Rhode Island 2025 Regular Session

Rhode Island Senate Bill S0353 Compare Versions

Only one version of the bill is available at this time.

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5	5	2025 -- S 0353
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7	7	LC001504
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9	9	S T A T E O F R H O D E I S L A N D
10	10	IN GENERAL ASSEMBLY
11	11	JANUARY SESSION, A.D. 2025
12	12	____________
13	13
14	14	A N A C T
15	15	RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE IN PARTICULAR
16	16	ACTIONS -- ARBITRATION
17	17	Introduced By: Senators McKenney, LaMountain, and Burke
18	18	Date Introduced: February 21, 2025
19	19	Referred To: Senate Judiciary
20	20
21	21
22	22	It is enacted by the General Assembly as follows:
23	23	SECTION 1. Sections 10-3-2, 10-3-22, 10-3-23 and, 10-3-24 of the General Laws in 1
24	24	Chapter 10-3 entitled "Arbitration" are hereby amended to read as follows: 2
25	25	10-3-2. Agreements to arbitrate subject to chapter — Notice. 3
26	26	(a) When clearly written and expressed, a provision in a written contract to settle by 4
27	27	arbitration a controversy thereafter arising out of such contract, or out of the refusal to perform the 5
28	28	whole or any part thereof, or an agreement in writing between two (2) or more persons to submit 6
29	29	to arbitration any controversy existing between them at the time of the agreement to submit shall 7
30	30	be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 8
31	31	revocation of any contract; provided, however, that the provisions of this chapter shall not apply 9
32	32	to, arbitration agreements governed by 9 U.S.C. §§ 1 through 16, collective contracts between 10
33	33	employers and employees, or between employers and associations of employees, in respect to terms 11
34	34	or conditions of employment; and provided further, that in all contracts of primary insurance, 12
35	35	wherein the provision for arbitration is not placed immediately before the testimonium clause or 13
36	36	the signature of the parties, the arbitration procedure may be enforced at the option of the insured, 14
37	37	and in the event the insured exercises the option to arbitrate, then the provisions of this chapter 15
38	38	shall apply and be the exclusive remedy available to the insured. 16
39	39	(b) Notice of intention to arbitrate. A party may serve upon another party a demand for 17
40	40	arbitration or a notice of intention to arbitrate, specifying the agreement pursuant to which 18
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44	44	arbitration is sought and the name and address of the party serving the notice, or of an officer or 1
45	45	agent thereof if such party is an association or corporation, and stating that unless the party served 2
46	46	applies to stay the arbitration within twenty (20) one hundred-eighty (180) days after such service 3
47	47	they shall thereafter be precluded from objecting that a valid agreement was not made or has not 4
48	48	been complied with and from asserting in court the bar of a limitation of time. Such notice or 5
49	49	demand shall be served in the same manner as a summons or by registered or certified mail, return 6
50	50	receipt requested. An application to stay arbitration shall be made by the party served within twenty 7
51	51	(20) one hundred-eighty (180) days after service upon the party of the notice or demand, or they 8
52	52	shall be so precluded. Notice of such application shall be served in the same manner as a summons 9
53	53	or by registered or certified mail, return receipt requested. Service of the application may be made 10
54	54	upon the adverse party, or upon their attorney if the attorneys’ name appears on the demand for 11
55	55	arbitration or the notice of intention to arbitrate. Service of the application by mail shall be timely 12
56	56	if such application is posted within the prescribed period. Any provision in an arbitration agreement 13
57	57	or arbitration rules that waives the right to apply for a stay of arbitration or prescribes a manner of 14
58	58	notifying a party of an intention to commence arbitration that is more burdensome than that 15
59	59	described in this section is hereby declared null and void. 16
60	60	(c) The party required to send notice pursuant to subsection (b) of this section shall 17
61	61	affirmatively include in the notice the rights being waived by failure to apply for the stay of 18
62	62	arbitration. Said notice shall be done in bold print and highlighted. 19
63	63	10-3-22. Right to representation. 20
64	64	A party has the right to be represented by an attorney and may claim such right at any time 21
65	65	as to any part of the arbitration or hearings that have not taken place. This right may not be waived. 22
66	66	If a party is represented by an attorney, papers to be served on the party shall be served upon the 23
67	67	party’s attorney. Any provision of an agreement that discriminates against or penalizes a party for 24
68	68	retaining the services of counsel in an arbitration is null and void. 25
69	69	10-3-23. Fees and costs of arbitration initiation — Invoice — Breach of agreement — 26
70	70	Sanctions. 27
71	71	(a)(1) In an employment or consumer arbitration that requires, either expressly or through 28
72	72	application of state or federal law or the rules of the arbitration provider, unless there is a mutually 29
73	73	agreed upon provision to split costs equally, the drafting party, unless otherwise specified, is to pay 30
74	74	certain fees and costs before the arbitration can proceed. If the fees or costs to initiate an arbitration 31
75	75	proceeding are not paid within thirty (30) days after the due date the drafting party is in default and 32
76	76	the arbitration provider shall send notice of default to the drafting party. If the drafting party fails 33
77	77	to cure the default within fifteen (15) days after notice of the default or to file an action in court or 34
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81	81	a motion in arbitration to challenge whether the arbitration filings or notice of default are proper, 1
82	82	the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, 2
83	83	and waives its right to compel arbitration under § 10-3-4. 3
84	84	(2) After an employee or consumer meets the filing requirements necessary to initiate an 4
85	85	arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs 5
86	86	required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall 6
87	87	be provided in its entirety, shall state the full amount owed and the date that payment is due, and 7
88	88	shall be sent to all parties by the same means on the same day. To avoid delay, absent an express 8
89	89	provision in the arbitration agreement stating the number of days in which the parties to the 9
90	90	arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to 10
91	91	the parties as due upon receipt. 11
92	92	(b) If the drafting party materially breaches the arbitration agreement and is in default under 12
93	93	subsection (a) of this section, the employee or consumer may do either of the following: 13
94	94	(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction; 14
95	95	or 15
96	96	(2) Compel arbitration in which the drafting party shall pay reasonable attorneys’ fees and 16
97	97	costs related to the arbitration. 17
98	98	(c) If the employee, consumer, or other involved party withdraws the claim from arbitration 18
99	99	and proceeds with an action in a court of appropriate jurisdiction under subsection (b)(1) of this 19
100	100	section, the statute of limitations with regard to all claims brought or that relate back to any claim 20
101	101	brought in arbitration shall be tolled as of the date of the first filing of a claim in a court, arbitration 21
102	102	forum, or other dispute resolution forum. 22
103	103	(d) If the employee or consumer proceeds with an action in a court of appropriate 23
104	104	jurisdiction, the court shall impose sanctions on the drafting party in accordance with § 10-3-25. 24
105	105	10-3-24. Material breach of agreement — Remedies. 25
106	106	(a)(1) In an employment or consumer arbitration that requires, either expressly or through 26
107	107	application of state or federal law or the rules of the arbitration provider, that the drafting party pay 27
108	108	certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required 28
109	109	to continue the arbitration proceeding are not paid within thirty (30) days after the due date, the 29
110	110	drafting party is in default and the arbitration provider shall send notice of default to the drafting 30
111	111	party. If the drafting party fails to cure the default within fifteen (15) days after notice of the default 31
112	112	or to file an action in court or a motion in arbitration to challenge whether the arbitration filings or 32
113	113	notice of default are proper, the drafting party is in material breach of the arbitration agreement, is 33
114	114	in default of the arbitration, and waives its right to compel the employee or consumer to proceed 34
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118	118	with that arbitration as a result of the material breach. 1
119	119	(2) The arbitration provider shall provide an invoice for any fees and costs required for the 2
120	120	arbitration proceeding to continue to all of the parties to the arbitration. The invoice shall be 3
121	121	provided in its entirety, shall state the full amount owed and the date that payment is due, and shall 4
122	122	be sent to all parties by the same means on the same day. To avoid delay, absent an express 5
123	123	provision in the arbitration agreement stating the number of days in which the parties to the 6
124	124	arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to 7
125	125	the parties as due upon receipt. Any extension of time for the due date shall be agreed upon by all 8
126	126	parties. 9
127	127	(b) If the drafting party materially breaches the arbitration agreement and is in default under 10
128	128	subsection (a) of this section, the employee or consumer may unilaterally elect to do any of the 11
129	129	following: 12
130	130	(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. 13
131	131	If the employee or consumer withdraws the claim from arbitration and proceeds with an action in 14
132	132	a court of appropriate jurisdiction, the statute of limitations, with regard to all claims brought or 15
133	133	that relate back to any claim brought in arbitration, shall be tolled as of the date of the first filing 16
134	134	of a claim in any court, arbitration forum, or other dispute resolution forum; 17
135	135	(2) Continue the arbitration proceeding, if the arbitration provider agrees to continue 18
136	136	administering the proceeding, notwithstanding the drafting party’s failure to pay fees or costs. The 19
137	137	neutral arbitrator or arbitration provider may institute a collection action at the conclusion of the 20
138	138	arbitration proceeding against the drafting party that is in default of the arbitration for payment of 21
139	139	all fees associated with the employment or consumer arbitration proceeding, including the cost of 22
140	140	administering any proceedings after the default; 23
141	141	(3) Petition the court for an order compelling the drafting party to pay all arbitration fees 24
142	142	that the drafting party is obligated to pay under the arbitration agreement or the rules of the 25
143	143	arbitration provider; or 26
144	144	(4) Pay the drafting party’s fees and proceed with the arbitration proceeding. As part of the 27
145	145	award, the employee or consumer shall recover all arbitration fees paid on behalf of the drafting 28
146	146	party without regard to any findings on the merits in the underlying arbitration. 29
147	147	(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a 30
148	148	court of appropriate jurisdiction pursuant to subsection (b)(1) of this section, both of the following 31
149	149	apply: 32
150	150	(1) The employee or consumer may bring a motion, or a separate action, to recover all 33
151	151	attorneys’ fees and all costs associated with the abandoned arbitration proceeding. The recovery of 34
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155	155	arbitration fees, interest, and related attorneys’ fees shall be without regard to any findings on the 1
156	156	merits in the underlying action or arbitration; and 2
157	157	(2) The court shall impose sanctions on the drafting party in accordance with § 10-3-25. 3
158	158	(d) If the employee or consumer continues in arbitration pursuant to subsections (b)(2) 4
159	159	through (4) of this section, inclusive, the arbitrator shall impose appropriate sanctions on the 5
160	160	drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating 6
161	161	sanctions. 7
162	162	SECTION 2. This act shall take effect on January 1, 2026 8
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164	164	LC001504
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169	169	EXPLANATION
170	170	BY THE LEGISLATIVE COUNCIL
171	171	OF
172	172	A N A C T
173	173	RELATING TO COURTS AND CIVIL PROCEDURE -- PROCEDURE IN PARTICULAR
174	174	ACTIONS -- ARBITRATION
175	175	***
176	176	This act would provide that effective January 1, 2026 contract provisions relative to 1
177	177	arbitration would not apply to agreements covered by 9 U.S.C. §§ 1 through 16 and extend the time 2
178	178	for a party to apply for a stay of arbitration to one hundred-eighty (180) days. The act would also 3
179	179	invalidate any provision of an agreement that penalizes a party for seeking legal representation in 4
180	180	an arbitration; and require the arbitrator to provide notice of default to a party for failure to pay fees 5
181	181	and afford the party in default to challenge any notice of default. 6
182	182	This act would take effect on January 1, 2026 7
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