What's happening
This bill allows arbitration awards in New York to be vacated if the arbitrator shows a manifest disregard of the law.
Why it matters
Expands Judicial Oversight. By allowing courts to vacate arbitration awards for "manifest disregard of the law," the bill increases judicial oversight over arbitration, potentially making arbitration outcomes more accountable to established legal standards.
Protects Against Arbitrator Error. This change gives parties in arbitration an added safeguard if an arbitrator blatantly ignores or misapplies clear legal principles, helping ensure that arbitration is not used to circumvent important legal rights.
May Impact Arbitration’s Finality. Introducing this ground for vacatur could make arbitration awards more susceptible to court challenges, possibly undermining the traditional speed and finality that make arbitration attractive for resolving disputes.
Aligns State Law with Federal Trends. The proposed amendment echoes language used in federal courts, potentially harmonizing New York’s arbitration law with broader interpretations and expectations about arbitrator conduct and the enforceability of awards.
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Who cares
Headline styles
Let Courts Overturn Bad Arbitration
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Referred to codes
- Referred to codes
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Let Courts Void Unlawful Arbitration
In Senate Committee · Codes · Sponsor Helene Weinstein
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
6060
2017-2018 Regular Sessions
IN SENATE
May 10, 2017
Introduced by Sen. AVELLA -- read twice and ordered printed, and when printed to be committed to the Committee on Codes
AN ACT to amend the civil practice law and rules, in relation to vacating arbitration awards on the basis of arbitrator disregard of the law
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subparagraph (iv) of paragraph 1 of subdivision (b) of section 7511 of the civil practice law and rules is amended and a new subparagraph (v) is added to read as follows:
(iv) failure to follow the procedure of this article, unless the party applying to vacate the award continued with the arbitration with notice of the defect and without objection[.]; or
(v) the arbitrator evidenced a manifest disregard of the law in rendering the award.
§ 2. This act shall take effect on the one hundred eightieth day after it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02866-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the civil practice law and rules, in relation to vacating arbitration awards on the basis of arbitrator disregard of the law
Purpose of bill
To permit an arbitration award to be vacated as a result of an arbitrator's manifest disregard of the law.
Summary of provisions of bill
This bill would add a new subdivision to CPLR 7511, which would permit an arbitration award to be vacated due to arbitral manifest disregard of law.
Justification
Under existing law, an arbitration award can be vacated if "completely irrational", a high standard for the losing arbitral litigant to overcome. As noted by Professor Siegel, even an arbitrator's "manifest disregard of the law" is not a basis for vacating an award in New York State. New York Practice, Firth Edition, Sec. 602. While arbitration can be a useful tool for persons to settle disputes in a more timely and cost-effective way, such resolutions should not be totally divorced from applicable standards of law.
Thus, a measured and prudent way in which arbitrators should be required to reasonably follow applicable legal standards in resolving disputes would be permit awards to be vacated if arbitrators evidence a "manifest disregard of the law".
This standard has been used in federal practice for many years as a basis to vacate arbitration awards. In fact, the Circuit Court of Appeals, Second Circuit has well-honed this standard as follows: "...first, whether the governing law alleged to have been ignored by the arbitrators was well defined, explicit, and clearly applicable, and, second, whether the arbitrator knew about the existence of a clearly governing legal principle but decided to ignore it or pay no attention to it". internal citations omitted Schwartz v. Merrill Lynch & Co., Inc., 665 F. 3d 444 (2011).
In setting such a clear standard of law for the vacating of arbitration awards, this bill would provide greater clarity to the Courts in determining whether an award would be subject to vacatur due to failure to follow applicable law. Such a standard would also compel arbitrators to make a good faith and reasonable attempt to follow provisions of substantive law, which they presently are not required to do.
Legislative history
2017: A.1370 (Weinstein) 2016: A.9993 (Weinstein)
Fiscal implications for state and local governments
None.
Effective date
This bill shall take effect on the one hundred eightieth day after it shall become law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.