Alan

The heir of a deceased investor filed this civil action against the investor’s brokers, alleging mismanagement of the investor’s accounts. The investment agreements signed by the investor required that all controversies be decided by arbitration before one of the securities industry self-regulatory organizations (SRO’s). But all of the SRO’s refuse to conduct arbitrations in California because they do not want to comply with the ethical standards for arbitrators recently promulgated by the California Judicial Council. The SRO’s take the position that the standards are preempted by federal law.

Yet, after this action was filed, the brokers moved to compel arbitration. They assert that an SRO would arbitrate the dispute if the heir waives the Judicial Council’s ethical standards or agrees to hold the arbitration outside California. The heir has declined both options. On motion by the brokers, the trial court ordered the case to arbitration. The heir challenges that order.

We conclude that the trial court should first decide if California is a proper location for the arbitration, applying principles that determine whether a forum selection clause is valid. If California is…