The Supreme Court Strikes a Blow Against Class Arbitrations

On April 27, 2010, the United States Supreme Court in Stolt-Nielsen S.A. v. AnimalFeeds International Corp. held 5-3 that, under the Federal Arbitration Act (the "FAA"), if a commercial arbitration agreement is silent on whether it allows for class arbitration, an arbitration panel or court cannot allow class arbitration. (Justice Sotomayor took no part in the decision.)

Background

The case arose out of a series of antitrust disputes subject to international maritime agreements among seagoing shipping companies. Respondent AnimalFeeds filed a class action in federal district court alleging that the shipping companies engaged in a price-fixing conspiracy. The Second Circuit, thereafter, held that the claims arose under contracts with enforceable arbitration clauses, and that the antitrust claims were arbitrable.