The Stolt-Nielsen Decision: Class Arbitration Absent Express Consent Violates FAA

The Supreme Court of the United States today held that arbitrators exceed their powers under the Federal Arbitration Act when they impose class arbitration on parties that have not expressly agreed to class arbitration. The Court reversed a decision of the U.S. Court of Appeals for the Second Circuit, which held that the parties’ agreement to class action arbitration may be Inferred when their agreement is silent on the matter. Such inference, the Court held today, is “fundamentally at war with the foundational FAA principle that arbitration is a matter of consent. The Court divided 5-3. Justice Alito wrote the majority opinion, joined by Justices Kennedy, Scalia, Thomas and Chief Justice Roberts. Justice Ginsburg wrote a dissent, joined by Justices Breyer and Stevens. Justice Sotomayor took no part. A more detailed analysis of the Court’s decision will follow in the coming days.