NY State Senate Bill 2025-S5425A

Senate Bill S5425A

2025-2026 Legislative Session

Requires employment and consumer dispute arbitrations to be submitted to neutral third party arbitrators, and establishes prohibited arbitration agreements and provisions

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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

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Actions

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Mar 13, 2025	print number 5425a
Mar 13, 2025	amend and recommit to judiciary
Feb 21, 2025	referred to judiciary

Bill Amendments

Original

A (Active)

2025-S5425 - Details

Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Add Art 75 §7500, §§7505-a, 7517 & 7518, amd §§7501, 7506, 7507 & 7511, CPLR
Versions Introduced in Other Legislative Sessions:: 2019-2020: S3684
2021-2022: S697
2023-2024: S3259

2025-S5425 - Summary

Requires employment and consumer dispute arbitrations to be submitted to neutral third party arbitrators; establishes prohibited arbitration agreements and provisions; requires disclosure of information by certain arbitrators.

2025-S5425 - Sponsor Memo

                                 
BILL NUMBER: S5425

SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:

An act to amend the civil practice law and rules, in relation to arbi-
tration agreements

 
PURPOSE:

This bill would clearly define the and void any agreement or contract
submitted to a neutral third party require a series of disclosures by
her impartiality.term "neutral third party' arbitrator that does not
require any disputed be arbitrator. The bill also would an arbitrator
that may impact his or

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1. Amends the civil practice law and rules by adding a new
section 7500, providing definitions.

Section 2. Amends section 7501 of the civil practice law and rules to

ensure arbitrator neutrality and objectivity.

Section 3. Amends the civil practice law and rules by adding a new
section 7505-a, requiring potential arbitrators to make specific disclo-
sures to ensure their neutrality and objectivity.

Section 4. Amends section 7506 of the civil practice law and rules
outlining new provisions to ensure fairness and objectivity in arbi-
tration proceedings.

Section 5. Amends Section 7507 of the civil practice law and rules to
enact new provisions related to arbitration awards, requiring arbitra-
tors to state the issues in dispute and a basis for their findings.

Section 6. Amends Section 7511 of the civil practice law and rules to
allow awards to be vacated if a manifest disregard of the law is demon-
strated.

Section 7. Amends the civil practice law and rules by adding new
sections 7516 and 7517, together providing definitions, prohibitions,
and requirements for specific arbitration cases.

Section 8. Provides provisions for enforcement of the provisions of this
act.

Section 9. provides for severability of the provisions of this act.

Section 10. Provides the effective date.

 
JUSTIFICATION:

"Forced arbitration" or "mandatory arbitration" clauses are fine-print
terms included in contracts of adhesion - often contracts between an
employee and her employer or a consumer and a merchant - that, in the
case of consumer and employment contracts in non-unionized workplaces,
require the consumer or employee to give up her right to assert claims
against the merchant or employer in court as a condition of obtaining or
keeping her job or using the consumer goods or services. These clauses
are prevalent in a number of types of contracts including, among others,
cellphone contracts, and employment contracts in non- union workplaces.
Instead of providing employees and consumers with access to state or
federal court or administrative agencies, these clauses purport to
provide employees and consumers with a private forum to resolve their
claims against the company. But in actuality many consumers and employ-
ees are never actually able to access this alternative, private forum,
because forced arbitration clauses also often require the employee or
consumer to pursue her claims individually, without the benefit of class
or collective action procedures that many consumers and employees rely
on to assert their rights. Moreover, some clauses require the consumer
or employee to pay exorbitant arbitration fees or even to arbitrate in a
far-off forum. This bill builds upon the proscription against mandatory
arbitration clauses which is contained in General Business Law
Sec.399-c.

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 litigation.  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 arbitrator clearly has an economic
stake in the outcome of the dispute. This outcome is in direct oppo-
sition 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.

Even when the employee or consumer is able - or required - to pursue her
claims in arbitration, she often finds that the deck is stacked against
her. The arbitration process is secret, and arbitrators are often
subject to "repeat player" bias in favor of the business and against the
employee or consumer, because the business is the entity appearing in
front of the arbitrator most frequently and is the one paying the
arbitrator's salary. What is more, under both state and federal law, the
right to vacate an arbitrator's decision is extremely limited. A consum-
er or employee cannot obtain relief on a challenge to an arbitrator's
decision even when the arbitrator is clearly wrong on the facts or the
law. This bill requires that an arbitrator in such matters state the
basis for her decision, which is modeled after 11 NYCRR 65-4.5 (s),
which has been used in no-fault insurance arbitrations for many years.
The bill also allows an arbitration award to be vacated because of an
arbitrator's manifest disregard of the law. This latter standard is used
in arbitrations which are sought to be vacated pursuant to federal law.
See, Schwartz v. Merrill Lynch & Co., Inc. 665 F.3d 444 (2011).Likewise
for the provisions in the bill that call for arbitrators
 to provide basic conflict disclosure. Given the high bar presently
contained in CPLR 7511 (b)(1)(ii), it is very difficult to establish
arbitrator partiality. This bill sets affirmative requirements for arbi-
trators concerning disclosure of conflicts.

For the most part, business are allowed to write their contracts in a
way which is not consumer or employee-friendly, because of the Supreme
Court's recent interpretations of the Federal Arbitration Act (FAA), a
law that has been on the books for over 90 years. Although Congress's
purpose in enacting the FAA was to allow companies, bargaining at arm's-
length, to settle on an alternative dispute resolution forum, a series
of recent Supreme Court decisions have expanded the Act's reach to cover
almost all employment and consumer contracts, whether or not the parties
actually bargained over the term. As a result, given these judicial
interpretations, and given that mandatory arbitration may well be a more
common occurrence in New York State, it is felt that procedural modifi-
cations to the way arbitrations are conducted, such as set forth in this
bill and in away that they comport with the FAA, are warranted. In addi-
tion, the bill makes it clear that arbitration clauses in contracts
exempted under federal law, or not governed by federal law in the first
instance, are not preempted by federal law, and proscribed. Finally, the
bill specifically provides that it shall not apply to collectively
bargained agreements with unions, so as not to upset the delicate
balance that is had in agreements typically negotiated by lawyers for
both sides, as contrasted to the typically non-negotiated agreement
between businesses and employers and consumers.

 
LEGISLATIVE HISTORY:

S.3258 of 2023-2024 (Hoylman-Sigal): Died in Rules

A.856 of 2023-2024 (Dinowitz): Passed Assembly

S.0697 OF 2021-2022 (Hoylman): Died in Judiciary

A.1464-A of 2021-2022 (Dinowitz): Passed Assembly/ Died in Judiciary

S.3684 of 2019-2020 (Holyman): Died in Judiciary

A.3265 of 2019-2020 (Dinowitz): Died in Codes

 
FISCAL IMPLICATIONS:

None

 
EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.

2025-S5425 - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5425
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 21, 2025
                                ___________
 
 Introduced  by Sen. HOYLMAN-SIGAL -- 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  arbi-
   tration agreements
 
   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 OR
 MATERIAL INTEREST, INCLUDING A FINANCIAL OR  PERSONAL  INTEREST  IN  THE
 OUTCOME  OF  THE  ARBITRATION  PROCEEDING,  OR A KNOWN, 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.
   (C)  "EMPLOYMENT"  MEANS  A  RELATIONSHIP  BETWEEN  AN EMPLOYER AND AN
 EMPLOYEE AS DEFINED IN SECTION THREE OF THE FAIR LABOR STANDARDS ACT  OF
 1938 (29 U.S.C. § 203).
   (D) "CONSUMER" MEANS A NATURAL PERSON RESIDING IN THIS STATE.
   (E)  "CONSUMER GOODS" MEANS GOODS, WARES, PAID MERCHANDISE OR SERVICES
 PURCHASED OR PAID FOR BY A CONSUMER, THE  INTENDED  USE  OR  BENEFIT  OF
 WHICH IS INTENDED FOR THE PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OF SUCH
 CONSUMER.
   §  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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07891-01-5

 S. 5425                             2
 
 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  PORTION  OF  AN  AGREEMENT  OR  CONTRACT  REQUIRING THE CONTROVERSY
 CONCERNING EMPLOYMENT OR THE PROVIDING OF CONSUMER GOODS BE SUBMITTED TO
 AN ARBITRATOR OR ARBITRATION ORGANIZATION THAT IS NOT  A  NEUTRAL  THIRD
 PARTY  ARBITRATOR,  SHALL  BE  DEEMED  VOID.    THE REQUIREMENT THAT THE
 CONTROVERSY BE HEARD BY A NEUTRAL THIRD  PARTY  ARBITRATOR  MAY  NOT  BE
 WAIVED  BY  A  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,  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.
   ARBITRATION  OF  ANY EMPLOYMENT OR CONSUMER DISPUTE SHALL BE CONDUCTED
 BY A NEUTRAL THIRD PARTY ARBITRATOR.    APPOINTMENT  OF  ANY  ARBITRATOR
 SHALL  REASONABLY  ENSURE THE PERSONAL OBJECTIVITY OF THE ARBITRATOR AND
 THE RIGHT OF EACH PARTY TO PRESENT ITS CASE, TO BE IN ATTENDANCE  DURING
 ANY  PRESENTATION  MADE  BY  THE OTHER PARTY AND TO REBUT OR REFUTE SUCH
 PRESENTATION.
   § 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  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 BASED ON SUCH NON-DISCLOSURE.
   (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 RELATIONSHIP
 WITH  A PARTY IS PRESUMED TO ACT WITH EVIDENT PARTIALITY IN RENDERING AN
 AWARD.
   § 4. Section 7506 of the civil practice law and rules  is  amended  to
 read as follows:
 S. 5425                             3
 
   § 7506. Hearing. (a) Oath of arbitrator. Before hearing any testimony,
 an  arbitrator  shall be sworn to hear and decide the controversy faith-
 fully and fairly by an officer authorized to administer an oath.
   (b)  Time and place. The arbitrator shall appoint a time and place for
 the hearing and notify the parties in writing personally  or  by  regis-
 tered or certified mail not less than eight days before the hearing. The
 arbitrator may adjourn or postpone the hearing. The court, upon applica-
 tion  of  any  party, may direct the arbitrator to proceed promptly with
 the hearing and determination of the controversy.
   (c) Evidence. The  parties  are  entitled  to  be  heard,  to  present
 evidence and to cross-examine witnesses.
   (D) POSTPONEMENTS AND ADJOURNMENTS.  THE ARBITRATOR MAY FOR GOOD CAUSE
 POSTPONE  OR  ADJOURN  THE  HEARING  UPON REQUEST OF A PARTY OR UPON THE
 ARBITRATOR'S OWN INITIATIVE. Notwithstanding the failure of a party duly
 notified to appear, the arbitrator may hear and determine the controver-
 sy upon the evidence produced.  IF A PARTY TO AN ARBITRATION INTENDS  TO
 PRESENT  TESTIMONY  FROM  A  WITNESS  AT  THE HEARING, ABSENT GOOD CAUSE
 SHOWN, THE IDENTITY OF THE WITNESS MUST BE GIVEN TO ALL PARTIES AT LEAST
 SEVEN CALENDAR DAYS PRIOR TO THE HEARING.
   [(d)] (E) Representation by attorney. A party  has  the  right  to  be
 represented  by  an  attorney and may claim such right at any time as to
 any part of the arbitration or hearings which have not taken place. This
 right may not be waived. If a  party  is  represented  by  an  attorney,
 papers  to be served on the party shall be served upon [his] THE PARTY'S
 attorney. IT SHALL BE DISCRETIONARY WITH THE ARBITRATOR  TO  PERMIT  THE
 ATTENDANCE OF ANY OTHER PERSONS.
   [(e)] (F) Determination by majority. The hearing shall be conducted by
 all  the  arbitrators,  but  a  majority  may determine any question and
 render an award.
   [(f)] (G) Waiver.  Except  as  provided  in  subdivision  [(d)](E),  a
 requirement  of  this  section  may  be waived by written consent of the
 parties and it is waived if the parties continue  with  the  arbitration
 without objection.
   §  5.  Section 7507 of the civil practice law and rules, as amended by
 chapter 952 of the laws of 1981, is amended to read as follows:
   § 7507. Award; form; time;  delivery.    (A)  Except  as  provided  in
 section  7508, the award shall be in writing, signed and affirmed by the
 arbitrator making it within the time fixed by the agreement, or, if  the
 time is not fixed, within such time as the court orders.
   (B)  IN  A  MATTER  INVOLVING A CONSUMER ARBITRATION OR AN ARBITRATION
 BETWEEN AN EMPLOYER AND AN EMPLOYEE, AS DEFINED IN SECTION THREE OF  THE
 FAIR  LABOR  STANDARDS  ACT OF 1938 (29 U.S.C. § 203), WHERE ARBITRATION
 WAS HELD PURSUANT TO A CONTRACT, THE AWARD SHALL  STATE  THE  ISSUES  IN
 DISPUTE  AND SHALL CONTAIN THE ARBITRATOR'S FINDINGS OF FACT AND CONCLU-
 SIONS OF LAW. THE AWARD SHALL CONTAIN A DECISION ON ALL ISSUES SUBMITTED
 TO THE ARBITRATOR.
   (C) The parties may in writing extend the time either before or  after
 its  expiration. A party waives the objection that an award was not made
 within the time required unless [he] THE PARTY notifies  the  arbitrator
 in  writing  of [his] THE PARTY'S objection prior to the delivery of the
 award [to him].
   (D) The arbitrator shall deliver a copy of the award to each party  in
 the  manner  provided  in the agreement, or, if no provision is so made,
 personally or by registered or certified mail, return receipt requested.
 S. 5425                             4
 
   § 6. Subparagraph (iv) of paragraph 1 of subdivision  (b)  of  section
 7511  of  the civil practice law and rules is amended and a new subpara-
 graph (v) is added to read as follows:
   (iv) failure to follow the procedure of this article, unless the party
 applying  to vacate the award continued with the arbitration with notice
 of the defect and without objection[.]; OR
   (V) THE ARBITRATOR EVIDENCED  A  MANIFEST  DISREGARD  OF  THE  LAW  IN
 RENDERING THE AWARD.
   §  7.  The  civil  practice law and rules is amended by adding two new
 sections 7517 and 7518 to read as follows:
   § 7517. PROHIBITED  PREDISPUTE  ARBITRATION  AGREEMENTS.    (A)  DEFI-
 NITIONS.  (I)  THE  TERM  "CONSUMER  DISPUTE" MEANS A DISPUTE BETWEEN AN
 INDIVIDUAL WHO SEEKS OR ACQUIRES REAL  OR  PERSONAL  PROPERTY,  SERVICES
 (INCLUDING  SERVICES  RELATING  TO  SECURITIES  AND  OTHER INVESTMENTS),
 MONEY, OR CREDIT FOR PERSONAL, FAMILY  OR  HOUSEHOLD  PURPOSES  AND  THE
 SELLER OR PROVIDER OF SUCH PROPERTY, SERVICES, MONEY OR CREDIT.
   (II) THE TERM "EMPLOYMENT DISPUTE" MEANS A DISPUTE BETWEEN AN EMPLOYER
 AND EMPLOYEE ARISING OUT OF THE RELATIONSHIP OF EMPLOYER AND EMPLOYEE AS
 DEFINED  IN  SECTION  THREE  OF THE FAIR LABOR STANDARDS ACT OF 1938 (29
 U.S.C. § 203).
   (III) THE TERM "PREDISPUTE ARBITRATION AGREEMENT" MEANS ANY  AGREEMENT
 TO ARBITRATE A DISPUTE THAT HAD NOT YET ARISEN AT THE TIME OF THE MAKING
 OF THE AGREEMENT.
   (B) PROHIBITION.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,
 NO  PREDISPUTE ARBITRATION AGREEMENT SHALL BE VALID OR ENFORCEABLE IF IT
 REQUIRES ARBITRATION OF AN EMPLOYMENT DISPUTE OR CONSUMER DISPUTE.
   § 7518. PROHIBITED PROVISIONS.  (A) PROHIBITION OF EFFECT  OF  CERTAIN
 ARBITRATION  CLAUSES  OR  AGREEMENTS.   MANDATORY ARBITRATION CLAUSES OR
 AGREEMENTS COVERING CONSUMERS AND EMPLOYEES ARE CONTRARY TO  THE  ESTAB-
 LISHED  PUBLIC POLICY OF THIS STATE. BECAUSE EMPLOYEES AND CONSUMERS ARE
 FORCED TO ASSENT TO THESE AGREEMENTS AS A CONDITION OF BEING AN EMPLOYEE
 OR CONSUMER BEFORE ANY DISPUTE HAS ARISEN WITH THE EMPLOYER OR MERCHANT,
 THESE AGREEMENTS DO NOT  OFFER  EMPLOYEES  AND  CONSUMERS  A  MEANINGFUL
 CHOICE  ABOUT  HOW  TO  RESOLVE  THEIR  DISPUTES  WITH  THE  EMPLOYER OR
 MERCHANT. IN ADDITION, MANDATORY ARBITRATION AGREEMENTS PREVENT  EMPLOY-
 EES  AND CONSUMERS FROM EFFECTIVELY VINDICATING THEIR RIGHTS UNDER STATE
 LAW. FOR THESE REASONS, EXCEPT WHEN INCONSISTENT WITH FEDERAL  LAW,  THE
 STATE  PROHIBITS  THE FORMATION AND ENFORCEMENT OF MANDATORY ARBITRATION
 AGREEMENTS IN EMPLOYMENT AND CONSUMER CONTRACTS.
   (B) PROHIBITION OF ARBITRATION CLAUSES  IN  EMPLOYMENT  CONTRACTS  FOR
 WORKERS  EXEMPTED  FROM  THE FEDERAL ARBITRATION ACT.  A MANDATORY ARBI-
 TRATION AGREEMENT WITHIN OR PART OF ANY WRITTEN CONTRACT  OF  EMPLOYMENT
 OF  SEAMEN,  RAILROAD EMPLOYEES OR ANY OTHER CLASS OF WORKERS ENGAGED IN
 FOREIGN OR INTERSTATE COMMERCE IS UNENFORCEABLE AND VOID. ANY SUCH ARBI-
 TRATION  AGREEMENT  SHALL  BE  CONSIDERED  SEVERABLE,  AND   ALL   OTHER
 PROVISIONS  OF  THE EMPLOYMENT CONTRACT SHALL REMAIN IN EFFECT AND GIVEN
 FULL FORCE.
   (C) PROHIBITION OF ARBITRATION CLAUSES THAT ARE NOT GOVERNED BY FEDER-
 AL LAW.  ANY MANDATORY ARBITRATION AGREEMENT, OR PORTION THEREOF, IN  AN
 EMPLOYMENT OR CONSUMER CONTRACT IS INVALID, UNENFORCEABLE AND VOID, WHEN
 THE  ENFORCEABILITY  OF  SUCH  ARBITRATION  AGREEMENT, OR THE PORTION AT
 ISSUE, IS GOVERNED BY STATE LAW. ANY SUCH ARBITRATION AGREEMENT SHALL BE
 CONSIDERED  SEVERABLE,  AND  ALL  OTHER  PROVISIONS  OF  THE  EMPLOYMENT
 CONTRACT SHALL REMAIN IN EFFECT AND GIVEN FULL FORCE.
 S. 5425                             5
 
   (D)  EXCLUSION.  THE  PROVISIONS  OF  THIS  SECTION SHALL NOT APPLY TO
 AGREEMENTS NEGOTIATED WITH ANY LABOR UNION THROUGH  COLLECTIVE  BARGAIN-
 ING.
   §  8.  Enforcement.   Any private person and any enforcement agency or
 official responsible for enforcing the provisions of this act may  bring
 suit  for  injunctive  relief  against  an  entity  that  violates  such
 provisions, and may recover reasonable attorney fees and other costs  if
 an  injunction  or equivalent relief is awarded. Injunctive relief shall
 be the only relief available in a suit arising from  failure  to  comply
 with this act.
   §  9.  Severability.   If any provision of this act or the application
 thereof to any person or circumstance is held invalid,  such  invalidity
 shall  not  affect other provisions or applications of this act that can
 be given effect without the invalid provision  or  application,  and  to
 that end the provisions of this act are declared to be severable.
   § 10. This act shall take effect on the first of January next succeed-
 ing the date on which it shall have become a law.

2025-S5425A (ACTIVE) - Details

Current Committee:: Senate Judiciary
Law Section:: Civil Practice Law and Rules
Laws Affected:: Add Art 75 §7500, §§7505-a, 7517 & 7518, amd §§7501, 7506, 7507 & 7511, CPLR
Versions Introduced in Other Legislative Sessions:: 2019-2020: S3684
2021-2022: S697
2023-2024: S3259

2025-S5425A (ACTIVE) - Summary

2025-S5425A (ACTIVE) - Bill Text download pdf

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  5425--A
 
                        2025-2026 Regular Sessions
 
                             I N  S E N A T E
 
                             February 21, 2025
                                ___________
 
 Introduced  by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
   when printed to be committed to the Committee on Judiciary --  commit-
   tee  discharged, bill amended, ordered reprinted as amended and recom-
   mitted to said committee
 
 AN ACT to amend the civil practice law and rules, in relation  to  arbi-
   tration agreements

   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 OR
 MATERIAL INTEREST, INCLUDING A FINANCIAL OR  PERSONAL  INTEREST  IN  THE
 OUTCOME  OF  THE  ARBITRATION  PROCEEDING,  OR A KNOWN, 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.
   (C)  "EMPLOYMENT"  MEANS  A  RELATIONSHIP  BETWEEN  AN EMPLOYER AND AN
 EMPLOYEE AS DEFINED IN SECTION THREE OF THE FAIR LABOR STANDARDS ACT  OF
 1938 (29 U.S.C. § 203).
   (D) "CONSUMER" MEANS A NATURAL PERSON RESIDING IN THIS STATE.
   (E)  "CONSUMER GOODS" MEANS GOODS, WARES, PAID MERCHANDISE OR SERVICES
 PURCHASED OR PAID FOR BY A CONSUMER, THE  INTENDED  USE  OR  BENEFIT  OF
 WHICH IS INTENDED FOR THE PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OF SUCH
 CONSUMER.
   §  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:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD07891-02-5

 S. 5425--A                          2
 
   § 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  PORTION  OF  AN  AGREEMENT  OR  CONTRACT  REQUIRING THE CONTROVERSY
 CONCERNING EMPLOYMENT OR THE PROVIDING OF CONSUMER GOODS BE SUBMITTED TO
 AN ARBITRATOR OR ARBITRATION ORGANIZATION THAT IS NOT  A  NEUTRAL  THIRD
 PARTY  ARBITRATOR,  SHALL  BE  DEEMED  VOID.    THE REQUIREMENT THAT THE
 CONTROVERSY BE HEARD BY A NEUTRAL THIRD  PARTY  ARBITRATOR  MAY  NOT  BE
 WAIVED  BY  A  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,  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.
   ARBITRATION  OF  ANY EMPLOYMENT OR CONSUMER DISPUTE SHALL BE CONDUCTED
 BY A NEUTRAL THIRD PARTY ARBITRATOR.    APPOINTMENT  OF  ANY  ARBITRATOR
 SHALL  REASONABLY  ENSURE THE PERSONAL OBJECTIVITY OF THE ARBITRATOR AND
 THE RIGHT OF EACH PARTY TO PRESENT ITS CASE, TO BE IN ATTENDANCE  DURING
 ANY  PRESENTATION  MADE  BY  THE OTHER PARTY AND TO REBUT OR REFUTE SUCH
 PRESENTATION.
   § 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  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 BASED ON SUCH NON-DISCLOSURE.
   (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 RELATIONSHIP
 WITH  A PARTY IS PRESUMED TO ACT WITH EVIDENT PARTIALITY IN RENDERING AN
 AWARD.
 S. 5425--A                          3
 
   § 4. Section 7506 of the civil practice law and rules  is  amended  to
 read as follows:
   § 7506. Hearing. (a) Oath of arbitrator. Before hearing any testimony,
 an  arbitrator  shall be sworn to hear and decide the controversy faith-
 fully and fairly by an officer authorized to administer an oath.
   (b) Time and place. The arbitrator shall appoint a time and place  for
 the  hearing  and  notify the parties in writing personally or by regis-
 tered or certified mail not less than eight days before the hearing. The
 arbitrator may adjourn or postpone the hearing. The court, upon applica-
 tion of any party, may direct the arbitrator to  proceed  promptly  with
 the hearing and determination of the controversy.
   (c)  Evidence.  The  parties  are  entitled  to  be  heard, to present
 evidence and to cross-examine witnesses. Notwithstanding the failure  of
 a  party duly  notified to appear, the arbitrator may hear and determine
 the controversy upon the evidence produced.
   (d) POSTPONEMENTS AND ADJOURNMENTS.  THE ARBITRATOR MAY FOR GOOD CAUSE
 POSTPONE OR ADJOURN THE HEARING UPON REQUEST OF  A  PARTY  OR  UPON  THE
 ARBITRATOR'S  OWN  INITIATIVE.  IF  A PARTY TO AN ARBITRATION INTENDS TO
 PRESENT TESTIMONY FROM A WITNESS  AT  THE  HEARING,  ABSENT  GOOD  CAUSE
 SHOWN, THE IDENTITY OF THE WITNESS MUST BE GIVEN TO ALL PARTIES AT LEAST
 SEVEN CALENDAR DAYS PRIOR TO THE HEARING.
   (E)  Representation  by  attorney. A party has the right to be repres-
 ented by an attorney and may claim such right at any time as to any part
 of the arbitration or hearings which have not taken  place.  This  right
 may  not  be waived. If a party is represented by an attorney, papers to
 be served on the party shall be served upon [his] THE PARTY'S  attorney.
 IT  SHALL  BE DISCRETIONARY WITH THE ARBITRATOR TO PERMIT THE ATTENDANCE
 OF ANY OTHER PERSONS.
   [(e)] (F) Determination by majority. The hearing shall be conducted by
 all the arbitrators, but a  majority  may  determine  any  question  and
 render an award.
   [(f)]  (G)  Waiver.  Except  as  provided  in  subdivision [(d)](E), a
 requirement of this section may be waived  by  written  consent  of  the
 parties  and  it  is waived if the parties continue with the arbitration
 without objection.
   § 5. Section 7507 of the civil practice law and rules, as  amended  by
 chapter 952 of the laws of 1981, is amended to read as follows:
   §  7507.  Award;  form;  time;  delivery.    (A) Except as provided in
 section 7508, the award shall be in writing, signed and affirmed by  the
 arbitrator  making it within the time fixed by the agreement, or, if the
 time is not fixed, within such time as the court orders.
   (B) IN A MATTER INVOLVING A CONSUMER  ARBITRATION  OR  AN  ARBITRATION
 BETWEEN  AN EMPLOYER AND AN EMPLOYEE, AS DEFINED IN SECTION THREE OF THE
 FAIR LABOR STANDARDS ACT OF 1938 (29 U.S.C. §  203),  WHERE  ARBITRATION
 WAS  HELD  PURSUANT  TO  A CONTRACT, THE AWARD SHALL STATE THE ISSUES IN
 DISPUTE AND SHALL CONTAIN THE ARBITRATOR'S FINDINGS OF FACT AND  CONCLU-
 SIONS OF LAW. THE AWARD SHALL CONTAIN A DECISION ON ALL ISSUES SUBMITTED
 TO THE ARBITRATOR.
   (C)  The parties may in writing extend the time either before or after
 its expiration. A party waives the objection that an award was not  made
 within  the  time required unless [he] THE PARTY notifies the arbitrator
 in writing of [his] THE PARTY'S objection prior to the delivery  of  the
 award [to him].
   (D)  The arbitrator shall deliver a copy of the award to each party in
 the manner provided in the agreement, or, if no provision  is  so  made,
 personally or by registered or certified mail, return receipt requested.
 S. 5425--A                          4
 
   §  6.  Subparagraph  (iv) of paragraph 1 of subdivision (b) of section
 7511 of the civil practice law and rules is amended and a  new  subpara-
 graph (v) is added to read as follows:
   (iv) failure to follow the procedure of this article, unless the party
 applying  to vacate the award continued with the arbitration with notice
 of the defect and without objection[.]; OR
   (V) THE ARBITRATOR EVIDENCED  A  MANIFEST  DISREGARD  OF  THE  LAW  IN
 RENDERING THE AWARD.
   §  7.  The  civil  practice law and rules is amended by adding two new
 sections 7517 and 7518 to read as follows:
   § 7517. PROHIBITED  PREDISPUTE  ARBITRATION  AGREEMENTS.    (A)  DEFI-
 NITIONS.  (I)  THE  TERM  "CONSUMER  DISPUTE" MEANS A DISPUTE BETWEEN AN
 INDIVIDUAL WHO SEEKS OR ACQUIRES REAL  OR  PERSONAL  PROPERTY,  SERVICES
 (INCLUDING  SERVICES  RELATING  TO  SECURITIES  AND  OTHER INVESTMENTS),
 MONEY, OR CREDIT FOR PERSONAL, FAMILY  OR  HOUSEHOLD  PURPOSES  AND  THE
 SELLER OR PROVIDER OF SUCH PROPERTY, SERVICES, MONEY OR CREDIT.
   (II) THE TERM "EMPLOYMENT DISPUTE" MEANS A DISPUTE BETWEEN AN EMPLOYER
 AND EMPLOYEE ARISING OUT OF THE RELATIONSHIP OF EMPLOYER AND EMPLOYEE AS
 DEFINED  IN  SECTION  THREE  OF THE FAIR LABOR STANDARDS ACT OF 1938 (29
 U.S.C. § 203).
   (III) THE TERM "PREDISPUTE ARBITRATION AGREEMENT" MEANS ANY  AGREEMENT
 TO ARBITRATE A DISPUTE THAT HAD NOT YET ARISEN AT THE TIME OF THE MAKING
 OF THE AGREEMENT.
   (B) PROHIBITION.  NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE,
 NO  PREDISPUTE ARBITRATION AGREEMENT SHALL BE VALID OR ENFORCEABLE IF IT
 REQUIRES ARBITRATION OF AN EMPLOYMENT DISPUTE OR CONSUMER DISPUTE.
   § 7518. PROHIBITED PROVISIONS.  (A) PROHIBITION OF EFFECT  OF  CERTAIN
 ARBITRATION  CLAUSES  OR  AGREEMENTS.   MANDATORY ARBITRATION CLAUSES OR
 AGREEMENTS COVERING CONSUMERS AND EMPLOYEES ARE CONTRARY TO  THE  ESTAB-
 LISHED  PUBLIC POLICY OF THIS STATE. BECAUSE EMPLOYEES AND CONSUMERS ARE
 FORCED TO ASSENT TO THESE AGREEMENTS AS A CONDITION OF BEING AN EMPLOYEE
 OR CONSUMER BEFORE ANY DISPUTE HAS ARISEN WITH THE EMPLOYER OR MERCHANT,
 THESE AGREEMENTS DO NOT  OFFER  EMPLOYEES  AND  CONSUMERS  A  MEANINGFUL
 CHOICE  ABOUT  HOW  TO  RESOLVE  THEIR  DISPUTES  WITH  THE  EMPLOYER OR
 MERCHANT. IN ADDITION, MANDATORY ARBITRATION AGREEMENTS PREVENT  EMPLOY-
 EES  AND CONSUMERS FROM EFFECTIVELY VINDICATING THEIR RIGHTS UNDER STATE
 LAW. FOR THESE REASONS, EXCEPT WHEN INCONSISTENT WITH FEDERAL  LAW,  THE
 STATE  PROHIBITS  THE FORMATION AND ENFORCEMENT OF MANDATORY ARBITRATION
 AGREEMENTS IN EMPLOYMENT AND CONSUMER CONTRACTS.
   (B) PROHIBITION OF ARBITRATION CLAUSES  IN  EMPLOYMENT  CONTRACTS  FOR
 WORKERS  EXEMPTED  FROM  THE FEDERAL ARBITRATION ACT.  A MANDATORY ARBI-
 TRATION AGREEMENT WITHIN OR PART OF ANY WRITTEN CONTRACT  OF  EMPLOYMENT
 OF  SEAMEN,  RAILROAD EMPLOYEES OR ANY OTHER CLASS OF WORKERS ENGAGED IN
 FOREIGN OR INTERSTATE COMMERCE IS UNENFORCEABLE AND VOID. ANY SUCH ARBI-
 TRATION  AGREEMENT  SHALL  BE  CONSIDERED  SEVERABLE,  AND   ALL   OTHER
 PROVISIONS  OF  THE EMPLOYMENT CONTRACT SHALL REMAIN IN EFFECT AND GIVEN
 FULL FORCE.
   (C) PROHIBITION OF ARBITRATION CLAUSES THAT ARE NOT GOVERNED BY FEDER-
 AL LAW.  ANY MANDATORY ARBITRATION AGREEMENT, OR PORTION THEREOF, IN  AN
 EMPLOYMENT OR CONSUMER CONTRACT IS INVALID, UNENFORCEABLE AND VOID, WHEN
 THE  ENFORCEABILITY  OF  SUCH  ARBITRATION  AGREEMENT, OR THE PORTION AT
 ISSUE, IS GOVERNED BY STATE LAW. ANY SUCH ARBITRATION AGREEMENT SHALL BE
 CONSIDERED  SEVERABLE,  AND  ALL  OTHER  PROVISIONS  OF  THE  EMPLOYMENT
 CONTRACT SHALL REMAIN IN EFFECT AND GIVEN FULL FORCE.
 S. 5425--A                          5
 
   (D)  EXCLUSION.  THE  PROVISIONS  OF  THIS  SECTION SHALL NOT APPLY TO
 AGREEMENTS NEGOTIATED WITH ANY LABOR UNION THROUGH  COLLECTIVE  BARGAIN-
 ING.
   §  8.  Enforcement.   Any private person and any enforcement agency or
 official responsible for enforcing the provisions of this act may  bring
 suit  for  injunctive  relief  against  an  entity  that  violates  such
 provisions, and may recover reasonable attorney fees and other costs  if
 an  injunction  or equivalent relief is awarded. Injunctive relief shall
 be the only relief available in a suit arising from  failure  to  comply
 with this act.
   §  9.  Severability.   If any provision of this act or the application
 thereof to any person or circumstance is held invalid,  such  invalidity
 shall  not  affect other provisions or applications of this act that can
 be given effect without the invalid provision  or  application,  and  to
 that end the provisions of this act are declared to be severable.
   § 10. This act shall take effect on the first of January next succeed-
 ing the date on which it shall have become a law.

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