U.S. Supreme Court

Supreme Court Bars Class-Action Arbitration Absent Contract Agreement

The U.S. Supreme Court has barred class arbitration of a price-fixing claim in an opinion that scolded an arbitration panel for proceeding as if it had common-law authority.

The Supreme Court ruled in a 5-3 opinion that class arbitration may not be imposed on parties who did not agree to it in their arbitration contracts, SCOTUSblog reports. Justice Samuel A. Alito Jr. wrote the majority opinion (PDF).

An arbitration panel had concluded that the arbitration contract governing commercial maritime shippers allowed for class arbitration, although it was silent on the issue. The U.S. Supreme Court disagreed.

An arbitration contract alone should not support an inference to authorize class-action arbitration, Alito said.

“In this case, we must conclude that what the arbitration panel did was simply to impose its own view of sound policy regarding class arbitration,” Alito wrote. “The panel proceeded as if it had the authority of a common-law court to develop what it viewed as the best rule to be applied in such a situation.”

The case is Stolt-Nielsen S.A. v. Animalfeeds International Corp.

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