Fact Pattern 3-2
Ellen contracts with James to be her stockbroker, making stock trades for Ellen's account. Ellen need not pre-approve the trades that James makes, only trades for more than $20,000. Ellen and James include a clause stating "that in case of any disputes arising out of this contract; the dispute shall be arbitrated using the rules of the New York Stock Exchange."
Ellen learns that since signing her contract with James, he has routinely been making trades worth more than $20,000 without her permission, and losing money.
-Refer to Fact Pattern 3-2. After Ellen receives her determination from the arbitrators, James decides that the arbitrator was wrong in his understanding of the brokerage agreement. James decides to appeal the decision of the arbitrators. In this case:
A) he may not appeal the decision
B) only Ellen may appeal the decision
C) he may appeal to a court, but he is unlikely to win
D) he may appeal only to the New York Stock Exchange
E) none of the other choices

Question

Quizplus · Accepted Answer

Although the parties agreed to arbitrate any disputes arising out of the contract, James may still appeal the decision to a court, but he is unlikely to win. The court will uphold the arbitrator's decision if it was made in accordance with the rules of the New York Stock Exchange and was not arbitrary or capricious. However, the scope of judicial review of arbitration awards is limited, so James would have a high burden to show that the arbitrator's decision was erroneous or that the arbitration process was unfair.

Fact Pattern 3-2 Ellen Contracts with James to Be Her Stockbroker, Making Stock