The Supreme Court recently issued a decision addressing the issue of class arbitration. In Stolt-Nielson S.A. v. Animalfeeds International Corp., No. 08-1198 (April 27, 2010), an antitrust class action involving allegations of illegal price-fixing by international shipping companies, the Court held that an arbitration panel’s decision to force class arbitration was invalid because the arbitration agreement was silent about whether arbitration could proceed on a class basis.
Beyond its impact in cases involving class arbitration and the interpretation of arbitration clauses in domestic disputes, the decision partially closes the door on arbitration as a possible global forum for litigating class actions. The Second Circuit Court of Appeals had upheld the arbitration panel’s decision to compel class arbitration and certify a class of all purchasers worldwide of the defendants’ shipping services. The Supreme Court’s decision leaves open the possibility of global class arbitration based on an arbitration agreement that expressly permits class arbitration, but class arbitration cannot be compelled simply because the agreement is silent on the issue.