Assembly requires disclosure to safeguard neutral arbitrators in arbitration agreements
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Summary
A bill to define arbitration and require disclosures to ensure neutral arbitrators by default passed the Assembly; sponsors said it protects consumers and small parties, while critics warned it could constrain panel arbitration practices.
The Assembly on March 24 approved legislation intended to protect parties in arbitration by requiring disclosure of potential conflicts and clarifying that arbitrators should be neutral by default.
Sponsor Assemblymember Dinowitz (label 36) said the bill would define arbitration and disqualifying circumstances — financial interests or past relationships that create bias — and ensure parties have notice and a chance to object before proceeding. He said the change prevents awards decided by an undisclosed biased arbitrator.
Several members raised concerns about panel arbitration arrangements in which each side selects an arbitrator and the two then choose a neutral third person; critics warned the bill could disrupt that practice and hamper union‑labor arbitration norms. The sponsor said disclosures and post‑selection objections would be addressed and that the bill allows parties to agree after disclosure to proceed.
The Assembly passed the bill, Ayes 97, Nays 44. Supporters called the change a fairness measure; opponents warned of unintended consequences for established arbitration practices.
What happens next: the bill goes to the governor for enactment; courts will apply the statute to arbitration disputes and parties will adjust arbitration clauses and practices accordingly.
