Senate Bill S5669

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5669
 
                        2019-2020 Regular Sessions
 
                             I N  S E N A T E
 
                               May 10, 2019
                                ___________
 
 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
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD07683-01-9

 S. 5669                             2
 
 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
 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.