Relates to the notice of intention to arbitrate.
TITLE OF BILL: An act to amend the civil practice law and rules, in relation to the notice of intention to arbitrate
This is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of her Advisory Committee on Civil Practice.
This measure would amend subdivision (c) of CPLR 7503, which presently provides for the service of a demand for arbitration or notice of intention to arbitrate, and the time in which to object to arbitrability. The notice requirement specifies that unless a party served with a demand applies to stay the arbitration within twenty days after service, such party shall thereafter be precluded from challenging the agreement to arbitrate or from asserting in court the bar of the statute of limitations. This measure would extend this twenty-day time period to thirty days.
The service of a demand for arbitration may be done in the manner of a summons, but also by registered or certified mail, return receipt requested. The requirement under 7503(c) that the application must be made "within twenty days after service" has been interpreted to mean receipt by the respondent in the arbitration. (Knickerbocker Insurance Co. v. Gilbert, 28 NY2d 57, 66 ; Prudential Securities Inc. v. Warsh, 214 AD2d [2d Dept 1995]). Nevertheless, particularly in cases where there may be a genuine dispute regarding the existence or scope of the agreement to arbitrate, or where documentary evidence of same must be obtained, the twenty day time period can be unreasonably short, and raise difficulties for a party with a legitimate objection to arbitration.
The public policy in favor of arbitration is strong, and the twenty day period advances the objective of a swift and sure resolution of the arbitrability question. However, we believe that, on balance, extending the period of time from twenty to thirty days will ameliorate some legitimate difficulties of a party with a valid objection to arbitration, and at the same time not unreasonably affect the policy in favor of swift resolution of arbitration disputes.
This measure would have no fiscal impact on the State. It would take effect on the first of January next succeeding the date on which it shall become law and shall apply to all actions pending on such effective date or commenced on or after such effective date.
LEGISLATIVE HISTORY: None. New proposal.
STATE OF NEW YORK ________________________________________________________________________ 6650 IN SENATE March 8, 2012 ___________Introduced by Sen. BONACIC -- (at request of the Office of Court Admin- istration) -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the civil practice law and rules, in relation to the notice of intention to arbitrate THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Subdivision (c) of section 7503 of the civil practice law and rules, as amended by chapter 1028 of the laws of 1973, is amended to read as follows: (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]THIRTY days after such service [he]THE PARTY 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 limita- tion 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]THIRTY days after service upon [him]SUCH PARTY of the notice or demand, or [he]THE PARTY 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]SUCH PARTY'S attorney if the attorney's name appears on the demand for arbitration or the notice of intention to arbitrate. Service 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 is hereby declared null and void.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14024-01-2 S. 6650 2
S 2. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law and shall apply to all actions pending on such effective date or commenced on or after such effective date.