On August 17, 2009 Disputing published Part III of our four-part guest post on Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 548 F.3d 85 (2d Cir. 2009), petition for cert. granted June 15, 2009 (No. 08-1198) (Part III available here). In Part III we examined the background of Stolt-Nielsen and identified four issues that the United States Supreme Court will likely confront when it decides the case.
Today Disputing published Part IVA (here), in which we consider the first issue: Who decides whether class arbitration can be imposed on the parties when their arbitration agreements are silent on that point? Put differently, is the question one of arbitrability for the court or one of procedural arbitrability or contract interpretation for the arbitrators?
Resolution of the question defines the standard of review. Questions of arbitrability are reviewed de novo on the law and for clear error on the facts. But if the question is one of procedural arbitrability or contract interpretation, the standard is the deferential one provided by Federal Arbitration Act Section 10, the one applied by both the District Court and the United States Court of Appeals for the Second Circuit.
The arbitrators in Stolt-Nielsen decided that class arbitration was authorized by the parties’ arbitration agreements even though the agreements said nothing about class arbitration. We believe that at least five Justices will conclude that this question was one of arbitrability for the Court to decide, and will either decide the issue de novo or remand it to the lower courts to decide.
The Supreme Court’s decision in Stolt-Nielsen may have some important ramifications for both commercial and consumer arbitration. So for advance coverage, tune into Disputing….
