Labor & Employment Law

Justice Ginsburg nixes a stay of decision allowing class action arbitration

Today US Supreme Court Justice Ginsburg denied an application to stay a 2nd Circuit ruling that allows a class action arbitration.
[Application for stay]

In Stolt-Nielsen SA, et al., v. AnimalFeeds International (2nd Circuit 11/04/2008) the court was handling an appeal from a district court decision vacating an arbitration award. The district court vacated the award on the ground that the arbitrators exhibited a "manifest disregard for the law" by ordering a class action arbitration where the arbitration agreement was silent as to class actions.

The 2nd Circuit reversed and held: "Because the parties specifically agreed that the arbitration panel would decide whether the arbitration clauses permitted class arbitration, the arbitration panel did not exceed its authority in deciding that issue ?- irrespective of whether it decided the issue correctly."

My view: The arbitrators were simply interpreting a silent arbitration agreement so as to allow class action arbitration. There was no disregard of any law.

One may argue that the arbitrators misinterpreted the contract, but that is not a ground for vacating the award.

Full post as published by Arbitration Blog on February 19, 2009 (boomark / email).