Source: https://blog.cpradr.org/2018/04/06/success-many-controversial-amendments-to-cplrs-article-75-on-arbitration-via-ny-state-2018-budget-bill-removed/
Timestamp: 2019-04-20 05:05:36+00:00

Document:
Via budget bill AB 9505 for fiscal year 2018-2019, the New York State (NYS) Assembly proposed several amendments to Article 75 of the NY Civil Practice Law & Rules (CPLR), rules governing arbitrations. AB 9505, print 9505c §§ 6-10, p.189-192 (Jan. 18, 2018).
In responses in late March, arbitral institutions, including CPR and AAA, as well as the New York State Bar Association’s Dispute Resolution Section and the New York City Bar Association’s Arbitration Committee and International Commercial Disputes Committee, issued comments about the proposed amendments to Article 75 of the CPLR, raising concerns and highlighting the expected negative impact on New York’s pro-arbitration reputation.
NY CPLR § 7507, as currently written, requires that an arbitration award must be in writing. The proposed amendments would have required that all arbitral awards “state the issues in dispute and contain the arbitrator’s findings of fact and conclusions of law.” at §8, p.191 lines 31-34. This proposal was criticized for importing litigation concepts – “findings of fact and conclusions of law” – incongruent with arbitration, creating additional cost and confusion. Moreover, parties in an arbitration, especially sophisticated ones, often do not seek formal court-like decisions, rather, “reasoned” awards and the freedom to design a process for the parties involved. The proposed amendment would have essentially rendered impossible creative and collaborative approaches to dispute resolution.
In proposed amendments to NY CPLR § 7511, the bill would have codified “manifest disregard of the law” of an arbitrator as additional grounds to vacate an award. Id at 9, p. 191 lines 51-52. Manifest disregard of the law is a highly controversial doctrine, and courts across the country have not considered it uniformly because it is often criticized as diminishing the finality of arbitration awards. Claudia Salomon, New York Vacates Arbitral Award with Manifest Disregard Doctrine, 258(25) N.Y. L.J. (Aug. 7, 2017) (available at http://bit.ly/2DL3vCq). New York courts have rarely used the “manifest disregard” standard, reflecting respect for the arbitral process and thereby maintaining New York State’s pro-arbitration reputation. Id.
Under the proposed amendments to NY CPLR § 7504, concerning the “appointment of an arbitrator,” the bill requires all arbitrators to be “non-neutral third-party arbitrator[s],” adding also that it was a non-waivable requirement. AB 9505 §6, p.190 lines 1-9. Would the common practice of party-selected arbitrators on a panel render the arbitrator “non-neutral”? What about choice for sophisticated parties desiring an expert to adjudicate? The core concerns were the lack of clarity concerning the definition of “neutrality” and the failure to respect the principle of party autonomy, a fundamental benefit of arbitration.
The Ways and Means Committee omitted the proposed amendments to Article 75 of the CPLR in its latest draft (9505d) on March 28, 2018 – a major victory for the New York arbitral community, which had cautioned that “considering amendments of this magnitude in the context of a budget bill does not provide the level of due process and scrutiny decades of New York arbitration practice deserves” and had urged the legislature to “allow a thorough review, hearings and an opportunity for public comment.” CPR, Comments on Sections 6-11 of New York Assembly Bill 9505 (Mar. 23, 2018)(available at https://bit.ly/2ElR9Rp); 2017 Bill Tracking NY A.B. 9505.
On March 29, 2018, the bill (without the above-referenced amendments) passed both floor votes in the NY State Senate and the NY State Assembly and is awaiting Governor Andrew Cuomo’s approval. AB 9505, §§ 6-10, p.189-192 (Jan. 18, 2018).
The entire bill – AB 9505 – in its latest form is available at: http://bit.ly/2pvMTcv.
Another piece of budget legislation to monitor is S7507-C/AB9507-C, which will impact the arbitration of sexual harassment claims. AB 9507, Part KK, Subpart B, §1, p.80-81, lines 22-54 (available at https://bit.ly/2uMRmxu).
The bill renders mandatory arbitration clauses in sexual harassment claims “null and void.” Id. at p. 80, line 52.
On March 30, 2018, S7507-C/AB9507-C also passed floor votes in the NY State Senate and the NY State Assembly and is currently before the Governor Cuomo. Id.
Governor Cuomo is expected to sign the bill into law. Vivian Wang, New York Rewrites Harassment Laws, but Some Say the Changes Fall Short, N.Y. Times (Mar. 30, 2018) (available at https://nyti.ms/2HfX11O).
The bill is a part of broader state proposal to address sexual harassment in the workplace. See Summary of the Assembly Recommended Changes to the Executive Budget, Legislative Reports, at 76 (Mar. 13, 2018) (available at https://bit.ly/2Hwt64p).
According to the National Conference of State Legislatures, NY’s move to address sexual harassment mirrors a larger effort nationally as “29 states have introduced [similar] sexual harassment bills in 2018.” Wang, supra.

References: § 7507
 §8
 § 7511
 § 7504
 §6
 §1