BILL NUMBER: S8201A
SPONSOR: HOYLMAN-SIGAL
 
TITLE OF BILL:
An act to amend the civil practice law and rules, in relation to arbi-
tration
 
SUMMARY OF PROVISIONS:,
Section 1: amends CPLR 7502 to add subdivision 5 to read: (v) If there
are multiple parties seeking arbitration against the same party or
parties, the proceeding may be brought in any court and county where any
of the parties seeking arbitration resides or is doing business or where
the arbitration was held or is pending.
Section 2: CPLR 7503 Amend subdivision c to read:
(c) Notice of intention to arbitrate. A party may serve upon another
party a demand for arbitration or a notice of intention to arbitrate,
specifying the agreement pursuant to which arbitration is sought and the
name and address of the party serving the notice, or of an officer or
agent thereof if such party is an association or corporation, and stat-
ing that unless the party served applies to stay the arbitration within
twenty days after such service he shall thereafter be precluded from
objecting that a valid agreement was not made or has not been complied
with and from asserting in court the bar of a limitation of time. Such
notice or demand shall be served in the same manner as a summons or by
registered or certified mail, return receipt requested. An application
to stay arbitration must be made by the party served within twenty days
after service upon him of the notice or demand, or he shall be so
precluded. Notice of such application shall be served in the same manner
as a summons or by registered or certified mail, return receipt
requested. Service of the application may be made upon the adverse
party, or upon his attorney if the attorney's name appears on the demand
for arbitration or the notice of intention to arbitrate. S ervice of the
application by mail shall be timely if such application is posted within
the prescribed period. Any provision in an arbitration agreement or
arbitration rules which waives the right to apply for a stay of arbi-
tration or prescribes a manner of notifying a party of an intention to
Commence arbitration that is more burdensome than that described in this
Section is hereby declared null and void.
Section 3: CPLR 7506 Amend subdivision d to read
(d)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. Any agreement
Which discriminates against or penalizes a party for retaining the
Services of counsel in an arbitration is null and void.
Section 4: The CPLR is amended by adding 3 new sections 7513a & 7513b
and 7517 to read
7513-A. Fees and expenses of arbitration initiation (a)(1) In an employ-
ment or consumer arbitration that requires, either expressly or through
application of state or federal law or the rules of the arbitration
provider, the drafting party to pay certain fees and costs before the
arbitration can proceed, if the fees or costs to initiate an arbitration
proceeding are not paid within 30 days after the due date the drafting
party is in material breach of the arbitration agreement, is in default
of the arbitration, and waives its right to compel arbitration.
(2) After an employee or consumer meets the filing requirements neces-
sary to initiate an arbitration, the arbitration provider shall imme-
diately provide an invoice for any fees and costs required before the
arbitration can proceed to all of the parties to the arbitration. The
invoice shall be provided in its entirety, shall state the full amount
owed and the date that payment is due, and shall be sent to all parties
by the same means on the same day. To avoid delay, absent an express
provision in the arbitration agreement stating the number of days in
which the parties to the arbitration must pay any required fees or
costs, the arbitration provider shall issue all invoices to the parties
as due upon receipt.
(b) If the drafting party materially breaches the arbitration agreement
and is in default under subdivision (a), the employee or consumer may do
either of the following:
(1) Withdraw the claim from arbitration and proceed in a court of appro-
priate jurisdiction.
(2) Compel arbitration in which the drafting party shall pay reasonable
attorney's fees and costs related to the arbitration.
(c) If the employee or consumer withdraws the claim from arbitration and
proceeds with an action in a court of appropriate jurisdiction under
paragraph (1) of subdivision (b), the statute of limitations with regard
to all claims brought or that relate back to any claim brought in arbi-
tration shall be tolled as of the date of the first filing of a claim in
a court, arbitration forum, or other dispute resolution forum.
(d) If the employee or consumer proceeds with an action in a court of
appropriate jurisdiction, the court shall impose sanctions on the draft-
ing party in accordance with Section TKTK.
7513-B. Fees and expenses of arbitration continuance
(a)(1) In an employment or consumer arbitration that requires, either
expressly or through application of state or federal law or the rules of
the arbitration provider, that the drafting party pay certain fees and
costs during the pendency of an arbitration proceeding, if the fees or
costs required to continue the arbitration proceeding are not paid with-
in 30 days after the due date, the drafting party is in material breach
of the arbitration agreement, is in default of the arbitration, and
waives its right to compel the employee or consumer to proceed with that
arbitration as a result of the material breach. This excludes arbi-
tration agreements included in the terms of a collective bargaining
agreement.
(2) The arbitration provider shall provide an invoice for any fees and
costs required for the arbitration proceeding to continue to all of the
parties to the arbitration. The invoice shall be provided in its entire-
ty, shall state the full amount owed and the date that payment is due,
and shall be sent to all parties by the same means on the same day. To
avoid delay, absent an express provision in the arbitration agreement
stating the number of days in which the parties to the arbitration must
pay any required fees or costs, the arbitration provider shall issue all
invoices to the parties as due upon receipt. Any extension of time for
the due date shall be agreed upon by all parties.
(b) If the drafting party materially breaches the arbitration agreement
and is in default under subdivision (a), the employee or consumer may
unilaterally elect to do any of the following:
(1) Withdraw the claim from arbitration and proceed in a court of appro-
priate jurisdiction. If the employee or consumer withdraws the claim
from arbitration and proceeds with an action in a court of appropriate
jurisdiction, the statute of limitations with regard to all claims
brought or that relate back to any claim brought in arbitration shall be
tolled as of the date of the first filing of a claim in any court, arbi-
tration forum, or other dispute resolution forum.
(2) Continue the arbitration proceeding, if the arbitration provider
agrees to continue administering the proceeding, notwithstanding the
drafting party's failure to pay fees or costs. The neutral arbitrator or
arbitration provider may institute a collection action at the conclusion
of the arbitration proceeding against the drafting party that is in
default of the arbitration for payment of all fees associated with the
employment or consumer arbitration proceeding, including the cost of
administering any proceedings after the default.
(3) Petition the court for an order compelling the drafting party to pay
all arbitration fees that the drafting party is obligated to pay under
the arbitration agreement or the rules of the arbitration provider.
(4) Pay the drafting party's fees and proceed with the arbitration
proceeding. As part of the award, the employee or consumer shall recover
all arbitration fees paid on behalf of the drafting party without regard
to any findings on the merits in the underlying arbitration.
(c) If the employee or consumer withdraws the claim. from arbitration
and proceeds in a court of appropriate jurisdiction pursuant to para-
graph (1) of subdivision (b), both of the following apply:
(1) The employee or consumer may bring a motion, or a separate action,
to recover all attorney's fees and all costs associated with the aban-
doned arbitration proceeding. The recovery of arbitration fees, inter-
est, and related attorney's fees shall be without regard to any findings
on the merits in the underlying action or arbitration.
(2) The court shall impose sanctions on the drafting party in accordance
with this chapter.
(d) If the employee or consumer continues in arbitration pursuant to
paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator
shall impose appropriate sanctions on the drafting party, including
monetary sanctions, issue sanctions, evidence sanctions, or terminating
sanctions. 7517. Breach of arbitration agreement
(a) The court shall impose a monetary sanction against a drafting party
that materially breaches an arbitration agreement, by ordering the
drafting party to pay the reasonable expenses, including attorney's fees
and costs, incurred by the employee or consumer as a result of the mate-
rial breach.
(b) In addition to the monetary sanction described in subdivision (a),
the court may order any of the following sanctions against a drafting
party that materially breaches an arbitration agreement, unless the
court finds that the one subject to the sanction acted with substantial
justification or that other circumstances make the imposition of the
sanction unjust.
(1) An evidence sanction by an order prohibiting the drafting party from
conducting discovery in the civil action.
(2) A terminating sanction by one of the following orders:
(A) An order striking out the pleadings or parts of the pleadings of the
drafting party.
(B) An order rendering a judgment by default against the drafting party.
(3) A contempt sanction by an order treating the drafting party as in
contempt of court.
 
JUSTIFICATION:
This bill would make it mandatory for. companies to pay their fair share
of arbitration fees. Arbitration is stalled when companies with mandato-
ry arbitration clauses do not pay the fees necessary to move forward.
This bill will penalize companies who default on arbitration filing
fees. This bill is necessary to protect consumers.
 
LEGISLATIVE HISTORY:
New Bill
 
FISCAL IMPLICATIONS:
None to the state.

Statutes affected:
S8201: 7502 civil practice law, 7503 civil practice law, 7506 civil practice law
S8201A: 7502 civil practice law, 7503 civil practice law, 7506 civil practice law