Proposed amendment to New York state legislation - vacating an arbitral award

Abby Cohen Smutny (Partner) and Lee A. Steven (Counsel), Leah Witters (Associate), White & Case LLP

A Bill (S.5798-2011) currently pending in the New York state legislature could amend a relevant arbitration provision found in the New York Civil Practice and Rules, which provides grounds for vacating an arbitral award.

Article 75(b)(ii) of Section 7511 of the New York Civil Practice and Rules currently allows an award to be vacated when a "court finds the rights of [a] party were prejudiced by partiality of an arbitrator appointed as a neutral." The proposed amendment in the Bill (S.5798-2011) would add grounds to vacate an award when an "arbitrator has been affiliated with any party or has a direct or indirect financial interest in any party or in the outcome of the arbitration." The proposed amendment is intended to "enforce the original intent of the law" by ensuring that disputes are resolved by neutral third parties. This would promote the goals of arbitration, namely, efficiency and fairness.

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