Bill Text: NY A06889 | 2023-2024 | General Assembly | Amended
Bill Title: Amends provisions of law governing arbitration proceedings; specifies fees and expenses with regard to employment or consumer arbitration proceedings; directs certain sanctions on a party which breaches an arbitration agreement.
Spectrum: Partisan Bill (Democrat 10-0)
Status: (Introduced) 2024-05-28 - reported referred to rules [A06889 Detail]
Download: New_York-2023-A06889-Amended.html
STATE OF NEW YORK ________________________________________________________________________ 6889--A 2023-2024 Regular Sessions IN ASSEMBLY May 8, 2023 ___________ Introduced by M. of A. LAVINE, WALLACE, KIM, STECK, HEVESI, SIMON, ZEBROWSKI, SIMONE, DINOWITZ, BURGOS -- read once and referred to the Committee on Judiciary -- recommitted to the Committee on Judiciary in accordance with Assembly Rule 3, sec. 2 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said commit- tee AN ACT to amend the civil practice law and rules, in relation to arbi- tration The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. Subdivision (a) of section 7502 of the civil practice law 2 and rules is amended by adding a new paragraph (v) to read as follows: 3 (v) If there are multiple parties seeking arbitration against the same 4 party or parties, the proceeding may be brought in any court and county 5 where any of the parties seeking arbitration resides or is doing busi- 6 ness or where the arbitration was held or is pending. 7 § 2. Subdivision (c) of section 7503 of the civil practice law and 8 rules, as amended by chapter 1028 of the laws of 1973, is amended to 9 read as follows: 10 (c) Notice of intention to arbitrate. A party may serve upon another 11 party a demand for arbitration or a notice of intention to arbitrate, 12 specifying the agreement pursuant to which arbitration is sought and the 13 name and address of the party serving the notice, or of an officer or 14 agent thereof if such party is an association or corporation, and stat- 15 ing that unless the party served applies to stay the arbitration within 16 twenty days after such service [he] such party shall thereafter be 17 precluded from objecting that a valid agreement was not made or has not 18 been complied with and from asserting in court the bar of a limitation 19 of time. Such notice or demand shall be served in the same manner as a 20 summons or by registered or certified mail, return receipt requested. An 21 application to stay arbitration must be made by the party served within EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD10900-02-4A. 6889--A 2 1 twenty days after service upon [him] such party of the notice or demand, 2 or [he] such party shall be so precluded. Notice of such application 3 shall be served in the same manner as a summons or by registered or 4 certified mail, return receipt requested. Service of the application 5 may be made upon the adverse party, or upon [his] such party's attorney 6 if the attorney's name appears on the demand for arbitration or the 7 notice of intention to arbitrate. Service of the application by mail 8 shall be timely if such application is posted within the prescribed 9 period. Any provision in an arbitration agreement or arbitration rules 10 which waives the right to apply for a stay of arbitration or prescribes 11 a manner of notifying a party of an intention to commence arbitration 12 that is more burdensome than that described in this section is hereby 13 declared null and void. 14 § 3. Subdivision (d) of section 7506 of the civil practice law and 15 rules is amended to read as follows: 16 (d) Representation by attorney. A party has the right to be repres- 17 ented by an attorney and may claim such right at any time as to any part 18 of the arbitration or hearings which have not taken place. This right 19 may not be waived. If a party is represented by an attorney, papers to 20 be served on the party shall be served upon [his] such party's attorney. 21 Any agreement which discriminates against or penalizes a party for 22 retaining the services of counsel in an arbitration is null and void. 23 § 4. The civil practice law and rules is amended by adding three new 24 sections 7513-a, 7513-b and 7517 to read as follows: 25 § 7513-a. Fees and expenses of arbitration initiation. (a) (i) In an 26 employment or consumer arbitration, except an arbitration agreement 27 included in the terms of a collective bargaining agreement, that 28 requires, either expressly or through application of state or federal 29 law or the rules of the arbitration provider, that the drafting party 30 shall pay certain fees and costs before the arbitration can proceed, if 31 the fees or costs to initiate an arbitration proceeding are not paid 32 within thirty days after the due date, the drafting party is in material 33 breach of the arbitration agreement, is in default of the arbitration, 34 and waives its right to compel arbitration. 35 (ii) After an employee or consumer meets the filing requirements 36 necessary to initiate an arbitration, the arbitration provider shall 37 immediately provide an invoice for any fees and costs required before 38 the arbitration can proceed to all of the parties to the arbitration. 39 The invoice shall be provided in its entirety, shall state the full 40 amount owed and the date that payment is due, and shall be sent to all 41 parties by the same means on the same day. To avoid delay, absent an 42 express provision in the arbitration agreement stating the number of 43 days in which the parties to the arbitration must pay any required fees 44 or costs, the arbitration provider shall issue all invoices to the 45 parties as due upon receipt. 46 (b) If the drafting party materially breaches the arbitration agree- 47 ment and is in default under subdivision (a) of this section, the 48 employee or consumer may do either of the following: 49 (i) withdraw the claim from arbitration and proceed in a court of 50 appropriate jurisdiction; or 51 (ii) compel arbitration in which the drafting party shall pay reason- 52 able attorneys' fees and costs related to the arbitration. 53 (c) If the employee or consumer withdraws the claim from arbitration 54 and proceeds with an action in a court of competent jurisdiction under 55 paragraph (i) of subdivision (b) of this section, the statute of limita- 56 tions with regard to all claims brought or that relate back to any claimA. 6889--A 3 1 brought in arbitration shall be tolled as of the date of the first 2 filing of a claim in a court, arbitration forum, or other dispute resol- 3 ution forum. 4 (d) If the employee or consumer proceeds with an action in a court of 5 competent jurisdiction, the court shall impose sanctions on the drafting 6 party in accordance with this chapter. 7 § 7513-b. Fees and expenses of arbitration continuance. (a) (i) In an 8 employment or consumer arbitration, except an arbitration agreement 9 included in the terms of a collective bargaining agreement, that 10 requires, either expressly or through application of state or federal 11 law or the rules of the arbitration provider, that the drafting party 12 shall pay certain fees and costs during the pendency of an arbitration 13 proceeding, if the fees or costs required to continue the arbitration 14 proceeding are not paid within thirty days after the due date, the 15 drafting party is in material breach of the arbitration agreement, is in 16 default of the arbitration, and waives its right to compel the employee 17 or consumer to proceed with that arbitration as a result of the material 18 breach. 19 (ii) The arbitration provider shall provide an invoice for any fees 20 and costs required for the arbitration proceeding to continue to all of 21 the parties to the arbitration. The invoice shall be provided in its 22 entirety, shall state the full amount owed and the date that payment is 23 due, and shall be sent to all parties by the same means on the same day. 24 To avoid delay, absent an express provision in the arbitration agreement 25 stating the number of days in which the parties to the arbitration must 26 pay any required fees or costs, the arbitration provider shall issue all 27 invoices to the parties as due upon receipt. Any extension of time for 28 the due date shall be agreed upon by all parties. 29 (b) If the drafting party materially breaches the arbitration agree- 30 ment and is in default under subdivision (a) of this section, the 31 employee or consumer may unilaterally elect to do any of the following: 32 (i) withdraw the claim from arbitration and proceed in a court of 33 appropriate jurisdiction. If the employee or consumer withdraws the 34 claim from arbitration and proceeds with an action in a court of appro- 35 priate jurisdiction, the statute of limitations with regard to all 36 claims brought or that relate back to any claim brought in arbitration 37 shall be tolled as of the date of the first filing of a claim in any 38 court, arbitration forum, or other dispute resolution forum; 39 (ii) continue the arbitration proceeding, if the arbitration provider 40 agrees to continue administering the proceeding, notwithstanding the 41 drafting party's failure to pay fees or costs. The neutral arbitrator or 42 arbitration provider may institute a collection action at the conclusion 43 of the arbitration proceeding against the drafting party that is in 44 default of the arbitration for payment of all fees associated with the 45 employment or consumer arbitration proceeding, including the cost of 46 administering any proceedings after the default; 47 (iii) petition the court for an order compelling the drafting party to 48 pay all arbitration fees that the drafting party is obligated to pay 49 under the arbitration agreement or the rules of the arbitration provid- 50 er; or 51 (iv) pay the drafting party's fees and proceed with the arbitration 52 proceeding. As part of the award, the employee or consumer shall recover 53 all arbitration fees paid on behalf of the drafting party without regard 54 to any findings on the merits in the underlying arbitration. 55 (c) If the employee or consumer withdraws the claim from arbitration 56 and proceeds in a court of competent jurisdiction pursuant to paragraphA. 6889--A 4 1 (i) of subdivision (b) of this section, both of the following shall 2 apply: 3 (i) the employee or consumer may bring a motion, or a separate action, 4 to recover all attorneys' fees and all costs associated with the aban- 5 doned arbitration proceeding. The recovery of arbitration fees, inter- 6 est, and related attorneys' fees shall be without regard to any findings 7 on the merits in the underlying action or arbitration; and 8 (ii) the court shall impose sanctions on the drafting party in accord- 9 ance with this chapter. 10 (d) If the employee or consumer continues in arbitration pursuant to 11 paragraph (ii), (iii) or (iv) of subdivision (b) of this section, the 12 arbitrator shall impose appropriate sanctions on the drafting party, 13 including monetary sanctions, issue sanctions, evidence sanctions, or 14 terminating sanctions. 15 § 7517. Breach of arbitration agreement; sanctions. (a) The court 16 shall impose a monetary sanction against a drafting party that mate- 17 rially breaches an arbitration agreement, except an arbitration agree- 18 ment included in the terms of a collective bargaining agreement, by 19 ordering the drafting party to pay the reasonable expenses, including 20 attorneys' fees and costs, incurred by the employee or consumer as a 21 result of the material breach. 22 (b) In addition to the monetary sanction described in subdivision (a) 23 of this section, the court may order any of the following sanctions 24 against a drafting party that materially breaches an arbitration agree- 25 ment, unless the court finds that the party subject to the sanction 26 acted with substantial justification or that other circumstances make 27 the imposition of the sanction unjust: 28 (i) an evidence sanction by an order prohibiting the drafting party 29 from conducting discovery in the civil action; 30 (ii) a terminating sanction by one of the following orders: 31 (1) an order striking out the pleadings or parts of the pleadings of 32 the drafting party; or 33 (2) an order rendering a judgment by default against the drafting 34 party; or 35 (iii) a contempt sanction by an order treating the drafting party as 36 in contempt of court. 37 § 5. This act shall take effect immediately.
