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California Statute - AB 2574
Prohibits private arbitration companies from having
a financial interest in parties and attorneys
BILL NUMBER: AB 2574	CHAPTERED
	BILL TEXT

	CHAPTER  952
	FILED WITH SECRETARY OF STATE  SEPTEMBER 27, 2002
	APPROVED BY GOVERNOR  SEPTEMBER 26, 2002
	PASSED THE ASSEMBLY  AUGUST 29, 2002
	PASSED THE SENATE  AUGUST 28, 2002
	AMENDED IN SENATE  AUGUST 26, 2002
	AMENDED IN SENATE  AUGUST 14, 2002
	AMENDED IN ASSEMBLY  MAY 14, 2002
	AMENDED IN ASSEMBLY  APRIL 17, 2002
	AMENDED IN ASSEMBLY  APRIL 1, 2002

INTRODUCED BY   Assembly Member Harman
                        FEBRUARY 21, 2002

   An act to add Section 1281.92 to the Code of Civil Procedure,
relating to arbitration.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2574, Harman.  Arbitration:  conflicts of interest.
   Existing law provides that in any arbitration pursuant to an
arbitration agreement, if a person is to serve as a neutral
arbitrator, the proposed neutral arbitrator is required to disclose
all matters that would cause a person aware of the facts to
reasonably entertain a doubt that the proposed neutral arbitrator
would be able to be impartial, as specified.
   This bill would prohibit a private arbitration company from
administering a consumer arbitration, or providing any other services
related to a consumer arbitration, if the company has, or within the
preceding year has had, a specified financial interest, in any party
or attorney for a party.  The bill would impose 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 private arbitration company.  The bill would state that its
provisions become operative on January 1, 2003.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 1281.92 is added to the Code of Civil
Procedure, to read:
   1281.92.  (a) No private arbitration company may administer a
consumer arbitration, or provide any other services related to a
consumer arbitration, if the company has, or within the preceding
year has had, a financial interest, as defined in Section 170.5, in
any party or attorney for a party.
   (b) No private arbitration company may administer a consumer
arbitration, or provide any other services related to a consumer
arbitration, if any party or attorney for a party has, or within the
preceding year has had, any type of financial interest in the private
arbitration company.
   (c) This section shall operate only prospectively so as not to
prohibit the administration of consumer arbitrations on the basis of
financial interests held prior to January 1, 2003.
   (d) This section applies to all consumer arbitration agreements
subject to this article, and to all consumer arbitration proceedings
conducted in California.
   (e) This section shall become operative on January 1, 2003.                                

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