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A01370 Summary:

BILL NOA01370
 
SAME ASNo Same As
 
SPONSORWeinstein
 
COSPNSRTitone, Dinowitz, Seawright, Sepulveda, Colton, Abinanti
 
MLTSPNSRCahill
 
Amd 7511, CPLR
 
Authorizes the vacating of an arbitration award on the basis of arbitrator disregard of the law.
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A01370 Actions:

BILL NOA01370
 
01/11/2017referred to judiciary
04/24/2017reported
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A01370 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1370
 
SPONSOR: Weinstein (MS)
  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.   EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER: This bill would provide needed clarification to CPLR 7511 and the limit- ed circumstances under which an arbitration award may be vacated.   JUSTIFICATION: Under existing law, an arbitration award can be vacated if "completely irrational", a high standard for the losing arbitral litigant to over- come. 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, Fifth 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 deter- mining 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: 2016: A.9993 - PA   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.
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A01370 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1370
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 11, 2017
                                       ___________
 
        Introduced  by M. of A. WEINSTEIN, TITONE, DINOWITZ, SEAWRIGHT, SEPULVE-
          DA, COLTON, ABINANTI -- Multi-Sponsored by -- M. of A. CAHILL --  read
          once and referred to the Committee on Judiciary
 
        AN  ACT to amend the civil practice law and rules, in relation to vacat-
          ing arbitration awards on the basis of arbitrator disregard of the law

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1.  Subparagraph  (iv)  of  paragraph 1 of subdivision (b) of
     2  section 7511 of the civil practice law and rules is amended  and  a  new
     3  subparagraph (v) is added to read as follows:
     4    (iv) failure to follow the procedure of this article, unless the party
     5  applying  to vacate the award continued with the arbitration with notice
     6  of the defect and without objection[.]; or
     7    (v) the arbitrator evidenced  a  manifest  disregard  of  the  law  in
     8  rendering the award.
     9    § 2. This act shall take effect on the one hundred eightieth day after
    10  it shall have become a law.
 
 
 
 
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD02866-01-7
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