Many entities doing business with the public have long preferred arbitration as a forum for resolving disputes with their customers. Arbitration is generally faster and less expensive than litigation and offers an efficient and generally non-public forum for handling the complaints of unhappy clients and customers. For businesses whose client and customer relationships are based on contracts that include arbitration clauses, the Supreme Court’s 2010 decision in Stolt-Nielsen v. Animal Feeds International Corp.1 provided strong protection against class litigation.
Stolt-Nielsen held that a party cannot be compelled to arbitrate on a class-wide basis unless there is a contractual basis for doing so, and that an agreement that is silent on the topic of class arbitration does not constitute an agreement to arbitrate class disputes. By requiring arbitration of disputes arising out of the customer relationship, and declining to agree to class arbitration, businesses dealing with consumers can effectively foreclose the option of class litigation.
