On October 10, 2023, Governor Gavin Newsom signed into law Senate Bill 365 ("SB 365"). SB 365 amends Section 1294 of the Code of Civil Procedure, specifically addressing the issue of automatic stays during the pendency of an appeal of an order dismissing or denying a petition to compel arbitration. SB 365 went into effect on January 1, 2024.
Under existing law, parties have the right to appeal various orders, including those dismissing or denying a petition to compel arbitration. Concurrently, a general provision stays trial court proceedings on the judgment or order being appealed, with exceptions. However, SB 365 introduces a crucial modification to this automatic stay provision.
The key amendment lies in Section 1 of the bill, where Section 1294 of the Code of Civil Procedure is revised. The updated language now explicitly states that, despite the appeal, trial court proceedings will not be automatically stayed during the process of an appeal of an order dismissing or denying a petition to compel arbitration.
This alteration carries implications for the flow and timing of legal actions related to arbitration disputes. While the appeal process unfolds, the trial court retains the authority to proceed with relevant proceedings, adding a dynamic element to the overall legal landscape.
It is worth noting that this change does not affect the broader spectrum of appeals outlined in Section 1294, including orders dismissing a petition to confirm, correct, or vacate an award, orders vacating an award (unless a rehearing in arbitration is ordered), judgments under the specified title, or special orders after final judgment.
The decision to implement SB 365 reflects a nuanced consideration of the balance between the rights of parties involved in arbitration disputes and the efficient progression of legal proceedings. As this amendment takes effect, attorneys and stakeholders in arbitration cases are advised to stay attuned to the evolving contours of California's civil procedure landscape.
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Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.
