BILL NUMBER: S86
SPONSOR: SEPULVEDA
 
TITLE OF BILL:
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
 
PURPOSE:
To clarify the intent and protect the purpose of the existing laws
regarding arbitration by creating a definition of the term arbitration.
 
SUMMARY OF PROVISIONS:
Section One amends Article 75 Civil Practice Law and Rules by adding a
new section 7500 allowing for arbitration as an alternative to liti-
gation. Subdivision (b)of Section 7500 defines a neutral third party
arbitrator.
Section two amends Section 7501 CPLR which adds the fact that if an
arbitrator has been affiliated with any party or has a direct or indi-
rect financial interest in any party or in the outcome of the arbi-
tration, has grounds to vacate an arbitration award.
Section 3 amends civil practice law and rules by adding a new Section
7505-a requiring disclosure by the arbitrator prior to accepting their
appointment.
Section 4 sets the act to take effect immediately after it is signed
into law.
 
JUSTIFICATION:
The public policy in favor of arbitration which is codified in Section
7501 of the Civil Practice Law and Rules, is based upon the fact that
arbitration can be a more efficient and cost-effective method for
parties to resolve disputes. The presumption that an arbitration clause
is enforceable has, however, become a sword to wield against parties of
lesser means rather than a shield to protect against unnecessary liti-
gation. Currently, a party must prove, either during the course of
misconduct by the arbitrator or after an award by an arbitrator is
perceived to be unfair, that the arbitrator was biased even if the arbi-
trator clearly has an economic stake in the outcome of the dispute. This
outcome is in direct opposition to the reasons (efficiency and fairness)
why arbitration is favored. As arbitration is commonly thought to be a
dispute resolution procedure that occurs in front of a neutral third
party, codifying it as such will enforce the original intent of the law.
 
LEGISLATIVE HISTORY:
S.461 of 2023-24; Referred to Judiciary;
S.2100 of 2021-22, Referred to Judiciary;
S.5669 of 2019-20, Referred to Judiciary;
S.8710 of 2018, Referred to Judiciary;
A.6637 of 2017, Referred to Judiciary;
A.2742 of 2015-16, Referred to Judiciary;
A.4789 of 2013-14, Referred to Judiciary;
A.7002-C of 2011-12, Referred to Judiciary
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
Immediately.