§ 1281.98.Failure to Pay Fees and Costs During Pendency of Proceeding

Title 9. Arbitration · Chapter 2. Enforcement of Arbitration Agreements · Last amended 2024 · Last verified July 29, 2026

In one sentenceSection 1281.98 applies the same thirty-day material-breach and waiver rule to fees due during an already-pending employment or consumer arbitration, giving the employee or consumer the choice to withdraw to court with tolling, continue if the provider agrees, petition to compel payment, or pay the fees and recover them as part of the award regardless of merits.

Full Text of § 1281.98

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, that the drafting party pay certain fees and costs during the pendency of an arbitration proceeding, if the fees or costs required to continue the 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 the employee or consumer to proceed with that arbitration as a result of the material breach.

(2) The arbitration provider shall provide an invoice for any fees and costs required for the arbitration proceeding to continue 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. Any extension of time for the due date shall be agreed upon by all parties. Once the invoice has been paid, the arbitration provider shall provide to all parties a document that reflects the date on which the invoice was paid.

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

(1) Withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. If the employee or consumer withdraws the claim from arbitration and proceeds with an action in a court of appropriate jurisdiction, 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 any court, arbitration forum, or other dispute resolution forum.

(2) Continue the arbitration proceeding, if the arbitration provider agrees to continue administering the proceeding, notwithstanding the drafting party's failure to pay fees or costs. The neutral arbitrator or arbitration provider may institute a collection action at the conclusion of the arbitration proceeding against the drafting party that is in default of the arbitration for payment of all fees associated with the employment or consumer arbitration proceeding, including the cost of administering any proceedings after the default.

(3) Petition the court for an order compelling the drafting party to pay all arbitration fees that the drafting party is obligated to pay under the arbitration agreement or the rules of the arbitration provider.

(4) Pay the drafting party's fees and proceed with the arbitration proceeding. As part of the award, the employee or consumer shall recover all arbitration fees paid on behalf of the drafting party without regard to any findings on the merits in the underlying arbitration.

(c) If the employee or consumer withdraws the claim from arbitration and proceeds in a court of appropriate jurisdiction pursuant to paragraph (1) of subdivision (b), both of the following apply:

(1) The employee or consumer may bring a motion, or a separate action, to recover all attorney's fees and all costs associated with the abandoned arbitration proceeding. The recovery of arbitration fees, interest, and related attorney's fees shall be without regard to any findings on the merits in the underlying action or arbitration.

(2) The court shall impose sanctions on the drafting party in accordance with Section 1281.99.

(d) If the employee or consumer continues in arbitration pursuant to paragraphs (2) through (4) of subdivision (b), inclusive, the arbitrator shall impose appropriate sanctions on the drafting party, including monetary sanctions, issue sanctions, evidence sanctions, or terminating sanctions.

End

Plain-English Summary

Section 1281.97 covers fees needed to get arbitration started; this section covers fees that come due once the case is already underway. When an employment or consumer arbitration requires the drafting party to pay fees during the proceeding, and those fees aren't paid within 30 days of the due date, the drafting party is again in material breach, in default, and has waived its right to make the employee or consumer keep going with that arbitration.

The invoicing mechanics track § 1281.97's -- full amount, due date, same-day delivery to all parties, due upon receipt absent a contrary agreement -- with an added feature for cases already in progress: any deadline extension needs every party's agreement, and once an invoice is paid, the provider has to document the payment date for everyone.

A mid-case default gives the employee or consumer more options than a start-of-case default does. They can withdraw and go to court, with the same tolling protection for related claims. They can keep the arbitration going if the provider agrees to continue despite the nonpayment, with the arbitrator or provider free to later pursue a separate collection action against the drafting party for the unpaid fees. They can ask the court to order the drafting party to pay what it owes under the agreement or the provider's rules. Or they can front the drafting party's fees themselves and keep the case moving -- and if they do, the arbitration award has to reimburse those fees regardless of how the case comes out on the merits.

Two of these paths carry consequences for the drafting party beyond just paying what it owed. Choosing court triggers a right to recover attorney's fees and costs tied to the abandoned arbitration, plus mandatory § 1281.99 sanctions. Staying in arbitration instead means the arbitrator has to impose sanctions directly -- monetary, evidentiary, or terminating.

Frequently Asked Questions

What if arbitration fees stop being paid partway through the case, not just at the start?

Section 1281.98 applies the same 30-day material-breach and default rule to fees due during the pendency of the arbitration.

What options does the employee or consumer have when this happens?

Withdraw and proceed in court with tolling, continue arbitration if the provider agrees to proceed, petition the court to compel the drafting party to pay, or pay the fees themselves and recover them through the award.

Can the employee or consumer just pay the fees and keep the case going?

Yes, and the award must then reimburse those fees to the employee or consumer without regard to the merits of the underlying claim.

Are sanctions available for a mid-case fee default too?

Yes. Proceeding in court triggers mandatory sanctions under § 1281.99, and staying in arbitration requires the arbitrator to impose its own sanctions.

Amendment History

Amended by Stats 2023 ch 478 (AB 1756),s 17, eff. 1/1/2024. Amended by Stats 2021 ch 222 (SB 762),s 3, eff. 1/1/2022. Added by Stats 2019 ch 870 (SB 707),s 5, 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

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