Eligibility and Statutes of Limitations in Arbitration

Abstract

Cases that are heard before FINRA arbitration panels must be “eligible” for arbitration. FINRA’s eligibility rule, Rule 12206(a), states “[n]o claim shall be eligible for submission to arbitration under the Code where six years have elapsed from the occurrence or event giving rise to the claim.” “Occurrence or event” is not defined within the Code, and accordingly, there is much dispute over what “occurrence or event” starts the clock on the six years. This article discusses FINRA guidance and case law interpreting “occurrence or event.”

Additionally, statutes of limitations may bar claims. Few states have addressed explicitly whether statutes of limitations apply to arbitrations as well as court actions. In many states, the applicability is determined by the phrasing within the statute. Statutes that use the term “actions” are generally interpreted to exclude arbitrations, while those that include the term “proceedings” are deemed to apply to arbitrations. The article examines the case law discussing the differences.