Senate Bill 762 (SB 762) adds a requirement to the law that arbitration providers in consumer or employee arbitrations, such as AAA or JAMS, must immediately provide an invoice to all parties to the arbitration for any fees and costs required before the arbitration can proceed. The invoice must state the full amount owed and the date that payment is due. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.
The purpose of this law is to close a gap with respect to the payment of fees and costs for arbitration. Current law states that if the drafter of the arbitration agreement does not pay all fees and costs due before the arbitration can proceed within 30 days of the due date for paying those fees and costs, the drafting party is in material breach of the arbitration agreement and the other party to the agreement may elect to proceed with the arbitration or bring the case in court. However, existing law does not impose any requirements on when an arbitrator must send invoices or whether and how the payment’s due date must be disclosed. This gives rise to a question as to when a party is actually past due on a payment, which in turn causes ambiguity as to when a party is 30 days late and therefore in material breach of the arbitration agreement. This bill attempts to address that problem by establishing when an arbitration provider must send an invoice, as well as requiring the invoice to contain the total amount due and the due date.
This bill further provides that, where an arbitration agreement does not establish a time frame for paying an arbitration invoice, the payment is due upon receipt. Additionally, this bill requires all parties to an arbitration to agree to a payment extension before the arbitration provider, such as AAA or JAMS, will allow a payment extension. Finally, this bill adds a code section addressing the time to perform under contracts of adhesion (which includes many arbitration agreements), stating that any time for performance of an act set forth in a contract of adhesion must be reasonable.
(SB 762 adds Section 1657.1 to the Code of Civil Procedure and amends Sections 1281.97 and 1281.98 of the Code of Civil Procedure.)
