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.
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: Amends Article 75 Civil Practice Law and Rules by adding a provision to subdivision (b) (ii) of Section 7511 which adds the fact that an arbitrator has been affiliated with any party or has a direct or indirect financial interest in any party or in the outcome of the arbitration, as grounds to vacate an arbitration award.
EXISTING LAW: Requires an arbitrator to be neutral.
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 litigation.
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 arbitrator 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: New bill.
FISCAL IMPLICATIONS: None.
LOCAL FISCAL IMPLICATIONS: None.
EFFECTIVE DATE: Immediate.
STATE OF NEW YORK ________________________________________________________________________ 5798 2011-2012 Regular Sessions IN SENATE June 16, 2011 ___________Introduced by Sen. FUSCHILLO -- read twice and ordered printed, and when printed to be committed to the Committee on Rules 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. Subparagraph (ii) of paragraph 1 of subdivision (b) of section 7511 of the civil practice law and rules is amended to read as follows: (ii) partiality of an arbitrator appointed as a neutral, except where the award was by confession; OR WHERE THE ARBITRATOR HAS BEEN AFFILIATED IN ANY WAY WITH ANY PARTY TO THE ARBITRATION, OR ANY OF ITS SUBSIDIARIES OR AFFILIATES; OR WHERE THE ARBITRATOR HAS A FINANCIAL INTEREST, DIRECT- LY OR INDIRECTLY, IN ANY PARTY OR IN THE OUTCOME OF THE ARBITRATION; or S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD09411-05-1