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“The majority position in U.S. courts is that statutes of limitation do not apply in arbitration.” Arbitration and the Rule of Law; Lessons from Limitations Periods, 27 Am. Rev. Int’l Arb. 373 (2016) (emphasis added). “[T]hese courts concluded that arbitration is an informal dispute resolution process that is fundamentally different from litigation, and that limitations periods applicable in judicial proceedings therefore should not be applicable in arbitral proceedings.” Id. “Florida is the only state whose courts have held statutes of limitation applicable in arbitration in the absence of an unequivocal statutory direction to do so.” Id.

The Michigan Supreme Court has held that statutes of limitation do not apply when there is a “provision in the arbitration agreement explicitly stating when a demand for arbitration must be made.” Nielsen v. Barnett, 440 Mich. 1 (1992). Based on this ruling, statutes of limitations should not apply in FINRA arbitration proceedings in Michigan because the FINRA Code, which is incorporated into all arbitration agreements between FINRA member firms and their customers, specifically states that a demand for arbitration must be made within 6 years of the occurrence or event giving rise to the claimant’s claim in order for the claim to be eligible for arbitration. FINRA Customer Code §§ 12101, 12206.

Notwithstanding the foregoing, it is best practice for investors to file their claims within statutory limitations periods for the simple reason that it will help to stave off frivolous motions to dismiss.

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