Originally from Dispute Resolution Journal

SECURITIES-APPLICABILITY OF ARBITRATION AGREEMENT-ENFORCEMENT OF ARBITRATION AGREEMENT - FEDERAL ARBITRATION ACT - MOTION TO VACATE AWARD- CONTRACT INTERPRETATIONBROAD CLAUSE

The court refused to vacate an arbitration award, finding that the Federal Arbitration Act (FAA) applied to the dispute and that the parties' arbitration agreement was broad enough to cover their dispute even though the transactions giving rise to their dispute occurred prior to the agreement's execution.

Robert Zink purchased bonds through Merrill Lynch, Pierce, Fenner & Smith, Inc. Some time after the purchase, the parties executed a formal account agreement which included a provision for arbitration. Zink filed suit against Merrill Lynch, asserting state and federal claims in connection with the bond purchase. The matter was referred to arbitration where a panel found in favor of Merrill Lynch. The award was confirmed, and Zink appealed.

Zink argued that the award should be vacated because the dealings giving rise to the dispute occurred prior to execution of the customer agreement. The court disagreed. Arbitration is a matter of contract. The parties' agreement in this case was broad enough to cover their dispute. The court deemed Zink's contention that an agreement to arbitrate a dispute must pre-date the actions giving rise to the dispute misplaced, stating that such a suggestion runs contrary to contract principles which govern arbitration agreements. The court also rejected Zink's claim that the dispute is not covered under the Federal Arbitration Act (FAA) because it has its origins in actions done prior to the account agreement's execution. It broadly construed the language of the Act so as to "cover agreements to arbitrate a dispute not arising out of the contract containing the arbitration agreement so long as the other requirements of the Act are satisfied." The court found persuasive language in section 2 of the Act dictating that "an agreement in writing to submit to arbitration an existing controversy arising out of .. . a contract [or] transaction [involving commerce] shall be valid [under the Act]." In accordance with its findings, the court affirmed the trial court's judgment confirming the arbitration award. nafta--_resolving_intl_payments_conflicts.