Arbitration in the Corporate World

1). Unless their award is overturned by the courts, binding arbitrement is just that--the award of the arbitrators has the force of law. In a binding arbitration, the corporate or other parties to a commercial argufy agree by contract to gift their dispute to arbitration. A typical AAA dispute forbearance clause reads as follows:

"Any controversy or pick out arising out of or relating to this contract, or the breach in that respectof, shall be settled by the

American arbitrement Association chthonic its Commercial

arbitrement Rules, and the judgment on the award rendered

by the arbitrator(s) may be entered in any court having

jurisdiction thereof" (American Arbitration Association, 1992, p. 2).

Some arbitrations are by agreement of the parties non-binding. For example, in cases where there is no agreement for binding arbitration and in which the center in controversy is less than $50,000, the parties may be logical to submit to arbitration by civil courts in the recount of California. The arbitrator's award is final and binding courts, unless one of the parties to the dis

It appeared for a while that the security industry was enjoying the best(p) of all worlds. SEC withdrew Rule 15c2-2; however, it announced in 1992 that it O.K. NASD rule changes that petitiond that class actions in securities matters be litigated, and so preserving that area for investors to sue (Exchange Act, 1987 and 1992, para. 84,163 and pp. 2189-2191, respectively).

Yuen, D. J. (1991, July). Arbitration as an alternative dispute resolution in medical malpractice cases. Honolulu: Hawaii Pacific University (unpublished manuscript).

breach thereof, shall be settled by arbitration in

In Wilko v. Swan, 346 U. S.

427 (1953), the Supreme Court held that the right to go to court to apply directs under the Securities Act of 1933 (the '33 Act) could not be waived by a PDAA and therefore that the dispute in that case, which involved a claim that the broker had defrauded the customer on his purchase of stock under sec. 12(2) of the '33 Act, could not be arbitrated. The Court relied in part on its conclusion that Congress intended sec. 14 of the '33 Act, which provides that any pact waiving compliance with any provision of that Act is void, to take priority over the provisions of the Arbitration Act. In its majority sight at p. 435, the Court was skeptical as to the adequacy of arbitration remedies to protect investors from violations of the '33 Act and stressed "the disadvantages under which buyers labor." Heinemann (1986) said that "the presumptuousness that arbitration would not provide as effective a remedy for the violation of investors' rights was an important element of the Court's decision in Wilko" (p. 550). By adopting its Rule 15c2-2, the SEC made it illegal for brokers to require customers to sign PDAAs. However, the Court then in a series of decisions largely eviscerated, then finally overruled Wilko.

Poser, N. S. (1993, Fall). Symposium: when ADR eclipses litigation: the brave new-fangled world of securities arbitration. Brooklyn L. Rev. 59,
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