The Opaque World of Arbitration Might Soon Become Clearer in New York

The New York Legislature has two bills pending in the Assembly and Senate which would make public, for the first time, details of private arbitrations. A09769 and S07146, sponsored by Matthew Titone and Brian Kavanagh respectively, are both crafted to provide information related to private arbitrations to the public. Information such as:

· the name of the non-consumer party,

· the state and zip code in which the consumer party resided at the time of arbitration, the type of  

  dispute involved,

· whether the consumer was the prevailing party,

· on how many occasions, if any, the non-consumer party has previously been a party in an 

  arbitration or mediation administered by that same private arbitration organization,

· the date the private arbitration organization received the demand for arbitration,

· the date the arbitrator was appointed,

· the date of disposition by the arbitrator or private arbitration organization,

· the type of disposition of the dispute, if known,

· the amount of the claim,

· the amount of any award or settlement, and any other relief granted,

· the name of the arbitrator,

· the arbitrator's total fee for the case,

· and the percentage of the arbitrator's fee allocated to each party.

The bills also define and prohibit certain financial conflicts of interest. Recurring parties as paying customers to the arbitrators is not listed as a financial conflict of interest and still remains a concern for consumers. The bills do provide for private causes of action and civil penalties for violations. The New York Attorney General would enforce the provisions. Neither Bill is retroactive.

The Senate bill was referred to the Consumer Protection Committee, but has not moved. The Assembly bill, however, was referred to the Consumer Affairs and protection Committee and passed on March 6, 2018. Should one of these bills pass, the impact on private arbitration in favor of consumers would be significant. Currently, businesses can bind customers with an arbitration agreement, have multiple arbitration claims brought against them and other customers and the general public would never know. Under these bills, customers would have access to the arbitration history a specific business has with a particular arbitration company. Should this pass, given arbitration’s significant and increasing prevalence, it is likely other states will look into passing similar consumer protections in an effort to shed light on the currently opaque arbitration process.

While these bills seem to strive to protect consumers by making important information public, some may argue the bills go too far by requiring the amount of a settlement, which is typically confidential. The bills could likely get to the same destination of providing important information to the public about companies without requiring this information.