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Applying The Eligibility Rule In Securities Arbitration: Resolving Circuit Court Conflict Regarding The Proper Role Of Arbitrators And Courts - Howsam V. Dean Witter Reynolds, Inc., James D. Hughes

Journal of Dispute Resolution

In Howsam v. Dean Witter Reynolds, Inc., the United States Supreme Court reviewed a Tenth Circuit holding that the eligibility rule presented a question of arbitrability, and was thus for the court to decide. Reversing, the Supreme Court held that the arbitrator, not a court, should apply the time limit rule. The Court's decision resolves the split among the circuit courts in addition to allowing arbitration clauses in securities firms' client agreements to serve their purpose of providing an efficient and less costly method of litigating disputes relating to investment accounts, ultimately increasing investor confidence in the securities industry.