Bill Text: NY S08201 | 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 1-0)

Status: (Introduced) 2024-06-07 - COMMITTED TO RULES [S08201 Detail]

Download: New_York-2023-S08201-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         8201--A

                    IN SENATE

                                    January 12, 2024
                                       ___________

        Introduced  by Sen. HOYLMAN-SIGAL -- read twice and ordered printed, and
          when printed to be committed to the Committee on Judiciary --  commit-
          tee  discharged, bill amended, ordered reprinted as amended and recom-
          mitted to said committee

        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
    22  twenty days after service upon [him] such party of the notice or demand,
    23  or  [he]  such  party shall be so precluded.  Notice of such application
    24  shall be served in the same manner as a  summons  or  by  registered  or
    25  certified  mail,  return receipt requested.   Service of the application
    26  may be made upon the adverse party, or upon [his] such party's  attorney

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD10900-03-4

        S. 8201--A                          2

     1  if  the  attorney's  name  appears  on the demand for arbitration or the
     2  notice of intention to arbitrate. Service of  the  application  by  mail
     3  shall  be  timely  if  such  application is posted within the prescribed
     4  period.  Any  provision in an arbitration agreement or arbitration rules
     5  which waives the right to apply for a stay of arbitration or  prescribes
     6  a  manner  of  notifying a party of an intention to commence arbitration
     7  that is more burdensome than that described in this  section  is  hereby
     8  declared null and void.
     9    §  3.  Subdivision  (d)  of section 7506 of the civil practice law and
    10  rules is amended to read as follows:
    11    (d) Representation by attorney. A party has the right  to  be  repres-
    12  ented by an attorney and may claim such right at any time as to any part
    13  of  the  arbitration  or hearings which have not taken place. This right
    14  may not be waived. If a party is represented by an attorney,  papers  to
    15  be served on the party shall be served upon [his] such party's attorney.
    16  Any  agreement  which  discriminates  against  or  penalizes a party for
    17  retaining the services of counsel in an arbitration is null and void.
    18    § 4. The civil practice law and rules is amended by adding  three  new
    19  sections 7513-a, 7513-b and 7517 to read as follows:
    20    §  7513-a.  Fees and expenses of arbitration initiation. (a) (i) In an
    21  employment or consumer  arbitration,  except  an  arbitration  agreement
    22  included  in  the  terms  of  a  collective  bargaining  agreement, that
    23  requires, either expressly or through application of  state  or  federal
    24  law  or  the  rules of the arbitration provider, that the drafting party
    25  shall pay certain fees and costs before the arbitration can proceed,  if
    26  the  fees  or  costs  to initiate an arbitration proceeding are not paid
    27  within thirty days after the due date, the drafting party is in material
    28  breach of the arbitration agreement, is in default of  the  arbitration,
    29  and waives its right to compel arbitration.
    30    (ii)  After  an  employee  or  consumer  meets the filing requirements
    31  necessary to initiate an arbitration,  the  arbitration  provider  shall
    32  immediately  provide  an  invoice for any fees and costs required before
    33  the arbitration can proceed to all of the parties  to  the  arbitration.
    34  The  invoice  shall  be  provided  in its entirety, shall state the full
    35  amount owed and the date that payment is due, and shall be sent  to  all
    36  parties  by  the  same  means on the same day. To avoid delay, absent an
    37  express provision in the arbitration agreement  stating  the  number  of
    38  days  in which the parties to the arbitration must pay any required fees
    39  or costs, the arbitration provider  shall  issue  all  invoices  to  the
    40  parties as due upon receipt.
    41    (b)  If  the drafting party materially breaches the arbitration agree-
    42  ment and is in default  under  subdivision  (a)  of  this  section,  the
    43  employee or consumer may do either of the following:
    44    (i)  withdraw  the  claim  from  arbitration and proceed in a court of
    45  appropriate jurisdiction; or
    46    (ii) compel arbitration in which the drafting party shall pay  reason-
    47  able attorneys' fees and costs related to the arbitration.
    48    (c)  If  the employee or consumer withdraws the claim from arbitration
    49  and proceeds with an action in a court of competent  jurisdiction  under
    50  paragraph (i) of subdivision (b) of this section, the statute of limita-
    51  tions with regard to all claims brought or that relate back to any claim
    52  brought  in  arbitration  shall  be  tolled  as of the date of the first
    53  filing of a claim in a court, arbitration forum, or other dispute resol-
    54  ution forum.

        S. 8201--A                          3

     1    (d) If the employee or consumer proceeds with an action in a court  of
     2  competent jurisdiction, the court shall impose sanctions on the drafting
     3  party in accordance with this chapter.
     4    §  7513-b. Fees and expenses of arbitration continuance. (a) (i) In an
     5  employment or consumer  arbitration,  except  an  arbitration  agreement
     6  included  in  the  terms  of  a  collective  bargaining  agreement, that
     7  requires, either expressly or through application of  state  or  federal
     8  law  or  the  rules of the arbitration provider, that the drafting party
     9  shall pay certain fees and costs during the pendency of  an  arbitration
    10  proceeding,  if  the  fees or costs required to continue the arbitration
    11  proceeding are not paid within thirty  days  after  the  due  date,  the
    12  drafting party is in material breach of the arbitration agreement, is in
    13  default  of the arbitration, and waives its right to compel the employee
    14  or consumer to proceed with that arbitration as a result of the material
    15  breach.
    16    (ii) The arbitration provider shall provide an invoice  for  any  fees
    17  and  costs required for the arbitration proceeding to continue to all of
    18  the parties to the arbitration. The invoice shall  be  provided  in  its
    19  entirety,  shall state the full amount owed and the date that payment is
    20  due, and shall be sent to all parties by the same means on the same day.
    21  To avoid delay, absent an express provision in the arbitration agreement
    22  stating the number of days in which the parties to the arbitration  must
    23  pay any required fees or costs, the arbitration provider shall issue all
    24  invoices  to  the parties as due upon receipt. Any extension of time for
    25  the due date shall be agreed upon by all parties.
    26    (b) If the drafting party materially breaches the  arbitration  agree-
    27  ment  and  is  in  default  under  subdivision  (a) of this section, the
    28  employee or consumer may unilaterally elect to do any of the following:
    29    (i) withdraw the claim from arbitration and  proceed  in  a  court  of
    30  appropriate  jurisdiction.  If  the  employee  or consumer withdraws the
    31  claim from arbitration and proceeds with an action in a court of  appro-
    32  priate  jurisdiction,  the  statute  of  limitations  with regard to all
    33  claims brought or that relate back to any claim brought  in  arbitration
    34  shall  be  tolled  as  of the date of the first filing of a claim in any
    35  court, arbitration forum, or other dispute resolution forum;
    36    (ii) continue the arbitration proceeding, if the arbitration  provider
    37  agrees  to  continue  administering  the proceeding, notwithstanding the
    38  drafting party's failure to pay fees or costs. The neutral arbitrator or
    39  arbitration provider may institute a collection action at the conclusion
    40  of the arbitration proceeding against the  drafting  party  that  is  in
    41  default  of  the arbitration for payment of all fees associated with the
    42  employment or consumer arbitration proceeding,  including  the  cost  of
    43  administering any proceedings after the default;
    44    (iii) petition the court for an order compelling the drafting party to
    45  pay  all  arbitration  fees  that the drafting party is obligated to pay
    46  under the arbitration agreement or the rules of the arbitration  provid-
    47  er; or
    48    (iv)  pay  the  drafting party's fees and proceed with the arbitration
    49  proceeding. As part of the award, the employee or consumer shall recover
    50  all arbitration fees paid on behalf of the drafting party without regard
    51  to any findings on the merits in the underlying arbitration.
    52    (c) If the employee or consumer withdraws the claim  from  arbitration
    53  and  proceeds in a court of competent jurisdiction pursuant to paragraph
    54  (i) of subdivision (b) of this section,  both  of  the  following  shall
    55  apply:

        S. 8201--A                          4

     1    (i) the employee or consumer may bring a motion, or a separate action,
     2  to  recover  all attorneys' fees and all costs associated with the aban-
     3  doned arbitration proceeding. The recovery of arbitration  fees,  inter-
     4  est, and related attorneys' fees shall be without regard to any findings
     5  on the merits in the underlying action or arbitration; and
     6    (ii) the court shall impose sanctions on the drafting party in accord-
     7  ance with this chapter.
     8    (d)  If  the employee or consumer continues in arbitration pursuant to
     9  paragraph (ii), (iii) or (iv) of subdivision (b) of  this  section,  the
    10  arbitrator  shall  impose  appropriate  sanctions on the drafting party,
    11  including monetary sanctions, issue sanctions,  evidence  sanctions,  or
    12  terminating sanctions.
    13    §  7517.  Breach  of  arbitration  agreement; sanctions. (a) The court
    14  shall impose a monetary sanction against a  drafting  party  that  mate-
    15  rially  breaches  an arbitration agreement, except an arbitration agree-
    16  ment included in the terms of  a  collective  bargaining  agreement,  by
    17  ordering  the  drafting  party to pay the reasonable expenses, including
    18  attorneys' fees and costs, incurred by the employee  or  consumer  as  a
    19  result of the material breach.
    20    (b)  In addition to the monetary sanction described in subdivision (a)
    21  of this section, the court may order  any  of  the  following  sanctions
    22  against  a drafting party that materially breaches an arbitration agree-
    23  ment, unless the court finds that the  party  subject  to  the  sanction
    24  acted  with  substantial  justification or that other circumstances make
    25  the imposition of the sanction unjust:
    26    (i) an evidence sanction by an order prohibiting  the  drafting  party
    27  from conducting discovery in the civil action;
    28    (ii) a terminating sanction by one of the following orders:
    29    (1)  an  order striking out the pleadings or parts of the pleadings of
    30  the drafting party; or
    31    (2) an order rendering a judgment  by  default  against  the  drafting
    32  party; or
    33    (iii)  a  contempt sanction by an order treating the drafting party as
    34  in contempt of court.
    35    § 5. This act shall take effect immediately.
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