NCJ Number
116356
Journal
Business Lawyer Volume: 44 Issue: 1 Dated: (November 1988) Pages: 65-84
Date Published
1988
Length
20 pages
Annotation
This article reviews the history of the Arbitration Act, a Federal statute that usually requires enforcement of contractual arbitration clauses, and focuses on a recent U.S. Supreme Court decision in Shearson/American Express v. McMahon that claims under the Securities Exchange Act of 1934 must be arbitrated if the disputants have agreed in a contract clause compelling arbitration.
Abstract
The McMahon case in analyzed in detail, with emphasis given to the identification of a Federal policy favoring arbitration. The author points out a puzzling aspect of the McMahon decision: McMahon created a dichotomy in securities litigation because its result applied only to claims under the Securities Exchange Act of 1934 and not to claims under the Securities Act of 1933. The different treatment of claims under the two statutes disrupts dispute resolution and fails to provide adequate consumer protection. Further problems affecting antitrust claims that result from the McMahon decision are discussed. The author points out that application of the McMahon rule to all commercial disputes could seriously hamper individual rights. Legislative amendments are proposed to remedy problems resulting from the McMahon decision. 164 footnotes.