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New Jersey Legislation Targets Fee-Shifting in Arbitration

November 14, 2019 | Posted in : Expenses / Costs, Fee Dispute Litigation / ADR, Fee Shifting, Legislation / Politics, Prevailing Party Issues

A recent New Jersey Law Journal story by Suzette Parmley, “Exception to Attys’ Rule Misapplied, Fla. Court Says,” reports that legislation that would establish certain consumer protections related to arbitration organizations cleared the Senate Commerce Committee by a 3-2 vote.  Among the proposed protections is prohibiting any arbitrator from requiring a consumer to pay fees and costs incurred by an opposing party if the consumer does not prevail in arbitration.

S-1490 states: “Under New Jersey’s current law, there are rules governing arbitrators and arbitration generally, but there are no rules pertaining to the regulation of arbitration organizations.  This bill prohibits a neutral arbitrator or arbitration organization from administering any consumer arbitration that requires a non prevailing consumer who is a party to the arbitration to pay the opposing party’s costs or fees.”

The measure would also prevent arbitration organizations from administering cases in which the organization has, or has had, a financial interest.  It would apply to any arbitration administrator who provides services for any disputes that may arise and result in forced arbitration between a consumer and a company, according to a Nov. 14 release on the bill’s committee passage.

“Unlike administrative or judicial proceedings, arbitration proceedings are not made public, making it difficult for the state to monitor these cases to ensure they are being carried out fairly,” said Sen. James Beach, D-Burlington, the bill’s primary sponsor, in a statement.

“More often than not, a private arbitrator is chosen by the company involved in the dispute, giving them an unfair advantage over the consumer,” added Beach.  “Through this bill, the state will have a better understanding of what is truly happening in these proceedings, allowing us to ensure consumers are being treated fairly."