On April 27, 2010, in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.,1 the U.S. Supreme Court held that where an arbitration agreement is “silent” on whether the parties have authorized classwide arbitration, neither the arbitrator nor the court may require that the action proceed on a class basis. The arbitration panel below exceeded its authority in violation of the Federal Arbitration Act (FAA)2 when it found that the agreement permitted class arbitration. The decision essentially reverses the presumption that many thought the Court previously had endorsed in Green Tree Financial Corp. v. Bazzle,3 that silence in an arbitration agreement allows the arbitrator to find authority to proceed on a class basis.
The underlying dispute in Stolt-Nielsen involved antitrust price-fixing claims by AnimalFeeds, an animal feed supplier, against several maritime shipping companies with whom it contracted to ship materials. AnimalFeeds sought to represent a class of customers of the shippers, initially in court and later in arbitration, after the court claims were dismissed pursuant to an arbitration clause in the standard shipping agreement.
