We finally have a ruling on the questionable argument that is often advanced that the statute of limitations does not apply in arbitration. The argument is premised on a contorted interpretation of a Florida statute and requires one to believe that an arbitration proceeding is not a "civil action or proceeding." Unfortunately, a lower court agreed with this argument, and ruled that the statute of limitations did not apply when a dispute was brought in arbitration, rather than court. The Florida Supreme Court reversed.
Every so often a claimant attempts to convince an arbitration panel that the statute of limitations does not apply to their claims. For better or worse, every type of legal claim has a statute of limitations. The Florida statute adopting limitation periods uses the phrase "civil action or proceeding." In an attempt to avoid the limitations period, some attorneys have argued that an arbitration is not a "civil action or proceeding." The argument continues to the illogical conclusion, that there is no statute of limitations for a claim that is brought in arbitration, and the only restriction is whether or not an arbitration forum will process an old claim.
Fortunately, the language used in the Florida statute is not used by a significant number of states, and in those states the door is not open to such wordsmithing. That door is also now shut in Florida, and we can expect it to be shut in other states where similar language is used.
The Florida Supreme Court put an end to this, and ruled that Florida's statute of limitations apply not only to court proceedings, but to securities arbitration cases between investors and their brokers. The ruling resolves this dispute and forces investors to file their claims in a timely fashion like everyone else.
While some in the press are calling this a significant blow to investors, this is nothing more than a court enforcing the law. Very few states use the phrasing that is used in the Florida statute, and this is not a significant change in arbitration practice.
The simple fact is, you need to pay attention to the statute of limitations, whether you are in court, or in arbitration.