Second Circuit Affirms Direction To Arbitrate But Holds The Arbitration Panel Determines Scope Of Contractual Forum Clause

UBS Financial Services, Inc., et al. v. West Virginia University Hospitals (WVUH), et al., Dkt. No. 11-235-cv (2d Cir. Sept. 2011), involves three issues of relevance to the development of international dispute resolution and international litigation. UBS acted as an underwriter and broker of auction rate securities and was a member of the Financial Industry Regulatory Authority (FINRA). WVUH issues $329 million in bonds, a significant portion of which were issued in the form of auction rate securities (ARS). UBS served as lead underwrite and main broker-dealer. WVUH wanted to arbitrate its dispute with UBS after the ARS market collapsed, and UBS sued in federal court to enjoin the arbitrarion claiming that, as an issuer, WVUH was not a customer and hence not entitled to demand arbitration under the FINRA regulations.