S T A T E O F N E W Y O R K
________________________________________________________________________
8191
2015-2016 Regular Sessions
I N A S S E M B L Y
June 11, 2015
___________
Introduced by M. of A. TITONE -- read once and referred 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. The civil practice law and rules is amended by adding a new
section 7500 to read as follows:
S 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.
S 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:
S 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
PARTY ARBITRATOR MAY NOT BE WAIVED BY PARTY PRIOR TO THE SERVICE ON SUCH
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD11404-02-5
A. 8191 2
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.
SUCH ARBITRATION SHALL BE CONDUCTED BY A NEUTRAL THIRD PARTY ARBITRA-
TOR UNDER REGULATIONS ESTABLISHED BY THE ATTORNEY GENERAL. APPOINTMENT
OF AN ARBITRATOR SHALL ENSURE THE PERSONAL OBJECTIVITY OF ITS ARBITRA-
TORS AND THE RIGHT OF EACH PARTY TO PRESENT ITS CASE, TO BE IN ATTEND-
ANCE DURING ANY PRESENTATION MADE BY THE OTHER PARTY AND TO REBUT OR
REFUTE SUCH PRESENTATION.
S 3. The civil practice law and rules is amended by adding a new
section 7505-a to read as follows:
S 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.
S 4. Section 7506 of the civil practice law and rules is amended to
read as follows:
S 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-
A. 8191 3
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
INTRODUCE AN EXPERT WITNESS AT THE HEARING, THE IDENTITY OF THE EXPERT
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 attorney.
PERSONS HAVING A DIRECT INTEREST IN THE ARBITRATION ARE ENTITLED TO
ATTEND HEARINGS. 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.
S 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:
S 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) THE AWARD SHALL STATE THE ISSUES IN DISPUTE AND SHALL CONTAIN THE
ARBITRATOR'S FINDINGS OF FACT AND CONCLUSIONS 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 notifies the arbitrator in writing of
his objection prior to the delivery of the award to him OR HER.
(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 6. Subparagraph (iv) of paragraph 1 of subdivision (b) of section
7511 of the civil practice law and rules is amended and two new subpara-
graphs (v) and (vi) are 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) WHERE THE ARBITRATOR WAS GUILTY OF MISCONDUCT IN REFUSING TO POST-
PONE THE HEARING, UPON SUFFICIENT CAUSE SHOWN, OR IN REFUSING TO HEAR
EVIDENCE PERTINENT AND MATERIAL TO THE CONTROVERSY; OR OF ANY OTHER
MISBEHAVIOR BY WHICH THE RIGHTS OF ANY PARTY HAVE BEEN PREJUDICED; OR
(VI) THE ARBITRATOR EVIDENCED A MANIFEST DISREGARD OF THE LAW IN
RENDERING THE AWARD.
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S 7. The civil practice law and rules is amended by adding three new
sections 7515, 7516 and 7517 to read as follows:
S 7515. PROHIBITED PREDISPUTE ARBITRATION AGREEMENTS. (A) THE TERM
"CONSUMER DISPUTE" MEANS A DISPUTE BETWEEN AN INDIVIDUAL WHO SEEKS OR
ACQUIRES REAL OR PERSONAL PROPERTY, SERVICES (INCLUDING SERVICES RELAT-
ING TO SECURITIES AND OTHER INVESTMENTS), MONEY, OR CREDIT FOR PERSONAL,
FAMILY, OR HOUSEHOLD PURPOSES AND THE SELLER OR PROVIDER OF SUCH PROPER-
TY, SERVICES, MONEY, OR CREDIT;
(B) 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 3 OF THE FAIR LABOR STANDARDS ACT OF 1938 (29 U.S.C.
203); AND
(C) 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.
(D) NOTWITHSTANDING ANY OTHER PROVISION OF THIS ARTICLE, NO PREDISPUTE
ARBITRATION AGREEMENT SHALL BE VALID OR ENFORCEABLE IF IT REQUIRES ARBI-
TRATION OF AN EMPLOYMENT DISPUTE, CONSUMER DISPUTE, ANTITRUST DISPUTE,
OR CIVIL RIGHTS DISPUTE.
S 7516. PROHIBITED PROVISIONS. (A) PROHIBITION OF EFFECT OF CERTAIN
ARBITRATION CLAUSES OR AGREEMENTS. FORCED ARBITRATION CLAUSES OR AGREE-
MENTS COVERING CONSUMERS AND EMPLOYEES ARE CONTRARY TO THE ESTABLISHED
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, FORCED ARBITRATION AGREEMENTS PREVENT EMPLOYEES
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 FORCED ARBITRATION AGREEMENTS
IN EMPLOYMENT AND CONSUMER CONTRACTS.
(B) PROHIBITION OF ARBITRATION CLAUSES IN INSURANCE AGREEMENTS. A
FORCED ARBITRATION AGREEMENT WITHIN OR PART OF ANY WRITTEN CONTRACT FOR
INSURANCE WITH A CONSUMER OR OTHER WRITTEN AGREEMENT INVOLVING THE
OFFERING OF INSURANCE TO A CONSUMER IS INVALID, UNENFORCEABLE, AND VOID.
ANY SUCH ARBITRATION AGREEMENT SHALL BE CONSIDERED SEVERABLE, AND ALL
OTHER PROVISIONS OF THE CONTRACT FOR INSURANCE SHALL REMAIN IN EFFECT
AND GIVEN FULL FORCE.
(C) PROHIBITION OF ARBITRATION CLAUSES IN EMPLOYMENT CONTRACTS FOR
WORKERS EXEMPTED FROM THE FEDERAL ARBITRATION ACT. A FORCED ARBITRATION
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.
(D) PROHIBITION OF ARBITRATION CLAUSES THAT ARE NOT GOVERNED BY FEDER-
AL LAW. ANY FORCED 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 7517. REQUIREMENTS. (A) ANY PRIVATE ENTITY THAT ADMINISTERS FIVE OR
MORE ARBITRATIONS A YEAR IN THIS STATE INVOLVING A CONSUMER OR EMPLOYEE
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SHALL COLLECT AND PUBLISH THE FOLLOWING INFORMATION ABOUT EACH OF ITS
ARBITRATIONS FOR AT LEAST FIVE YEARS AFTER THE ARBITRATION HAS
COMPLETED:
(1) THE NAMES OF THE PARTIES TO THE ARBITRATION;
(2) THE PARTY THAT FILED THE ARBITRATION CLAIM;
(3) THE TYPE OF DISPUTE INVOLVED, INCLUDING GOODS OR SERVICES, INSUR-
ANCE, CREDIT, DEBT COLLECTION, OR EMPLOYMENT;
(4) THE PREVAILING PARTY;
(5) WHETHER THE CONSUMER OR EMPLOYEE WAS REPRESENTED BY AN ATTORNEY;
(6) THE DATE THE COMPANY ADMINISTERING THE ARBITRATION RECEIVED THE
DEMAND FOR ARBITRATION, THE DATE THE ARBITRATOR WAS APPOINTED, AND THE
DATE OF THE ARBITRATION'S DISPOSITION;
(7) WHETHER THE ARBITRATION RESULTED IN AN IN-PERSON HEARING;
(8) WHETHER THE PARTIES PROVIDED EACH OTHER WITH ANY PRE-HEARING
DISCOVERY;
(9) THE AMOUNT OF THE CLAIM, THE AMOUNT OF THE AWARD, AND ANY OTHER
RELIEF GRANTED, IF ANY;
(10) THE NAME OF THE ARBITRATOR, HIS OR HER TOTAL FEE FOR THE CASE,
AND THE PERCENTAGE OF THE ARBITRATOR'S FEE PAID BY EACH PARTY; AND
(11) THE ARBITRATOR'S PROFESSIONAL AFFILIATIONS.
(B) INFORMATION PUBLISHED PURSUANT TO THIS SECTION SHALL BE UPDATED AT
LEAST QUARTERLY, AND MADE AVAILABLE TO THE PUBLIC IN A COMPUTER-SEARCHA-
BLE FORMAT, WHICH SHALL BE ACCESSIBLE AT THE WEBSITE OF THE PRIVATE
COMPANY ADMINISTERING THE ARBITRATIONS, IF ANY, AND ON PAPER UPON
REQUEST.
(C) NO PRIVATE COMPANY SHALL HAVE ANY LIABILITY FOR COLLECTING,
PUBLISHING, OR DISTRIBUTING THE INFORMATION IN ACCORD WITH THIS SECTION.
(D) THE PROVISIONS OF THIS SECTION SHALL NOT BE DEEMED TO REQUIRE THE
DISCLOSURE OF ANY INFORMATION NOT SPECIFICALLY REQUIRED TO BE DISCLOSED
PURSUANT TO SUBDIVISION (A) OF THIS SECTION.
S 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.
S 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.
S 10. This act shall take effect on the first of January next succeed-
ing the date on which it shall have become a law.