Review of Court Decisions - Dispute Resolution Journal - Vol. 44, No. 3
Originally from Dispute Resolution Journal
SECURITIES- SECURITIES ACT OF 1933-ENFORCEABILITY OF ARBITRATION AGREEMENTFEDERAL ARBITRATION ACT - RETROACTIVE APPLICATION
The U.S. Supreme Court held that an agreement to arbitrate claims arising under the Securities Act of 1933 is enforceable, thereby overruling Wilko v. Swan, which it deemed was incorrectly decided and inconsistent with the prevailing uniform construction of other federal statutes governing arbitration agreements in business transactions.
Rodriguez de Quijas signed a standard customer brokerage agreement with Shearson/ American Express. The agreement contained an arbitration clause. When a dispute arose, Rodriguez de Quijas brought an action in federal court. The district court ordered all claims, except those raised under section 12(2) of the Securities Act of 1933, to be submitted to arbitration. It determined that under the U.S. Supreme Court's holding in Wilko v. Swan, 346 U.S. 427 (1953), the section 12(2) claims must proceed in court. The appellate court reversed, finding Wilko obsolete and concluding that the arbitration agreement was enforceable. The U.S. Supreme Court granted certiorari and affirmed.