The U.S. Supreme Court has issued frequent opinions involving interpretation of the Federal Arbitration Act (the FAA), which governs the enforcement of arbitration agreements in federal court. On May 16, Justice Sonia Sotomayor writing for a unanimous court issued an opinion in Smith v. Spizzirri, regarding the supervisory role of federal courts in cases that should be arbitrated, reinforcing the importance of arbitration as a method of dispute resolution, particularly in franchise disputes.

Section 3 of the FAA states that, when a dispute is subject to arbitration, the court “shall on application of one of the parties stay the trial of the action until the arbitration” has concluded. The issue presented is whether Section 3 permits a court to dismiss the case instead of issuing a stay when the dispute is subject to arbitration and a party requests a stay pending arbitration. The court concluded that the case must be stayed and not dismissed, which has been the practice by many district courts. The court had previously identified the issue and decided not to address it. However, due to the rising popularity of commercial arbitration for dispute resolution, the differing practices by the district courts have led unexpected results. This decision confirms and elaborates on the role of federal courts in aiding dispute resolution as Congress intended.