Originally from Securities Arbitration: Practice and Forms - Fourth Edition – Preview Page

SCOPE NOTE 

Arbitration as a means of resolving disputes depends on the parties’ consent. This chapter analyzes the evidence of that consent—the arbitration agreement. 

Where the disputants are both members of the securities industry, the arbitration agreement often is a composite, formed by the bylaws, rules, and registration applications of FINRA. Section 3.02[2] examines these somewhat novel contracts, along with more standard forms of intra-industry agreements. 

In the case of disputes between members of the securities industry and the investing public, the existence of an obligation to arbitrate may depend upon the identity of the party against whom arbitration is sought. A securities industry member’s obligation to arbitrate a customer dispute is embodied in the FINRA rules, whereas a customer need not submit to arbitration unless he has expressly contracted to do so. Section 3.02[3] addresses the various types of agreements between members of the industry and the public, as well as the grounds on which customers most frequently try to invalidate such agreements. Section 3.02[4] examines agreements to arbitrate that are entered into after a dispute between the parties arises. 

At times, a threshold question of arbitrability may arise. That is to say that a dispute may arise to whether the issue between the parties is determined to be arbitrable, and what rules apply to govern the arbitration proceedings and awards. Section 3.02[1] addresses this evolving issue. 

Once the existence of an arbitration agreement is determined, counsel then must decide if the scope of that agreement encompasses the dispute at hand. As discussed in Section 3.03[1], the scope of intra-industry contracts is quite broad, and often is held to cover matters that arise after the relationship between the industry disputants has ended.