Arbitration Overview in California

Part 3, Title 9 of the Code of Civil Procedure deals with arbitration. Chapter 1 provides general provisions.

Section 1280 defines the following terms: “agreement,” “award,” “consumer,” “controversy,” “drafting party,” “employee,” “neutral arbitrator,” “party to the arbitration,” and “written agreement.”

Section 1280.2 explains that, whenever reference is made in this title to any portion of the title or of any other law of this State, the reference applies to all amendments and additions thereto now or hereafter made.

Chapter 2 deals with the enforcement of arbitration agreements in this state.

Section 1281 states that a written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.

Section 1281.1 provides that any request to arbitrate it to be considered as made pursuant to a written agreement to submit a controversy to arbitration.

Section 1281.12 specifies that, if an arbitration agreement requires that arbitration of a controversy be demanded or initiated by a party to the arbitration agreement within a period of time, the commencement of a civil action by that party based upon that controversy, within that period of time, must toll the applicable time limitations contained in the arbitration agreement with respect to that controversy.

Section 1281.2 says that, on petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court is required to order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that the right to compel has been waived or grounds exist for recission.

Section 1281.3 allows a party to an arbitration agreement to petition the court to consolidate separate arbitration proceedings, and the court may order consolidation of separate arbitration proceedings when one of three conditions exist.

Section 1281.4 provides that, if a court of competent jurisdiction has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which the action or proceeding is pending must, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.

Section 1281.5 specifies that any person who proceeds to record and enforce a claim of lien by commencement of an action does not thereby waive any right of arbitration the person may have pursuant to a written agreement to arbitrate, if, in filing an action to enforce the claim of lien, the claimant does either of two specified actions.

Section 1281.6 states that, if the arbitration agreement provides a method of appointing an arbitrator, that method must be followed. If the arbitration agreement does not provide a method for appointing an arbitrator, the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator and that method shall be followed.

In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and his or her successor has not been appointed, the court, on petition of a party to the arbitration agreement, is required to appoint the arbitrator.

Section 1281.7 states that a petition may be filed in lieu of filing an answer to a complaint. The petitioning defendant has 15 days after any denial of the petition to plead to the complaint.

Section 1281.8 defines the term “provisional remedy.” A party to an arbitration agreement may file in the court in the county in which an arbitration proceeding is pending, or if an arbitration proceeding has not commenced, in any proper court, an application for a provisional remedy in connection with an arbitrable controversy, but only upon the ground that the award to which the applicant may be entitled may be rendered ineffectual without provisional relief.

Section 1281.85 provides that a person serving as a neutral arbitrator pursuant to an arbitration agreement is required to comply with the ethics standards for arbitrators adopted by the Judicial Council pursuant to this section. The Judicial Council was required to adopt ethical standards for all neutral arbitrators. The ethics requirements and standards of this chapter are nonnegotiable and cannot be waived.

Section 1281.9 explains that, in any arbitration pursuant to an arbitration agreement, when a person is to serve as a neutral arbitrator, the proposed neutral arbitrator is required to disclose all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed neutral arbitrator would be able to be impartial, including all of the seven specified items.

In addition, the following terms are defined: “lawyer for a party,” “prior cases,” “any arbitration,” and “solicitation.”

Section 1281.91 requires a proposed neutral arbitrator be disqualified if he or she fails to comply with disclosures and any party entitled to receive the disclosure serves a notice of disqualification within 15 calendar days after the proposed nominee or appointee fails to comply the law.

A party has the right to disqualify one court-appointed arbitrator without cause in any single arbitration, and may petition the court to disqualify a subsequent appointee only upon a showing of cause.

Section 1281.92 specifies that no private arbitration company may administer a consumer arbitration, or provide any other services related to a consumer arbitration, if the company has, or within the preceding year has had, a financial interest in any party or attorney for a party.

No private arbitration company may administer a consumer arbitration, or provide any other services related to a consumer arbitration, if any party or attorney for a party has, or within the preceding year has had, any type of financial interest in the private arbitration company.

Section 1281.93 prohibits, during the pendency of the consumer arbitration, a solicitation to be made of a party to the arbitration or of a lawyer for a party to the arbitration. The terms “lawyer for a party” and “solicitation” are defined.

Section 1281.95 provides that, in a binding arbitration of any claim for more than $3,000 pursuant to a contract for the construction or improvement of residential property consisting of one to four units, the arbitrator is required, within 10 days following his or her appointment, to provide to each party a written declaration under penalty of perjury. This declaration has to disclosure two specified items of information.

If the arbitrator discloses an affiliation with either party, discloses that the arbitrator has been selected or designated as an arbitrator by either party in another arbitration, or fails to comply with this section, he or she may be disqualified from the arbitration by either party.

Section 1281.96 requires a private arbitration company that administers or is otherwise involved in a consumer arbitration, to collect, publish at least quarterly, and make available to the public on the internet website of the private arbitration company, and on paper upon request, a single cumulative report that contains all of the twelve specified pieces of information regarding each consumer arbitration within the preceding five years.

Section 1281.97 says that, in an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration.

Section 1281.98 specifies that, in an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the arbitration proceeding are not paid within 30 days after the due date, the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel the employee or consumer to proceed with that arbitration as a result of the material breach.

Section 1281.99 requires the court to impose a monetary sanction against a drafting party that materially breaches an arbitration agreement by ordering the drafting party to pay the reasonable expenses, including attorney’s fees and costs, incurred by the employee or consumer as a result of the material breach.