ASSEMBLY, No. 4972




DATED:  MARCH 7, 2019


      The Assembly Consumer Affairs Committee reports favorably an Assembly Committee Substitute for Assembly Bill No. 4972.

      As reported, the committee substitute regulates arbitration organizations. Increasingly, when a contract is signed between an individual and a business in a consumer transaction, the contract contains an arbitration clause that requires an arbitration organization to administer the arbitration.  In addition, the arbitration organization typically dictates the rules governing the dispute and how the arbitrator is chosen.  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.

      The committee substitute 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 committee substitute requires an arbitration organization to waive the fees and costs of arbitration, exclusive of arbitrator fees, for an indigent consumer.  In addition, the committee substitute requires an arbitration organization to provide written notice to any consumer of the right to obtain a fee waiver and to keep specified information concerning a consumer confidential.

      The committee substitute further prohibits an arbitration organization from administering consumer arbitration, or providing any other services related to consumer arbitration, if the company has, or within the preceding year has had, a financial interest in any party or attorney for a party. The committee substitute imposes similar limitations on the provision of services by private arbitration companies based on the financial interests of any party or attorney for a party in the arbitration organization.

      The committee substitute also requires an arbitration organization involved in consumer arbitration cases to make certain information regarding those cases available to the public.

      Finally, the committee substitute does not apply to arbitrations conducted or administered by a self-regulatory organization, as defined by the federal “Securities Exchange Act of 1934,” the “Commodity Exchange Act,” or regulations adopted under those acts.