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Bill No.: Summary Actions Committee&nbspVotes Floor&nbspVotes Memo Text LFIN Chamber&nbspVideo/Transcript S00086 Summary: BILL NO S00086A &nbsp SAME AS SAME AS A01219-A

&nbsp SPONSOR SEPULVEDA &nbsp COSPNSR &nbsp MLTSPNSR &nbsp Add Art 75 §7500, §7505-a, amd §7501, CPLR &nbsp Requires disclosure of possible conflicts of an arbitrator; 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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STATE OF NEW YORK ________________________________________________________________________

86--A

2025-2026 Regular Sessions

IN SENATE

(Prefiled)

January 8, 2025 ___________

Introduced by Sen. SEPULVEDA -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary -- recommitted to the Committee on Judiciary in accordance with Senate Rule 6, sec. 8 -- committee discharged, bill amended, ordered reprinted as amended and recommitted to said committee

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:

1 Section 1. Article 75 of the civil practice law and rules is amended 2 by adding a new section 7500 to read as follows: 3 § 7500. Definitions. As used in this article: 4 (a) "Arbitration" means the use of a decision-making forum conducted 5 by an arbitrator or panel of arbitrators within the meaning and subject 6 to the provisions of this article. 7 (b) "Neutral third party arbitrator" means an arbitrator who does not 8 have an undisclosed known, direct, and material interest in the outcome 9 of the arbitration proceeding or a known, existing, and substantial 10 relationship with a party, counsel, or representative of a party. 11 (c) "Employment" means a relationship between an employer and an 12 employee, as defined in section three of the Fair Labor Standards Act of 13 1938 (29 U.S.C. § 203) but who is neither an officer nor employed pursu- 14 ant to an individualized, mutually-negotiated employment contract. 15 (d) "Consumer" means a natural person residing in this state who is 16 involved in a consumer dispute. 17 (e) "Consumer dispute" means a dispute between an individual who seeks 18 or acquires real or personal property, services (including services 19 relating to securities and other investments), money, or credit for 20 personal, family or household purposes and the seller or provider of

EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00651-03-6

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1 such property, services, money or credit, but shall not include any such 2 property or service, including financial products and services where the 3 terms of acquisition of such product or service are mutually negotiated 4 between the seller and the purchaser of such property or service. 5 § 2. Section 7501 of the civil practice law and rules, as amended by 6 chapter 532 of the laws of 1963, is amended to read as follows: 7 § 7501. Effect of arbitration agreement. A written agreement to 8 submit any [ controversy ] employment or consumer dispute thereafter aris- 9 ing or [ any ] then existing [ controversy ] to arbitration is enforceable 10 without regard to the justiciable character of the controversy and 11 confers jurisdiction on the courts of the state to enforce it and to 12 enter judgment on an award ; provided, however, that, with the exception 13 of arbitrators designated pursuant to a collective bargaining agreement 14 between an employer and a labor organization and except where inconsist- 15 ent with federal law, any language requiring that such employment or 16 consumer dispute be submitted to an arbitrator or arbitration organiza- 17 tion that is not a neutral third-party arbitrator, as that term is 18 defined in subdivision (b) of section seventy-five hundred of this arti- 19 cle, shall be deemed void; provided that it shall be valid with respect 20 to the requirement that the controversy be arbitrated. In arbitrations 21 that are not governed by a collective bargaining agreement between a 22 labor organization and an employer the requirement that such employment 23 or consumer dispute be heard by a neutral third-party arbitrator may not 24 be waived by party prior to the service on such party of a demand for 25 arbitration. Upon disclosure pursuant to section seventy-five hundred 26 five-a of this article of a known, direct, and material interest in the 27 outcome of the arbitration proceeding or a known existing and substan- 28 tial relationship with a party, counsel, or representative of a party, a 29 party shall be deemed to have waived any objection to the arbitrator by 30 failing to raise same within thirty calendar days of receiving the 31 disclosure . In determining any matter arising under this article, the 32 court shall not consider whether the claim with respect to which arbi- 33 tration is sought is tenable, or otherwise pass upon the merits of the 34 dispute. 35 § 3. The civil practice law and rules is amended by adding a new 36 section 7505-a to read as follows: 37 § 7505-a. Disclosure by arbitrator. (a) Before accepting appointment 38 to any employment or consumer dispute, an individual who is requested to 39 serve as an arbitrator, after making a reasonable inquiry, shall 40 disclose to all parties to the agreement to arbitrate and the arbi- 41 tration proceeding and to any other arbitrators any known facts that a 42 reasonable person would consider likely to affect the impartiality of 43 the arbitrator in the arbitration proceeding, including: 44 (1) a financial or personal interest in the outcome of the arbitration 45 proceeding; and 46 (2) an existing or past relationship with any of the parties to the 47 agreement to arbitrate or the arbitration proceeding, their counsel or 48 representatives, a witness, or another arbitrator. 49 (b) An arbitrator has a continuing obligation to disclose to all 50 parties to the agreement to arbitrate and the arbitration proceeding and 51 to any other arbitrators any facts that the arbitrator learns after 52 accepting appointment which a reasonable person would consider likely to 53 affect the impartiality of the arbitrator. 54 (c) If an arbitrator discloses a fact required by subdivision (a) or 55 (b) of this section to be disclosed and a party timely objects to the 56 appointment or continued service of the arbitrator based upon the fact

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1 disclosed, the objection may be a ground for vacating an award made by 2 the arbitrator if the court holds that the arbitrator was partial as 3 provided for in section seventy-five hundred eleven of this article. 4 (d) If the arbitrator did not disclose a fact as required by subdivi- 5 sion (a) or (b) of this section, upon timely objection by a party after 6 discovery of such non-disclosure, the court may vacate an award based on 7 such non-disclosure if the court holds that the arbitrator was partial 8 as provided for in section seventy-five hundred eleven of this article. 9 (e) This section shall not apply to an arbitration proceeding 10 conducted pursuant to the terms of a collective bargaining agreement. 11 § 4. This act shall take effect immediately.

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