From California to Virginia: Arbitration Compliance is Getting Stricter
By Alex Wade
July 15, 2026
When I first started practicing law, arbitration felt relatively straightforward for financial institutions. Put a clean arbitration clause in the agreement, avoid class actions, move disputes out of court, and everyone saves time and money.
Fast forward to 2026, and arbitration compliance looks very different than it did even a few years ago.
For financial institutions, having an arbitration clause in the agreement is only part of the equation. Courts and lawmakers are paying closer attention to how arbitration is actually administered, including whether businesses are complying with procedural requirements, payment deadlines, and fairness standards once a dispute is filed. While Virginia’s new Arbitration Fairness Act is getting attention, California financial institutions have already been dealing with similar scrutiny for years.
Why Virginia’s New Law Matters
That is why Virginia’s new Arbitration Fairness Act, SB 227, is worth paying attention to even for institutions that do little or no business in Virginia. Although the law is directed primarily at arbitration providers and Virginia-based disputes, it reflects a broader national trend toward increased oversight of arbitration procedures and heightened consequences for failing to properly administer the process.
Virginia’s SB 227, signed into law in April 2026 and effective July 1, 2026, primarily targets “high-volume arbitration service providers” and imposes new requirements, including:
- Arbitrator selection procedures
- Reporting obligations
- Payment requirements
- Additional administrative and compliance standards
The law also creates additional grounds for challenging arbitration awards when providers fail to comply with certain statutory requirements.
California Has Been Here Before
In many respects, SB 227 reflects concerns that California courts and lawmakers have attempted to address over the last several years.
California has made clear that institutions seeking to enforce arbitration agreements must comply with procedural requirements, including timely payment of arbitration fees and costs after a consumer arbitration is initiated. Failure to do so can result in significant consequences, including waiver of the right to compel arbitration and termination of the arbitration proceeding.
In other words, even if an arbitration provision is valid and enforceable, arbitration rights can still be lost if a financial institution fails to properly follow arbitration compliance procedures, including making timely payments.
The Bigger Takeaway for Financial Institutions
That is where the overlap with Virginia’s new law becomes important. Both California and Virginia are signaling the same message: institutions cannot simply rely on the existence of an arbitration clause. Instead, they must also ensure that the arbitration process is properly administered once a claim is filed by monitoring deadlines, making timely payments, and satisfying other procedural obligations.
Financial institutions should have procedures in place for:
- Handling arbitration demands promptly
- Tracking payment and procedural deadlines
- Making timely arbitration fee payments
- Coordinating with counsel when issues arise
Virginia’s SB 227 and California’s existing arbitration framework serve as reminders that arbitration compliance matters. And unfortunately, unlike forgetting to respond to your spouse’s text message, missing an arbitration deadline may cost a lot more than just an uncomfortable conversation.
Please do not hesitate to reach out to SW&M if you would like assistance reviewing your institution’s arbitration agreements or related arbitration compliance practices.
About the Author
Alex Wade
Alex Wade is a Senior Associate Attorney at SW&M and is part of the firm’s Regulatory Compliance and Litigation Management practice groups. Using his experience in consumer defense, complex business litigation, governmental liability, insurance entity defense, and personal injury law, […]
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