81R8751 CAE-F

By: Gattis H.B. No. 2696

A BILL TO BE ENTITLED

AN ACT

relating to arbitration proceedings.

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

SECTION 1. Section 51.014(a), Civil Practice and Remedies Code, is amended to read as follows:

(a) A person may appeal from an interlocutory order of a district court, county court at law, or county court that:

(1) appoints a receiver or trustee;

(2) overrules a motion to vacate an order that appoints a receiver or trustee;

(3) certifies or refuses to certify a class in a suit brought under Rule 42 of the Texas Rules of Civil Procedure;

(4) grants or refuses a temporary injunction or grants or overrules a motion to dissolve a temporary injunction as provided by Chapter 65;

(5) denies a motion for summary judgment that is based on an assertion of immunity by an individual who is an officer or employee of the state or a political subdivision of the state;

(6) denies a motion for summary judgment that is based in whole or in part upon a claim against or defense by a member of the electronic or print media, acting in such capacity, or a person whose communication appears in or is published by the electronic or print media, arising under the free speech or free press clause of the First Amendment to the United States Constitution, or Article I, Section 8, of the Texas Constitution, or Chapter 73;

(7) grants or denies the special appearance of a defendant under Rule 120a, Texas Rules of Civil Procedure, except in a suit brought under the Family Code;

(8) grants or denies a plea to the jurisdiction by a governmental unit as that term is defined in Section 101.001;

(9) denies all or part of the relief sought by a motion under Section 74.351(b), except that an appeal may not be taken from an order granting an extension under Section 74.351;

(10) grants relief sought by a motion under Section 74.351(l); [or]

(11) denies a motion to dismiss filed under Section 90.007; or

(12) denies an application to compel or grants an application to stay arbitration.

SECTION 2. Section 171.001, Civil Practice and Remedies Code, is amended by adding Subsections (c) and (d) to read as follows:

(c) A written arbitration agreement described by Subsection (a)(1) must include a statement, initialed by each party to the agreement, stating that the party has chosen to arbitrate a controversy that exists at the time of the agreement. A written arbitration agreement described by Subsection (a)(2) must include a statement, initialed by each party to the agreement, stating that the party has chosen to arbitrate any controversy that arises between the parties after the date of the agreement. An agreement to arbitrate must be prominently displayed in the document and in 12-point bold type.

(d) A party to a contract may not require any other party to the contract to agree to arbitration as a condition of the contract.

SECTION 3. Section 171.021, Civil Practice and Remedies Code, is amended by adding Subsection (d) to read as follows:

(d) An order compelling arbitration may not violate a right protected by the United States Constitution or the Texas Constitution. The provisions of Section 171.098(a) apply to an appeal on constitutional grounds from an order compelling arbitration.

SECTION 4. Section 171.022, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 171.022. UNCONSCIONABLE AGREEMENTS UNENFORCEABLE. A court may not enforce an agreement to arbitrate if the court finds the agreement was unconscionable at the time the agreement was made. An agreement is unconscionable if enforcement of the agreement will violate a right protected by the United States Constitution or the Texas Constitution.

SECTION 5. Section 171.041, Civil Practice and Remedies Code, is amended by adding Subsection (d) to read as follows:

(d) An arbitrator appointed under Subsection (b) must satisfy objective qualification standards, including an appropriate level of education, training, and experience. A court may not appoint an unqualified arbitrator. The qualifications of an arbitrator are subject to judicial review. If a court determines that an arbitrator does not satisfy objective qualification standards, an arbitration award of the arbitrator is void and unenforceable.

SECTION 6. Section 171.042, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 171.042. MAJORITY ACTION BY ARBITRATORS. The powers of the arbitrators are exercised by a majority [unless otherwise provided by the agreement to arbitrate or this chapter].

SECTION 7. Section 171.043(a), Civil Practice and Remedies Code, is amended to read as follows:

(a) Unless otherwise provided by the agreement to arbitrate, all the arbitrators shall conduct the hearing. A majority of the arbitrators is required to [may] determine a question and render a final award.

SECTION 8. Section 171.044, Civil Practice and Remedies Code, is amended by amending Subsection (b) and adding Subsection (d) 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. Notice may not be waived, and the hearing may not proceed without proper [Appearance at the hearing waives the] notice.

(d) Notwithstanding Subsection (c), a hearing may not proceed without notice or waiver of notice in accordance with this section.

SECTION 9. Section 171.047, Civil Practice and Remedies Code, is amended to read as follows:

Sec. 171.047. RIGHTS OF PARTY AT HEARING. 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 transcript of the hearing.

SECTION 10. Subchapter C, Chapter 171, Civil Practice and Remedies Code, is amended by adding Section 171.0481 to read as follows:

Sec. 171.0481. TRANSCRIPT. (a) A transcript of the hearing must be requested by a party before commencement of the hearing or the right to a transcript is waived.

(b) A party requesting the transcript is responsible for the cost. A party requesting a copy of the transcript is responsible for the cost of the copy.

(c) An arbitrator may consider the cost of the transcript to be an expense incurred in conducting the arbitration as provided by Section 171.055.

(d) A transcript of a hearing must be prepared by a person authorized by law to record testimony.

SECTION 11. Sections 171.049 and 171.055, Civil Practice and Remedies Code, are amended to read as follows:

Sec. 171.049. OATH. The arbitrators, or an arbitrator at the direction of the arbitrators, shall [may] administer to each witness testifying before them the oath required of a witness in a civil action pending in a district court.

Sec. 171.055. ARBITRATOR'S FEES AND EXPENSES. Unless otherwise provided in the agreement to arbitrate, the arbitrators' reasonable expenses and fees, with other reasonable expenses incurred in conducting the arbitration, shall be paid as provided in the award.

SECTION 12. 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 an 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 wilful 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 13. 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 14. The change in law made by this Act applies only to arbitration commenced on or after the effective date of this Act. An arbitration commenced before the effective date of this Act is governed by the law applicable to arbitrations immediately before the effective date of this Act, and that law is continued in effect for that purpose.

SECTION 15. 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 September 1, 2009.