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.

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S5798-2011 Actions

• Jan 4, 2012: REFERRED TO JUDICIARY
• Jun 16, 2011: REFERRED TO RULES

S5798-2011 Memo

BILL NUMBER:S5798

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.

S5798-2011 Text

                      S T A T E   O F   N E W   Y O R K
  ________________________________________________________________________

                                    5798

                         2011-2012 Regular Sessions

                              I N  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