## Facts

- Dean Witter Reynolds, Inc., a securities brokerage firm and NASD member, recommended that Karen Howsam purchase interests in four limited partnerships between 1986 and 1994.
- Howsam alleged Dean Witter misrepresented the partnerships’ merits.
- The parties’ client agreement contained a broad clause requiring arbitration of disputes arising from the account, transactions, or agreements, before a self-regulatory organization or exchange of which Dean Witter was a member.
- Howsam initiated arbitration under NASD procedures by signing a Uniform Submission Agreement incorporating the NASD Code of Arbitration Procedure.
- NASD Code § 10304 stated that a dispute was not eligible for submission to arbitration if more than six years had elapsed from the occurrence or event giving rise to the dispute.
- Dean Witter asserted the dispute was time-barred under the NASD six-year eligibility rule and sought to prevent arbitration.

## Issues

1. Whether the applicability of the NASD six-year eligibility rule is a “question of arbitrability” for courts or a procedural gateway matter for the arbitrator.
2. Whether, absent clear contrary language, parties are presumed to have assigned interpretation and application of the arbitral forum’s time-limit rule to the arbitrator.

## Decision

- The Supreme Court unanimously reversed the Tenth Circuit and held that an NASD arbitrator, not a court, should decide the applicability of the NASD six-year eligibility rule.
- The Court characterized the time-limit question as a “gateway procedural” issue growing out of the dispute and bearing on its final disposition.
- The Court concluded the strong presumption favoring judicial resolution applies only to a limited set of “questions of arbitrability,” and does not govern forum-specific procedural rules such as NASD § 10304.
- Justice O’Connor did not participate; Justice Thomas concurred in the judgment.

## Legal Principles

- “Questions of arbitrability” presumptively for courts are limited to gateway matters such as whether the parties are bound by an arbitration clause or whether an arbitration clause covers a particular type of controversy, unless the parties clearly provide otherwise.
- Procedural gateway matters that grow out of the dispute and affect its resolution—such as defenses based on waiver, delay, or time limits imposed by the selected arbitral forum—are presumptively for the arbitrator to decide.
- A forum’s eligibility or time-limit rule is generally treated as part of the arbitral process the parties selected; arbitrators are typically better positioned to interpret and apply their forum’s procedural rules.
- Assigning such procedural matters to arbitrators is consistent with the federal policy favoring enforcement of arbitration agreements and avoiding threshold litigation over arbitral procedure.

## Conclusion

The Court held that the NASD six-year eligibility rule concerns arbitral procedure rather than “arbitrability,” so its application is for the arbitrator to decide unless the parties clearly agree otherwise.


Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002)