Prohibits person appointed as arbitrator who subsequently serves as mediator from resuming the role of arbitrator unless the parties agree.

A1573

ASSEMBLY, No. 1573

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman SEAN T. KEAN

District 30 (Monmouth and Ocean)

SYNOPSIS

���� Prohibits person appointed as arbitrator who
subsequently serves as mediator from resuming the role of arbitrator unless the
parties agree.

CURRENT VERSION OF TEXT

���� Introduced Pending Technical Review by Legislative
Counsel.

��

An Act
concerning arbitration and mediation and amending
P.L.2003, c.95.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 11 of P.L.2003,
c.95 (C.2A:23B-11) is amended to read as follows:

���� 11.� Appointment of
Arbitrator; Service as a Neutral Arbitrator.

���� a.���� If the parties to an
agreement to arbitrate agree on a method for appointing an arbitrator, that
method shall be followed, unless the method fails.� If the parties have not
agreed on a method, the agreed method fails, or an arbitrator appointed fails
or is unable to act and a successor has not been appointed, the court, on
application of a party to the arbitration proceeding, shall appoint the
arbitrator.� An arbitrator so appointed has all the powers of an arbitrator
designated in the agreement to arbitrate or appointed pursuant to the agreed
method.�

���� b.��� An individual who has a
known, direct, and material interest in the outcome of the arbitration
proceeding or a known, existing, and substantial relationship with a party may
not serve as an arbitrator required by an agreement to be neutral.

���� c.���� An individual who has a
known, direct, and material interest in the outcome of the arbitration
proceeding or a known, existing, and substantial relationship with a party may
not serve as a party arbitrator if such information has not been disclosed
pursuant to section 12 of this act.

���� d.��� An individual appointed
as a party arbitrator may be predisposed toward the appointing party.� From and
after the commencement of an arbitration, an arbitrator shall act in good faith
and exercise the arbitrator's responsibilities in a manner consistent with the
authority placed in the arbitrator by the courts of this State and this act.

����
e.���� An individual
appointed as arbitrator in a matter may assume the role of mediator in that
matter, however, an arbitrator who assumes the role of mediator may not,
thereafter, serve as arbitrator in that matter unless an agreement by the
parties to the arbitration proceeding permits the arbitrator to resume the role
of arbitrator.

(cf: P.L.2003, c.95, s.11)

���� 2.��� Section 23 of P.L.2003,
c.95 (C.2A:23B-23) is amended to read as follows:

���� 23.� Vacating Award.

���� a.���� Upon the filing of a
summary action with the court by a party to an arbitration proceeding, the
court shall vacate an award made in the arbitration proceeding if:

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

���� (2)�� the court finds evident
partiality by an arbitrator; corruption by an arbitrator; or misconduct by an
arbitrator prejudicing the rights of a party to the arbitration proceeding;

���� (3)�� an arbitrator refused to
postpone the hearing upon showing of sufficient cause for postponement, refused
to consider evidence material to the controversy, or otherwise conducted the
hearing contrary to section 15 of this act, so as to substantially prejudice
the rights of a party to the arbitration proceeding;

���� (4)�� an arbitrator exceeded
the arbitrator's powers;

���� (5)�� there was no agreement
to arbitrate, unless the person participated in the arbitration proceeding
without raising the objection pursuant to subsection c. of section 15 of this
act not later than the beginning of the arbitration hearing;
[
or
]

���� (6)�� the arbitration was
conducted without proper notice of the initiation of an arbitration as required
in section 9 of this act so as to substantially prejudice the rights of a party
to the arbitration proceeding
; or

����
(7)�� the award was entered
by a person who, following appointment as an arbitrator, subsequently assumed
the role of mediator and then subsequently resumed the role of arbitrator and
the award was entered after the person resumed the role of arbitrator
.

���� b.��� A summary action
pursuant to this section shall be filed within 120 days after the aggrieved
party receives notice of the award pursuant to section 19 of this act or within
120 days after the aggrieved party receives notice of a modified or corrected
award pursuant to section 20 of this act, unless the aggrieved party alleges
that the award was procured by corruption, fraud, or other undue means, in
which case the summary action shall be commenced within 120 days after the
ground is known or by the exercise of reasonable care would have been known by
the aggrieved party.

���� c.���� If the court vacates an
award on a ground other than that set forth in paragraph (5) of subsection a.
of this section, it may order a rehearing.� If the award is vacated on a ground
stated in paragraph (1)
[
or
]
,
(2)
or
(7)
of subsection a. of this section, the rehearing shall be before a new
arbitrator.� If the award is vacated on a ground stated in paragraph (3), (4),
or (6) of subsection a. of this section, the rehearing may be before the
arbitrator who made the award or the arbitrator's successor.� The arbitrator
shall render the decision in the rehearing within the same time as that
provided in subsection b. of section 19 of this act for an award.

���� d.��� If the court denies an
application to vacate an award, it shall confirm the award unless an
application to modify or correct the award is pending.

(cf: P.L.2003,
c.95, s.23)

���� 3.��� This act shall take
effect immediately.

STATEMENT

���� This bill clarifies that
an arbitrator appointed under P.L.2003, c.95 (C.2A:23B-1
et seq.) who then assumes the role of mediator may not then resume the role of
arbitrator unless the parties agree.�

���� The
current statute is silent as to whether an arbitrator who is appointed pursuant
to the arbitration law may assume the role of mediator and then subsequently
resume the role of arbitrator.� The Appellate Division of the Superior Court
specified in
Minkowitz
v.
Israeli
, 433
N.J. Super.

111 (App. Div. 2013)
that parties could voluntarily
enter into an agreement which permits a person who is appointed as arbitrator
to assume a role of mediator, and then subsequently assume the role of arbitrator,
but in the absence of such an agreement, an arbitrator appointed under the act
may not assume the role of mediator and, thereafter, resume the role of
arbitrator.� The court noted that a mediator, whose role is to guide parties
toward a mediated resolution, may become privy to party confidences and
therefore cannot subsequently retain the appearance of a neutral factfinder, which
is necessary to conduct a binding arbitration proceeding.�

���� The
Appellate Division further specified that an award entered by an arbitrator who
has resumed the role of arbitrator after assuming the role of mediator must be
vacated unless the parties enter into an agreement permitting the arbitrator to
resume the role of arbitrator after serving as mediator.� The court further
specified that any awards entered by the arbitrator prior to serving as
mediator should not be vacated.� The bill codifies this provision of the
court�s decision as well.