514 U.S. 52 (1995)
Petitioners opened a stock account with respondent brokerage company and claimed that respondent mishandled their account. Petitioners sued respondent in federal court, and respondent successfully stayed the proceeding, claiming that their agreement with petitioners required all disputes to go before an arbitration panel, applying New York law as its choice of law. An arbitration panel convened and found in favor of petitioners, awarding compensatory and punitive damages. Respondent challenged the award of punitive damages, arguing that under New York law, arbitrators were not permitted to award punitive damages.
- On appeal, the court held that the agreement requiring that New York law applied meant that only New York's substantive law was applicable to the parties' dispute, and not its provisions limiting an arbitrator's award.
- The court determined that the parties' agreement permitted punitive damages from arbitrators and so enforced the panel's award.
The court reversed the judgment of the lower court and held that a choice of law provision in an arbitration agreement only applied to that state's substantive law, and not to its rules limiting an arbitrator's award.
Suggested Study Aids For Securities Regulation Law
Securities Regulation in a Nutshell, 10th (Nutshell Series)
Securities Regulation: Examples & Explanations, 5th Edition
Securities Regulations: The Essentials