April 27, 2010
SCOTUS Decision in Stolt-Nielsen v. AnimalFeeds: Arbitration and Class Actions
Today the Supreme Court decided Stolt-Nielsen S.A. v. AnimalFeeds International Corp., 08-1198, which addresses "whether imposing class arbitration on parties whose arbitration clauses are 'silent' on that issue is consistent with the Federal Arbitration Act (FAA)." The Court split 5-3, with Justice Alito writing for the majority, Justice Ginsburg writing for the dissent, and Justice Sotomayor taking no part.
Here are some excerpts from Justice Alito's majority opinion:
"While the interpretation of an arbitration agreement is generally a matter of state law, the FAA imposes certain rules of fundamental importance, including the basic precept that arbitration 'is a matter of consent, not coercion.' ...
"[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so. ...
"Here, where the parties stipulated that there was 'no agreement' on this question, it follows that the parties cannot be compelled to submit their dispute to class arbitration."
Justice Ginsburg's dissenting opinion begins:
"When an arbitration clause is silent on the question, may arbitration proceed on behalf of a class? The Court prematurely takes up that important question and, indulging in de novo review, overturns the ruling of experienced arbitrators."