By Van de Putte S.B. No. 1706
77R7732 AJA-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to arbitration.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 171.001, Civil Practice and Remedies Code,
1-5 is amended by amending Subsection (a) and adding Subsection (c) to
1-6 read as follows:
1-7 (a) Except as provided by Subsection (c), a [A] written
1-8 agreement to arbitrate is valid and enforceable if the agreement is
1-9 to arbitrate a controversy that:
1-10 (1) exists at the time of the agreement; or
1-11 (2) arises between the parties after the date of the
1-12 agreement.
1-13 (c) A written agreement to arbitrate a controversy that
1-14 arises out of an agreement described by Section 171.002(a)(2) to
1-15 which this chapter applies is not valid and enforceable unless the
1-16 controversy exists at the time of the agreement to arbitrate. This
1-17 subsection does not apply to a written agreement to arbitrate a
1-18 controversy that arises out of:
1-19 (1) a motor vehicle insurance contract;
1-20 (2) a contract for health benefit plan coverage; or
1-21 (3) a contract entered into with a health care
1-22 provider for the provision of health care services.
1-23 SECTION 2. Subchapter C, Chapter 171, Civil Practice and
1-24 Remedies Code, is amended by adding Section 171.0411 to read as
2-1 follows:
2-2 Sec. 171.0411. APPEARANCE OF PARTIALITY. (a) In this
2-3 section:
2-4 (1) "Arbitration services provider" means a person
2-5 that initiates, sponsors, or administers arbitrations or is
2-6 involved in the appointment of arbitrators.
2-7 (2) "Nonparty arbitrator" means an arbitrator:
2-8 (A) jointly selected by:
2-9 (i) all the parties to an arbitration; or
2-10 (ii) all arbitrators selected by fewer
2-11 than all the parties; or
2-12 (B) appointed by:
2-13 (i) an arbitration services provider; or
2-14 (ii) a court.
2-15 (b) For the purposes of this section, an arbitrator appears
2-16 partial if:
2-17 (1) based on the totality of the circumstances, a
2-18 reasonable person would conclude that the impartiality of the
2-19 arbitrator may be compromised or improperly or unduly influenced if
2-20 the arbitrator is asked to decide a significant matter that is the
2-21 subject of arbitration because of an actual or potential conflict
2-22 of interest; or
2-23 (2) the arbitrator is an attorney, and, in light of
2-24 the arbitrator's legal practice, a reasonable person would conclude
2-25 that the impartiality of the arbitrator may be compromised or
2-26 improperly or unduly influenced if the arbitrator is asked to
2-27 decide a significant legal matter at issue in the arbitration.
3-1 (c) Each party to an arbitration shall prepare a disclosure
3-2 document that in good faith:
3-3 (1) describes each material fact or legal issue that
3-4 the party contends is included in the controversy to be arbitrated;
3-5 (2) provides the name of each party to the
3-6 arbitration; and
3-7 (3) includes any other information the person has
3-8 reason to believe a prospective nonparty arbitrator needs to know
3-9 to determine whether the arbitrator appears partial.
3-10 (d) The party that demands arbitration shall deliver a
3-11 disclosure document under Subsection (c) to each other party to the
3-12 arbitration, any arbitration services provider involved in the
3-13 arbitration, and any potential nonparty arbitrator not later than
3-14 the 10th day after:
3-15 (1) if the nonparty arbitrator is selected before the
3-16 controversy arises, the date the arbitration demand is filed; or
3-17 (2) the earliest date on which the identity of the
3-18 nonparty arbitrator is known.
3-19 (e) Not later than the 10th day after the date a party to
3-20 arbitration receives a disclosure document delivered under
3-21 Subsection (d), the party shall submit that party's disclosure
3-22 document to each other party to the arbitration, any arbitration
3-23 services provider involved in the arbitration, and any potential
3-24 nonparty arbitrator.
3-25 (f) A party to an arbitration may amend the party's
3-26 disclosure document at any time before all the nonparty arbitrators
3-27 have been selected and have agreed to serve.
4-1 (g) A party to an arbitration may not assert as a basis for
4-2 disqualifying a nonparty arbitrator or vacating an arbitration
4-3 award that the arbitrator appears partial if the cause of the
4-4 appearance of partiality could not reasonably have been identified
4-5 and disclosed by the arbitrator without information that the party
4-6 failed to include in the party's disclosure document.
4-7 (h) Before an arbitrator is selected, an arbitration
4-8 services provider shall provide to each party:
4-9 (1) a complete copy of any agreement the arbitration
4-10 services provider has with a party or a party's counsel or insurer,
4-11 including any discount, compensation, or referral arrangement; and
4-12 (2) a complete copy of each agreement between the
4-13 arbitration services provider and any arbitrator designated as a
4-14 prospective arbitrator for the arbitration.
4-15 (i) Before a nonparty arbitrator is selected and after all
4-16 disclosure documents required under this section have been
4-17 delivered, each prospective nonparty arbitrator shall disclose in
4-18 writing to each party any matter that might give rise to an
4-19 appearance of partiality. After a disclosure by an arbitrator
4-20 under this subsection, at the request of a party, all of the
4-21 parties shall interview a prospective arbitrator on issues that
4-22 might give rise to an appearance of partiality.
4-23 (j) A nonparty arbitrator shall promptly supplement a
4-24 disclosure required under Subsection (i) with any new information
4-25 affecting the potential for the arbitrator to appear partial that
4-26 occurs on or before the earlier of:
4-27 (1) the date the arbitrator renders the arbitrator's
5-1 decision or award; or
5-2 (2) the date the arbitration proceeding terminates.
5-3 (k) A nonparty arbitrator selected before the controversy
5-4 being arbitrated arose is disqualified if a party establishes that
5-5 the arbitrator appears partial based on information discovered by
5-6 the party after the agreement to arbitrate was entered into.
5-7 SECTION 3. Subchapter C, Chapter 171, Civil Practice and
5-8 Remedies Code, is amended by adding Section 171.0431 to read as
5-9 follows:
5-10 Sec. 171.0431. CONSOLIDATION OF ARBITRATION PROCEEDINGS. (a)
5-11 Two or more arbitration proceedings may be consolidated if:
5-12 (1) two or more persons are subject to substantially
5-13 similar agreements to arbitrate a controversy with the same
5-14 opposing party;
5-15 (2) the method for appointment of arbitrators is
5-16 substantially the same in each agreement; and
5-17 (3) the subject matter of the arbitration proceedings
5-18 arises from the same or similar circumstances.
5-19 (b) Arbitration proceedings must be consolidated into the
5-20 proceeding that commenced first if:
5-21 (1) all parties agree to the consolidation; or
5-22 (2) two or more persons subject to agreements to
5-23 arbitrate a controversy with the same opposing party move for a
5-24 consolidation and a majority of the arbitrators for the proceeding
5-25 that commenced first determine that the consolidation complies with
5-26 Subsection (a).
5-27 SECTION 4. Section 171.088(a), Civil Practice and Remedies
6-1 Code, is amended to read as follows:
6-2 (a) On application of a party, the court shall vacate an
6-3 award if:
6-4 (1) the award was obtained by corruption, fraud, or
6-5 other undue means;
6-6 (2) the rights of a party were prejudiced by:
6-7 (A) evident partiality by an arbitrator
6-8 appointed as a neutral arbitrator;
6-9 (B) corruption in an arbitrator; or
6-10 (C) misconduct or wilful misbehavior of an
6-11 arbitrator;
6-12 (3) the arbitrators:
6-13 (A) exceeded their powers;
6-14 (B) refused to postpone the hearing after a
6-15 showing of sufficient cause for the postponement;
6-16 (C) refused to hear evidence material to the
6-17 controversy; or
6-18 (D) conducted the hearing, contrary to Section
6-19 171.043, 171.044, 171.045, 171.046, or 171.047, in a manner that
6-20 substantially prejudiced the rights of a party; [or]
6-21 (4) there was no agreement to arbitrate, the issue was
6-22 not adversely determined in a proceeding under Subchapter B, and
6-23 the party did not participate in the arbitration hearing without
6-24 raising the objection; or
6-25 (5) an arbitrator failed to make a material disclosure
6-26 required under Section 171.0411(i) or (j).
6-27 SECTION 5. (a) Section 171.001(c), Civil Practice and
7-1 Remedies Code, as added by this Act, applies only to an agreement
7-2 to arbitrate a controversy that is entered into on or after the
7-3 effective date of this Act.
7-4 (b) Sections 171.0411 and 171.0431, Civil Practice and
7-5 Remedies Code, as added by this Act, and Section 171.088(a), Civil
7-6 Practice and Remedies Code, as amended by this Act, apply only to
7-7 an arbitration proceeding that begins on or after the effective
7-8 date of this Act. An arbitration proceeding that begins before the
7-9 effective date of this Act is governed by the law in effect
7-10 immediately before that date, and that law is continued in effect
7-11 for that purpose.
7-12 SECTION 6. This Act takes effect September 1, 2001.