Compelling arbitration in California: 10 days to respond, four defences, and a 30-day fee deadline that forfeits the whole clause

California courts must order arbitration when a written agreement covers the dispute. The interesting parts are the exceptions — one of which lets a court refuse arbitration entirely to avoid conflicting rulings — and a 2019 statute that takes the right away from a company that pays the arbitrator late.

The starting point

CCP 1281:

A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.

Ordinary contract defences apply, and nothing else.

The petition, and the four exceptions

CCP 1281.2: on petition of a party alleging a written agreement to arbitrate and that another party refuses to arbitrate, "the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that":

• (a) The right to compel arbitration has been waived by the petitioner; or
• (b) Grounds exist for rescission of the agreement.
• (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.
• (d) The petitioner is a state or federally chartered depository institution seeking, on or after January 1, 2018, to apply the section in the circumstances the subdivision describes.

Subdivision (c) is the distinctively Californian one. Where the same transaction has produced both an arbitrable dispute and litigation with a third party who is not bound by the clause, the court may decline to compel arbitration to avoid inconsistent outcomes. Most jurisdictions have no equivalent, and the Federal Arbitration Act does not.

It is drafted against gamesmanship, too: "a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition."

So a third-party action filed after the petition still counts — but only if filed by the hearing date.

And it has a carve-out: subdivision (c) "shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295."

Responding: 10 days

CCP 1290.6:

A response shall be served and filed within 10 days after service of the petition except that if the petition is served in the manner provided in paragraph (2) of subdivision (b) of Section 1290.4, the response shall be served and filed within 30 days after service of the petition. The time … may be extended by an agreement in writing between the parties to the court proceeding or, for good cause, by order of the court.

Ten days is short, and it runs from service of the petition rather than from any hearing date. Extensions are available by written agreement or on good cause — but they have to be obtained, not assumed.

Staying the court case

CCP 1281.4 supplies the stay, and it covers two situations.

Where arbitration has been ordered — by any court of competent jurisdiction, "whether in this State or not" — of a controversy at issue in a pending California action, the court "shall, upon motion of a party … stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies."

Where an application is still undetermined — again in any competent court, in or out of state — the California court "shall, upon motion of a party … stay the action or proceeding until the application … is determined," and then until the arbitration is had if it is ordered.

Partial stays: "If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only."

Two points. The stay is mandatory on motion — "shall" — but it is on motion, so someone has to ask. And it responds to orders and pending applications in other jurisdictions, not only California ones.

Choosing the arbitrator

CCP 1281.6 sets a cascade:

1. If the agreement provides a method, that method shall be followed.
2. If it does not, the parties "may agree on a method of appointing an arbitrator and that method shall be followed."
3. "In the absence of an agreed method, or if the agreed method fails or for any reason cannot be followed, or when an arbitrator appointed fails to act and a successor has not been appointed, the court, on petition of a party … shall appoint the arbitrator."

The nomination procedure: where the court is asked to appoint a neutral arbitrator, it "shall nominate five persons from lists of persons supplied jointly by the parties … or obtained from a governmental agency concerned with arbitration or private disinterested association concerned with arbitration."

The parties then have "within five days of receipt of notice of the nominees … jointly [to] select the arbitrator whether or not the arbitrator is among the nominees." If they fail to select within the five days, "the court shall appoint the arbitrator from the nominees."

That five-day window is easy to miss, and it is the parties' last chance to pick someone off the court's list.

The fee-payment trap

CCP 1281.98 is the provision most likely to decide an employment or consumer arbitration, and it runs against the company.

Subdivision (a)(1): in an employment or consumer arbitration that requires the drafting party to pay certain fees and costs during the pendency of the 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.

Thirty days past due, and the clause is forfeited as to that dispute. No showing of prejudice, no discretion.

The invoicing rules — subdivision (a)(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." 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.

And the default is immediate: "To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt."

So unless the agreement itself sets a payment period, the 30 days runs from receipt of the invoice. "Any extension of time for the due date shall be agreed upon by all parties" — the provider cannot grant one unilaterally, and neither can the paying party.

For an employee or consumer, this means the arbitration file should be diarised against every invoice. For a drafting party, it means invoice handling is not an administrative matter but a substantive one.

How the pieces fit

How California compares

A short checklist

If you are moving to compel

1. Attach the written agreement and plead the refusal to arbitrate. Those are the elements.
2. Check your own conduct for waiver. Subdivision (a) is the most common answer to a late petition.
3. Ask for the CCP 1281.4 stay by motion. It is mandatory, but only on motion.
4. Watch for related third-party litigation. Under subdivision (c) it can defeat the petition — including an action filed after your petition but before the hearing.
5. If the court is appointing, calendar five days from notice of the nominees.

If you are resisting

1. Calendar 10 days from service. Extensions need a written agreement or a good cause order.
2. Look for a parallel action with a non-signatory arising from the same transactions. That is CCP 1281.2(c), and it is unique to California.
3. Check for waiver and rescission grounds — the two ordinary defences in subdivisions (a) and (b).

If you are already in a consumer or employment arbitration

1. Diary every provider invoice. Absent an express payment period in the agreement, it is due on receipt.
2. Count 30 days past the due date. If the drafting party has not paid, it is in material breach, in default, and has waived the right to compel you to continue.
3. Extensions require everyone's agreement. A unilateral extension by the provider or the payer does not stop the clock.

Where these sections live

• CCP 1281 — Validity of arbitration agreements
• CCP 1281.2 — Petition to compel arbitration
• CCP 1281.4 — Stay of the court proceeding
• CCP 1281.6 — Appointment of the arbitrator
• CCP 1281.98 — Late payment of arbitration fees
• CCP 1290.6 — Time to respond to a petition
• CCP 1005 — Notice periods for motions
• CCP 998 — Offer to compromise

This page explains what the Code says. It isn't legal advice, and the interaction between these sections and the Federal Arbitration Act is decided under case law this site doesn't cover.