Stolt-Nielsen S.A., et al. v. AnimalFeeds International Corp. (08-1198) 
Imposing class arbitration on parties who have not agreed to it violates Federal Arbitration Act (5-3)
 
Decided April 27, 2010 
[Full text of opinion

The parties in this case are parties to an international maritime contract that contains an arbitration clause. The contracts are silent as to whether arbitration is permissible on behalf of a class, and the parties submitted that issue to arbitration. A panel of arbitrators decided that the arbitration clause allowed for class arbitration. The District Court vacated the award on the ground that it was made in "manifest disregard" of the law. The 2nd Circuit reversed.

The US Supreme Court held (5-3) that imposing class arbitration on parties who have not agreed to authorize class arbitration is inconsistent with the Federal Arbitration Act (FAA).

(1) The arbitrators exceeded their powers by imposing their own policy choice instead of identifying and applying a rule of decision derived from the FAA or from maritime or New York law. (2) Imposing class arbitration in this case is inconsistent with the FAA. The Court restated the principles that arbitration "is a matter of consent, not coercion," that "private agreements to arbitrate are enforced according to their terms," and that parties are "generally free to structure their arbitration agreements as they see fit." Based on these principles, "parties may specify WITH WHOM they chose to arbitrate." [Emphasis in original] Because the parties stipulated that there was no agreement on class arbitration, the parties cannot be compelled to submit to class arbitration.

The DISSENT argued that the arbitrators' "partial award" was not ripe for judicial review. On the merits, the dissent would have upheld the arbitrators due to the strict limitation the FAA places on judicial review of arbitral awards.

Case below: Stolt-Nielsen S.A., et al. v. AnimalFeeds International Corp. (2nd Cir 11/04/2008) 
Official docket sheet 
Certiorari granted June 15, 2009.
Oral argument:  December 9, 2009. 

Question presented:   

In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), this Court granted certiorari to decide a question that had divided the lower courts: whether the Federal Arbitration Act permits the imposition of class arbitration when the parties’ agreement is silent regarding class arbitration. The Court was unable to reach that question, however, because a plurality concluded that the arbitrator first needed to address whether the agreement there was in fact "silent." That threshold obstacle is not present in this case, and the question presented here--which continues to divide the lower courts--is the same one presented in Bazzle: 

Whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. 

Certiorari Documents: 

Briefs on the merits: 

Counsel: