Untimely Payment of Arbitrator’s Fees Can Result in Severe Consequences

NL 8 Arbitrator Fee Deadline Consequences

Untimely Payment of Arbitrator’s Fees Can Result in Severe Consequences

Today, we’re highlighting three recent cases that address an essential aspect of arbitration proceedings: the timely payment of the arbitrator’s fees. These cases are a cautionary tale, because failing to pay on time can result in severe consequences, including losing your right to arbitrate at all.  

Paying versus Mailing

Doe v. Superior Court (2023) 95 Cal.App.5th 346 involved a plaintiff who sued her former employer. The former employer successfully compelled arbitration before the American Arbitration Association (“AAA”). On September 1, 2022, AAA sent the parties an invoice for the arbitrator’s fees. It noted that, under Code of Civil Procedure section 1281.98, payment must be received within 30 days. The former employer mailed payment of the fees on September 30, but AAA received the check on October 5. The plaintiff argued the payment was late and moved to vacate the trial court’s order compelling arbitration. The trial court denied the motion, but the plaintiff appealed.  

The Court of Appeal found the payment untimely. It held Code of Civil Procedure section 1281.98 requires the employer to pay—not just send—the arbitrator fees and costs within 30 days after the due date. If it fails to do so, the employer is in material breach of the arbitration agreement and waives its right to compel arbitration. The court found September 1 was the “due date” for the payment. The court also found the statute’s term “paid” meant “receipt” of the funds—depositing a check in the mail was not enough. Since the payment was received on October 5—over 30 days after AAA’s September 1 due date—it was untimely. Thus, the case was sent back to the superior court for trial. 

Electronic Payments and Holidays

A few months later, in Suarez v. Superior Court of San Diego County (2024) 99 Cal.App.5th 32, the Court of Appeal addressed whether electronic service of an invoice impacts the payment deadline. There, a former employee sued the employer, and the court ordered the parties to arbitration before JAMS. On December 2, 2022, JAMS issued an email for the initial filing fee, stating that payment was due upon receipt. The former employer paid on January 4—33 days later. It argued the payment was timely. First, it argued the 30-day deadline fell on January 1, but January 1 and 2 were holidays, thus the deadline should be extended to January 3. Then, it argued that because JAMS emailed the invoice, Code of Civil Procedure section 1010.6 required an additional two-day extension for electronic service—moving the final deadline to January 5.  

The court disagreed. It found, even assuming a holiday extension, section 1010.6 did not apply to extend the deadline another two days. The section governs the timing of service in state-court actions. It does not apply to arbitration proceedings, nor does it apply to arbitration invoices provided via email. Therefore, the court held that, even if the deadline was extended due to the holidays to January 3, the former employer’s payment was untimely.  

Agreement by All Parties

The most recent case is Hohenshelt v. Superior Court of Los Angeles County (2024) 318 Cal.Rptr.3d 475. There, the employment-related case was compelled to arbitration before JAMS. On July 29, 2022, JAMS sent an invoice to the former employer. On August 29, JAMS sent another invoice for another payment. Both invoices stated they were due upon receipt. But they were not paid, causing JAMS to send a warning letter on September 30: “Pursuant to our fee and cancellation policy, all fees must be paid in full by October 28, 2022, or your [arbitration] hearing may be subject to cancellation.” This prompted the former employer to pay the fees on October 5. Despite the former employer paying before the second—October 28—deadline, the former employee claimed the October 5 payment was untimely, and he attempted to return the case back to superior court. The trial court refused his request, finding that the due date was revised to October 28. The former employee filed a petition challenging the court’s denial, and the Court of Appeal granted the petition.  

The appellate court first noted that under Code of Civil Procedure section 1281.98, any extension of time to pay arbitration fees must be agreed upon by the parties; it does not allow an arbitrator to remedy a party’s late payment. The court then found that the fees for the July 29 invoice had to be paid by August 28, and the fees for the August 29 invoice had to be paid by September 28. Because payment was not made by those dates, the former employee could withdraw from the arbitration: “Section 1281.98 does not allow for any extension of time for the due date absent an agreement ‘by all parties.’” So the revised invoice from JAMS didn’t change the deadline.  

What are the takeaways here? 

  • Employers must ensure that payment is received by the arbitrator within 30 days of the initial due date. Mailing it within the 30-day window is not sufficient.  
  • No extensions apply to invoices sent via email.  
  • The due date is not revised simply because the arbitration administrator sends a revised invoice. The initial due date is the effective due date absent an agreement by all parties. 

These cases illustrate that initiating arbitration proceedings hinges on strict adherence to procedural requirements, including the timely payment of arbitrator fees—and many plaintiffs will seek technicalities to avoid arbitration if they can. Failure to meet these deadlines can have significant repercussions. Therefore, please ensure you pay your arbitration fees within the statutory deadlines to avoid forfeiting your rights. 


Keith W. Carlson and Nima A. Jalali 

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