U.S. Supreme Court Bars Class-Action Arbitration Absent Contractual Agreement

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In Stolt-Nielsen S.A. v. AnimalFeeds International Corporation, the United States Supreme Court recently held that a party may not be compelled under the Federal Arbitration Act (“FAA”) to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so. No. 08-1198 (decided April 27, 2010). In an opinion authored by Justice Alito, the Court ruled that the arbitrators had exceeded their powers by imposing their own policy choice favoring class arbitration instead of applying a rule of decision for construing silent arbitration clauses derived from either the FAA, maritime or New York state law.

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