Stolt-Nielsen S.A. v. AnimalFeeds International Corp.

Facts

AnimalFeeds International Corp. ships goods pursuant to a standard maritime contract known as the “Vegoilvoy” charter party, which contains an arbitration clause requiring that disputes be settled by arbitration in New York. After a Department of Justice investigation revealed that Stolt-Nielsen and other shipping companies were engaging in illegal price-fixing, AnimalFeeds brought a class action against them. When the court determined that the claims were subject to arbitration, AnimalFeeds demanded class arbitration. The parties agreed to submit to a panel of arbitrators the question of whether their arbitration clause permitted class arbitration, and they stipulated that the clause was “silent” on this issue, meaning they had not reached any agreement on it. Despite this stipulation and evidence that maritime arbitrations had traditionally been conducted on a bilateral basis, the arbitrators concluded that the arbitration clause allowed for class arbitration, relying primarily on post-Bazzle arbitral decisions that had permitted class arbitration in other contexts. The arbitrators did not analyze whether federal maritime law or New York law contained a default rule on this issue.