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WASHINGTON -- The U.S. Supreme Court today hears a controversial Case that will determine whether banks can include mandatory arbitration clauses in contracts with customers. The high court will hear the dispute on the second day of a fall term that features a variety of cases that can affect the banking industry.

The arbitration case, Allied-Bruce Terminex vs. Dobson, could dictate the future of mandatory arbitration clauses that banks have started using, said Michael F. Crotty, general counsel to the American Bankers Association. "The question is whether the federal arbitration act overrides any state anti-arbitration laws,"' Mr. Crotty said.

If the court sides …