The New York State Senate

                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  8710

                            I N  S E N A T E

                              May 10, 2018
                               ___________

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
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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets

                      [ ] is old law to be omitted.
                                                           LBD09174-01-7

S. 8710                             2

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.