Review of Court Decisions - Dispute Resolution Journal - Vol. 28, No. 4
Originally from Dispute Resolution Journal
FLORIDA F.S.A. 682.02 — ARBITRATION CLAUSE IN CUSTOMER'S STOCK AGREEMENT — ORDER TO COMPEL QUASHED
The Florida District Court of Appeals for the Fourth District interpreted Florida Arbitration Code §682.02, et seq. to mean that an arbitration agreement may not be enforced in Florida unless the agreement provides for arbitration in Florida and otherwise complies with the Code. The parties entered into a stock agreement which provided for arbitration of controversies in accordance with the rules then obtaining of either the Arbitration Committee of the Chamber of Commerce of the State of New York, the American Arbitration Association, or the Board of Arbitration of the New York Stock Exchange, as the parties might elect. The agreement and its enforcement were to be governed by the laws of the State of New York. The customer, a resident of Florida, commenced an action for damages and the foreign stock brokerage corporation filed a motion to compel arbitration, which the trial court granted. The customer appealed. The appellate court rejected the customer's argument that the arbitration clause was not binding because it was an attempt to oust the court's jurisdiction over security transactions (Shearson, Hammill & Co. v. Vouis, Fla. App. 1971, 247 So.2d 733, cert. den. 253 So.2d 444 (Fla. 1971). The court distinguished the cases on their facts. Shearson concerned an allegation of fraud, misrepresentation and breach of fiduciary duties, and to have allowed arbitration of these issues was held to have been inconsistent with the policy and language of the Florida Securities Law which, in this instance, had control over the provisions of the Florida Arbitration Code. In the instant case there was no "allegation of fraud arising from a contractual relationship under the Florida Securities Law." The customer sought damages as a result of alleged unauthorized purchases and sales of stock made on behalf of the customer by an agent of the stock brokerage firm. The court found that what was relevant, however, was the language in the Florida Arbitration Code §682.02, which declares future agreements to arbitrato are enforceable unless within the agreement "it is stipulated that this law shall not apply . . ." and §682.18 authorizes the court's jurisdiction to enforce the agreement where arbitration is "subject to this law and providing for arbitration in this state." The court found that the jurisdiction of the Florida court could not be invoked to specifically enforce an agreement unless it complied with the Florida Code.
Knight v. H.S. Equities, Inc., 280 So.2d 456, (District Court of Appeals of Florada, 1973).