§ 1281.97.Material Breach For Failure to Pay Fees Before Arbitration Can Proceed

Title 9. Arbitration · Chapter 2. Enforcement of Arbitration Agreements · Last amended 2022 · Last verified July 29, 2026

In one sentenceSection 1281.97 puts a drafting party in material breach, default, and waiver of its right to compel arbitration if it fails to pay required fees to initiate an employment or consumer arbitration within thirty days of the due date, letting the employee or consumer then withdraw to court with tolling, or compel arbitration while shifting fees and costs.

Full Text of § 1281.97

Text sizeJump to: (a) (b) (c) (d)

(a)

(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.

(2) After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. 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.

(b) If the drafting party materially breaches the arbitration agreement and is in default under subdivision (a), the employee or consumer may do either of the following:

(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction.

(2) Compel arbitration in which the drafting party shall pay reasonable attorney's fees and costs related to the arbitration.

(c) If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction under paragraph (1) of subdivision (b), the statute of limitations with regard to all claims brought or that relate back to any claim brought in arbitration shall be tolled as of the date of the first filing of a claim in a court, arbitration forum, or other dispute resolution forum.

(d) If the employee or consumer proceeds with an action in a court of appropriate jurisdiction, the court shall impose sanctions on the drafting party in accordance with Section 1281.99.

End

Plain-English Summary

Arbitration only works for an employee or consumer if the company that wrote the arbitration clause pays to get it started. This section makes that obligation enforceable with real teeth. When an employment or consumer arbitration requires the drafting party to pay fees or costs before the arbitration can proceed, and those fees aren't paid within 30 days after the due date, the drafting party is automatically in material breach of the arbitration agreement, in default of the arbitration, and has waived its own right to compel arbitration under § 1281.2.

The 30-day clock starts running from an invoice the arbitration provider has to issue immediately once the employee or consumer has met the requirements to start arbitration. That invoice has to state the full amount owed and the due date, and go to every party the same way on the same day. Absent a contract term saying otherwise, invoices are due upon receipt -- there's no built-in grace period beyond the 30 days this section itself allows.

Once the drafting party defaults, the employee or consumer gets to choose the path forward. They can withdraw the claim entirely and proceed in court instead, or they can compel arbitration to go forward with the drafting party now on the hook for reasonable attorney's fees and costs tied to the arbitration. Choosing court doesn't come at the expense of the underlying claim's timeliness: the statute of limitations on all related claims is tolled back to the date the claim was first filed in any court, arbitration forum, or dispute-resolution forum. And if the employee or consumer ends up in court, § 1281.99 requires the court to sanction the drafting party for the default.

Frequently Asked Questions

What happens if a company doesn't pay arbitration fees on time before arbitration even starts?

It's automatically in material breach of the arbitration agreement, in default of the arbitration, and waives its right to compel arbitration under § 1281.2.

How many days does the drafting party have to pay?

Thirty days after the due date stated in the arbitration provider's invoice, which defaults to due upon receipt absent a contrary agreement.

What can an employee or consumer do once the drafting party defaults?

Withdraw the claim and proceed in court, or compel arbitration while making the drafting party pay reasonable attorney's fees and costs related to the arbitration.

Does the statute of limitations keep running while this plays out?

No. If the employee or consumer proceeds to court, the statute of limitations on related claims is tolled back to the date of the first filing in any court, arbitration, or dispute-resolution forum.

Amendment History

Amended by Stats 2021 ch 222 (SB 762),s 2, eff. 1/1/2022. Added by Stats 2019 ch 870 (SB 707),s 4, eff. 1/1/2020.

Source & verification. Section text is reproduced verbatim from the California Legislative Information. Enacted by the California Legislature. Last verified July 29, 2026. · Official source

Also known as: arbitration fees not paid californiaemployer fails to pay arbitration feesmaterial breach arbitration agreement fees