Shareholders Lawsuits and Arbitration Clauses in Corporate Charters

Should the Securities and Exchange Commission permit arbitration clauses in a public company's charter? A member of the SEC recently said yes.

"For shareholder lawsuits, companies can come to us to ask for relief to put in mandatory arbitration into their charters," said Michael Piwowar. "I would encourage companies to come and talk to us about that."

As Reuters reports, "The issue garnered attention in 2012, when the SEC pressured private equity firm Carlyle Group L.P. to drop a mandatory arbitration requirement before the regulator would sign off on its IPO plans."

Piwowar's use of the word "mandatory" cuts against his position because, as the saying goes, "arbitration is a matter of contract," and contracts are consensual, not mandatory. Piwowar's position should rest of the view that a corporate charter is contractual so becoming a shareholder is consent to (agreeing to a contract that provides for) arbitration of disputes. In contrast, making arbitration "mandatory" sounds like "forcing" shareholders to arbitrate, which is likely what Piwowar's opponents will argue.

New Book on Arbitration Law

Pleased to announce publication of my new book, Principles of Arbitration Law.

Thanks to my excellent co-author, Ariana Levinson, Professor of Law at the University of Louisville's Brandeis School of Law.

Thanks also for the Nice plug from Professors Rick Bales and Sarah Cole.

As the publisher (West) says and Amazon quotes:

The Concise Hornbook Principles of Arbitration Law is an authoritative and extensively cited treatise on arbitration. It thoroughly discusses general arbitration law―from federal preemption of state law to the formation, performance, and enforcement of arbitration agreements―and provides in-depth coverage of specialized law governing international arbitration and labor arbitration. The last few decades have witnessed the growth of a large body of legal doctrine―from statutes, judicial decisions, and other sources―focused on arbitration. This Concise Hornbook summarizes that body of law, so should be useful to lawyers and scholars researching arbitration law and to students learning about arbitration.

This Concise Hornbook is designed to be used as the primary or secondary text in a law school course. Many teachers of arbitration design their courses to develop a wide array of practice skills, generally through the use of role-playing exercises. Because this book is clear and concise, students reading it can quickly gain a solid understanding of arbitration’s central concepts and legal doctrines. This efficient use of time enables the teacher to devote many class sessions to role-playing exercises, and discussion of them. This Concise Hornbook can also serve as the primary text for arbitration seminars. Before venturing into a field of scholarship, students generally need a solid foundation in the field’s central concepts and legal doctrines. This book provides that foundation with only a limited amount of reading, thus enabling students to devote substantial time to the seminar’s more-advanced work of reading scholarly articles and writing original papers.

Religious Arbitration

Emory Law Professor Michael Broyde blogging on his new book, “Sharia Tribunals, Rabbinical Courts, and Christian Panels: Religious Arbitration in America and the West”