Journal Article

The extent of arbitrators’ power to order class arbitration

Claudia Pharaon

in Arbitration International

Published on behalf of The London Court of International Arbitration

Volume 31, issue 4, pages 589-612
Published in print December 2015 | ISSN: 0957-0411
Published online May 2015 | e-ISSN: 1875-8398 | DOI: https://dx.doi.org/10.1093/arbint/aiv040
The extent of arbitrators’ power to order class arbitration

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The United States (‘US’) Supreme Court’s decision in Stolt-Nielsen v AnimalFeeds (2010) shook up the American arbitration landscape. First, when justifying the annulment of the arbitral award, the Court’s ambiguous interpretation of section 10(a)(4) of the Federal Arbitration Act (‘FAA’) (under which courts may vacate an arbitral award where the arbitral panel exceeded its powers) raised doubts as to whether it departed from precedent by reviewing errors of law under this ground. Second, by narrowly approaching the power of arbitrators to order class proceedings, the Court indicated a new movement in the case law on class arbitration, fed by scepticism and hostility against this procedure. The Supreme Court’s unanimous decision in Oxford Health Plans LLC v Sutter (2013) clarified that an arbitrator’s erroneous interpretation of the parties' contract did not amount to an ‘excess of power’ under the FAA. However, the Supreme Court’s decision in Oxford Health raised new questions, and certainly did not restore the pro-class arbitration approach previously adopted in Green Tree v Bazzle (2003).

This article explores the concept of ‘excess of arbitral power’ so as to understand its purpose, content, and limits in light of recent decisions of the Supreme Court on class arbitration. Based on a thorough analysis of the case law and on a comparative law approach to the extent of arbitrators’ powers, it spells out where the limits of arbitrators’ power to order class arbitration are likely to stand in the US.

Key References

1US Federal Arbitration Act, Title 9 Arbitration (1925) 2Green Tree Financial Corp, Conseco Finance Corp v Bazzle and ors, US Supreme Court (2003) 3Stolt-Nielsen SA and ors v AnimalFeeds International Corporation, US Supreme Court (2010) 4AT&T Mobility v Concepcion, US Supreme Court (2011) 5American Express Co and ors v Italian Colors Restaurant and ors, US Supreme Court (2013) 6Oxford Health Plans LLC v Sutter, US Supreme Court (2013)

Journal Article.  12860 words. 

Subjects: Arbitration ; Company and Commercial Law ; Competition Law ; Employment and Labour Law ; Settlement of Disputes

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