80R10929 T

By: Gattis H.B. No. 3885

A BILL TO BE ENTITLED

AN ACT

relating to binding arbitration.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 171.021, Civil Practice and Remedies Code, is amended by adding Subsection (d) to read as follows:

(d) An order compelling arbitration shall not violate any rights protected by the constitution of the United States or of this state. The provisions of Section 171.098(a) apply to any appeal on constitutional grounds from an order compelling arbitration.

SECTION 2. Section 171.041, Civil Practice and Remedies Code, is amended by adding Subsection (d) to read as follows:

(d) Proposed arbitrators must satisfy objective qualification standards that consider education, training and experience. A court shall not appoint unqualified arbitrators.

SECTION 3. Section 171.044(b), Civil Practice and Remedies Code, is amended to read as follows:

(b) The notice must be served not later than the fifth day before the hearing either personally or by registered or certified mail with return receipt requested. The notice requirement may not be waived, and the hearing cannot proceed without proper notice of the hearing under this section [Appearance at the hearing waives the notice].

SECTION 4. Section 171.047, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 171.047. Rights of Party at Hearing. (a) Unless otherwise provided by the agreement to arbitrate, a party at the hearing is entitled to:

(1) be heard;

(2) present evidence material to the controversy; [and]

(3) cross-examine any witness; and

(4) a stenographic recording of the hearing.

(b) A stenographic recording before any officer authorized by law to record testimony must be requested by any party prior to the commencement of the hearing or the right to a recording is waived. The cost of a stenographic recording shall be borne by any party requesting the recording and any party requesting a copy of the recording. The cost of a stenographic recording may be considered by the arbitrator to be an expense incurred in conducting the arbitration under Section 171.055.

SECTION 5. Section 171.088(a), Civil Practice and Remedies Code, is amended to read as follows:

(a) On application of a party, the court shall vacate the award if:

(1) the award was obtained by corruption, fraud, or other undue means;

(2) the rights of a party were prejudiced by:

(A) evident partiality by an arbitrator appointed as a neutral arbitrator;

(B) corruption in an arbitrator; or

(C) misconduct or willful misbehavior of an arbitrator;

(3) the arbitrators:

(A) exceeded their powers;

(B) refused to postpone the hearing after a showing of sufficient cause for the postponement;

(C) refused to hear evidence material to the controversy; or

(D) conducted the hearing, contrary to Section 171.043, 171.044, 171.045, 171.046, or 171.047, in a manner that substantially prejudiced the rights of a party; [or]

(4) there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B, and the party did not participate in the arbitration hearing without raising the objection; or

(5) the award clearly violates fundamental public policy.

SECTION 6. Section 171.092, Civil Practice and Remedies Code, is amended by adding Subsections (c) and (d) to read as follows:

(c) Notwithstanding any limitations in Sections 171.087, 171.088, 171.090, or 171.091 of this code, the court may also vacate, modify, or correct an award as if the award was a judgment entered by a court sitting without a jury.

(d) An appellate court reviewing a judgment entered on an award must apply the same standard of review as if the judgment was one entered by a court sitting without a jury.

SECTION 7. Section 171.098(a), Civil Practice and Remedies Code, is amended to read as follows:

(a) A party may appeal a judgment or decree entered under this chapter or an order:

(1) granting or denying an application to compel arbitration made under Section 171.021;

(2) granting an application to stay arbitration made under Section 171.023;

(3) confirming or denying confirmation of an award;

(4) modifying or correcting an award; or

(5) vacating an award without directing a rehearing.

SECTION 8. (a) Except as otherwise provided by Subsection (b), the change in the law made by this Act applies to an arbitration commenced on or after the effective date. The law in effect immediately prior to the effective date of this Act applies to an arbitration commenced prior to the effective date of this Act and is continued for that purpose.

(b) Section 6 of this Act applies to an arbitrators award signed by an arbitrator on or after the effective date of this Act.

SECTION 9. This Act takes effect immediately if it receives a vote of two-thirds of all the members elected to each house, as provided by Section 39, Article III, Texas Constitution. If this Act does not receive the vote necessary for immediate effect, this Act takes effect on the 91st day after the last day of the legislative session.