Supreme Court Rules Class Action Arbitrations Impermissible Absent Express Agreement

The U.S. Supreme Court recently handed down its long-awaited ruling in Stolt-Nielsen S. A. v. Animalfeeds International Corp. , No. 08-1198 (Apr. 27, 2010). The issue before the Court was, can an arbitration agreement that is silent on the issue be construed to permit a case to proceed in arbitration as a class action?

In what could be a decision having far-reaching impact, the Court held that a class arbitration may be ordered only if "there is a contractual basis for concluding that the part[ies] agreed. . . to submit to class arbitration." The case arose in connection with a dispute between a shipping company and a customer regarding whether an agreement that was completely silent on the question of class arbitrations could be construed to permit them. The Supreme Court held that silence was not enough. It held instead that the agreement must affirmatively permit class actions in order for an arbitrator to preside over the case as a class action, as opposed to an