click, officially support or oppose key legislation, and follow issues, committees, and bills that matter to you. When you create an account, you agree to this platform's terms of participation.