Bill Text: NY A03337 | 2019-2020 | General Assembly | Introduced


Bill Title: 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.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced) 2019-02-28 - advanced to third reading cal.76 [A03337 Detail]

Download: New_York-2019-A03337-Introduced.html


                STATE OF NEW YORK
        ________________________________________________________________________
                                          3337
                               2019-2020 Regular Sessions
                   IN ASSEMBLY
                                    January 29, 2019
                                       ___________
        Introduced  by  M.  of A. DINOWITZ, GOTTFRIED, SEAWRIGHT, STIRPE -- 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-
    24  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

        A. 3337                             2
     1  party arbitrator may not be waived by party prior to the service on such
     2  party  of  a demand for arbitration. Upon disclosure pursuant to section
     3  seventy-five hundred five-a of this article  of  a  known,  direct,  and
     4  material  interest  in  the  outcome  of the arbitration proceeding or a
     5  known existing and substantial relationship with a  party,  counsel,  or
     6  representative  of  a  party, a party shall be deemed to have waived any
     7  objection to the arbitrator or composition of any arbitration panel,  by
     8  failing to raise same prior to the commencement of the arbitration hear-
     9  ing.    In  determining any matter arising under this article, the court
    10  shall not consider whether the claim with respect to  which  arbitration
    11  is sought is tenable, or otherwise pass upon the merits of the dispute.
    12    §  3.  The  civil  practice  law  and rules is amended by adding a new
    13  section 7505-a to read as follows:
    14    § 7505-a. Disclosure by arbitrator. (a) Before accepting  appointment,
    15  an individual who is requested to serve as an arbitrator, after making a
    16  reasonable  inquiry,  shall  disclose to all parties to the agreement to
    17  arbitrate and the arbitration proceeding and to  any  other  arbitrators
    18  any known facts that a reasonable person would consider likely to affect
    19  the  impartiality  of  the  arbitrator  in  the  arbitration proceeding,
    20  including:
    21    (1) a financial or personal interest in the outcome of the arbitration
    22  proceeding; and
    23    (2) an existing or past relationship with any of the  parties  to  the
    24  agreement  to  arbitrate or the arbitration proceeding, their counsel or
    25  representatives, a witness, or another arbitrator.
    26    (b) An arbitrator has a  continuing  obligation  to  disclose  to  all
    27  parties to the agreement to arbitrate and the arbitration proceeding and
    28  to  any  other  arbitrators  any  facts that the arbitrator learns after
    29  accepting appointment which a reasonable person would consider likely to
    30  affect the impartiality of the arbitrator.
    31    (c) If an arbitrator discloses a fact required by subdivision  (a)  or
    32  (b)  of  this  section to be disclosed and a party timely objects to the
    33  appointment or continued service of the arbitrator based upon  the  fact
    34  disclosed,  the  objection may be a ground for vacating an award made by
    35  the arbitrator.
    36    (d) If the arbitrator did not disclose a fact as required by  subdivi-
    37  sion  (a)  or (b) of this section, upon timely objection by a party, the
    38  court may vacate an award.
    39    (e) An arbitrator appointed as  a  neutral  arbitrator  who  does  not
    40  disclose  a  known,  direct, and material interest in the outcome of the
    41  arbitration proceeding or a known, existing, and  substantial  relation-
    42  ship with a party is presumed to act with evident partiality.
    43    § 4. This act shall take effect immediately.
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