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A06637 Summary:

BILL NOA06637
 
SAME ASNo Same As
 
SPONSORTitone
 
COSPNSRColton, Gottfried, Bronson, Lavine
 
MLTSPNSRAbinanti, Cook, Montesano
 
Add 7500 & 7505-a, amd 7501, CPLR
 
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.
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A06637 Actions:

BILL NOA06637
 
03/10/2017referred to judiciary
01/03/2018referred to judiciary
02/13/2018reported
02/15/2018advanced to third reading cal.675
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A06637 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A6637
 
SPONSOR: Titone (MS)
  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: Amends Article 75 Civil Practice Law and Rules by adding a provision to subdivision (b)(ii) of Section 7511 which adds the fact that an arbitra- tor has been affiliated with any party or has a direct or indirect financial interest in any party or in the outcome of the arbitration, as grounds to vacate an arbitration award.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF 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: (2011-2012) A7002-C Amend and recommit to judiciary; print number 7002C (2013-2014) A4789 Amend and recommit to judiciary   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: None   EFFECTIVE DATE: Immediately
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A06637 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          6637
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                     March 10, 2017
                                       ___________
 
        Introduced  by  M.  of  A. TITONE, COLTON, GOTTFRIED, BRONSON, LAVINE --
          Multi-Sponsored by -- M. of A. ABINANTI, COOK, MONTESANO -- read  once
          and referred 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:
 
     1    Section  1.  Article 75 of the civil practice law and rules is amended
     2  by adding a new section 7500 to read as follows:
     3    § 7500. Definitions. As used in this article:
     4    (a) "Arbitration" means a form of dispute resolution that is an alter-
     5  native to litigation, in which the parties agree  to  be  bound  by  the
     6  determination of a neutral third party arbitrator.
     7    (b)  "Neutral  third party arbitrator" means an arbitrator or panel of
     8  arbitrators each of whom does not have an undisclosed known, direct, and
     9  material interest in the outcome of  the  arbitration  proceeding  or  a
    10  known,  existing, and substantial relationship with a party, counsel, or
    11  representative of a party.
    12    § 2. Section 7501 of the civil practice law and rules, as  amended  by
    13  chapter 532 of the laws of 1963, is amended to read as follows:
    14    §  7501.  Effect  of  arbitration  agreement.   A written agreement to
    15  submit any controversy thereafter arising or any existing controversy to
    16  arbitration is enforceable without regard to the  justiciable  character
    17  of  the  controversy and confers jurisdiction on the courts of the state
    18  to enforce it and to enter judgment on an award; provided, however, that
    19  any language requiring the controversy be submitted to an arbitrator  or
    20  arbitration  organization  that is not a neutral third party arbitrator,
    21  as that term is defined  in  subdivision  (b)  of  section  seventy-five
    22  hundred of this article, shall be deemed void; provided that it shall be
    23  valid  with  respect  to  the  requirement that the controversy be arbi-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD09174-01-7

        A. 6637                             2
 
     1  trated. The requirement that the controversy be heard by a neutral third
     2  party arbitrator may not be waived by party prior to the service on such
     3  party of a demand for arbitration. Upon disclosure pursuant  to  section
     4  seventy-five  hundred  five-a  of  this  article of a known, direct, and
     5  material interest in the outcome of  the  arbitration  proceeding  or  a
     6  known  existing  and  substantial relationship with a party, counsel, or
     7  representative of a party, a party shall be deemed to  have  waived  any
     8  objection  to the arbitrator or composition of any arbitration panel, by
     9  failing to raise same prior to the commencement of the arbitration hear-
    10  ing.  In determining any matter arising under this  article,  the  court
    11  shall  not  consider whether the claim with respect to which arbitration
    12  is sought is tenable, or otherwise pass upon the merits of the dispute.
    13    § 3. The civil practice law and rules  is  amended  by  adding  a  new
    14  section 7505-a to read as follows:
    15    §  7505-a. Disclosure by arbitrator. (a) Before accepting appointment,
    16  an individual who is requested to serve as an arbitrator, after making a
    17  reasonable inquiry, shall disclose to all parties to  the  agreement  to
    18  arbitrate  and  the  arbitration proceeding and to any other arbitrators
    19  any known facts that a reasonable person would consider likely to affect
    20  the impartiality  of  the  arbitrator  in  the  arbitration  proceeding,
    21  including:
    22    (1) a financial or personal interest in the outcome of the arbitration
    23  proceeding; and
    24    (2)  an  existing  or past relationship with any of the parties to the
    25  agreement to arbitrate or the arbitration proceeding, their  counsel  or
    26  representatives, a witness, or another arbitrator.
    27    (b)  An  arbitrator  has  a  continuing  obligation to disclose to all
    28  parties to the agreement to arbitrate and the arbitration proceeding and
    29  to any other arbitrators any facts  that  the  arbitrator  learns  after
    30  accepting appointment which a reasonable person would consider likely to
    31  affect the impartiality of the arbitrator.
    32    (c)  If  an arbitrator discloses a fact required by subdivision (a) or
    33  (b) of this section to be disclosed and a party timely  objects  to  the
    34  appointment  or  continued service of the arbitrator based upon the fact
    35  disclosed, the objection may be a ground for vacating an award  made  by
    36  the arbitrator.
    37    (d)  If the arbitrator did not disclose a fact as required by subdivi-
    38  sion (a) or (b) of this section, upon timely objection by a  party,  the
    39  court may vacate an award.
    40    (e)  An  arbitrator  appointed  as  a  neutral arbitrator who does not
    41  disclose a known, direct, and material interest in the  outcome  of  the
    42  arbitration  proceeding  or a known, existing, and substantial relation-
    43  ship with a party is presumed to act with evident partiality.
    44    § 4. This act shall take effect immediately.
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