Stolt-Nielsen S.A. v. AnimalFeeds International

The Supreme Court will decide whether class arbitrations are allowed under the Federal Arbitration Act when the contract says nothing on that issue.

AnimalFeeds International Corp. on behalf of a class of plaintiffs filed suit in a Pennsylvania federal district court against Stolt-Nielsen among others alleging defendants were engaged in a "global conspiracy to restrain competition in the world market for parcel tanker transportation services."

After the case was transferred to the Connecticut federal district court, Stolt-Nielsen filed a motion to compel arbitration, which was denied.

On appeal, the 2nd U.S. Circuit Court of Appeals reversed. During arbitration, AnimalFeeds filed a demand to proceed as a class. A panel was appointed to determine whether the language of the Clause Construction Award permitted AnimalFeeds to proceed as a class and answered in the affirmative. Stolt-Nielsen then petitioned the Connecticut federal district court to vacate the panel's determination, which was granted.

The 2nd U.S. Circuit Court of Appeals reversed and reinstated the panel's decision. The court held that the arbitration panel did not manifestly disregard the law when reaching its conclusion that the Clause Construction Award permitted AnimalFeeds to proceed as a class, even though the Award was silent on whether proceeding as a class was permitted. The court reasoned that when parties agree to arbitrate, the question of whether an agreement permits class arbitration is generally left to the arbitrators, not the courts.

Question presented: Whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.