“Non-Party Enforcement of Arbitration Provisions”
On May 23, 2013, in Ronay Family Ltd. P’ship v. Tweed, D062195, 2013 WL 2300117 (Cal. Ct. App. May 23, 2013), the Fourth District of the California Court of Appeal held that an agent and third-party beneficiary could enforce the arbitration clause contained in the account agreement between an investor and a former member firm of the Financial Industry Regulatory Authority (“FINRA”). The court further held that even though the securities brokerage firm had become defunct and lost the ability to enforce the arbitration clause under the rules of FINRA, the investment advisory firm and registered representative nevertheless retained the rights to do so.
This Stroock Special Bulletin examines the Tweed decision, and discusses how it might apply in the context of non-party enforcement of arbitration provisions.