Relates to the notice of intention to arbitrate

BILL NUMBER:S6650

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 [1971]; 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.