Class Actions In Arbitration* – Vol. 14 No. 1-2

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Author: Hans Smit**

Published: January 2004

United States
Dispute Resolution and Litigation
Class Action

Description: In Green Tree Financial Corp. v. Bazzle, the Supreme Court, in a 5 – 4 decision, ruled that whether a class action could be brought in arbitration was to be decided by the arbitrator rather than the court. This ruling makes common sense. When the parties have agreed to arbitrate under rules provided by an institution, such as the American Arbitration Association or the ICC Court of International Arbitration, well–settled rules of contract interpretation leave it up to those rules, in the absence of pertinent provisions in the arbitration agreement, to provide an answer to the question of whether a class action can be brought in arbitration. And since institutional rules typically contain no provisions authorizing class actions, but, in the absence of a relevant agreement by the parties, leave it to the arbitrator to prescribe the appropriate procedure, it is for the arbitrator to decide whether to entertain a class action and to prescribe the appropriate procedure to be followed.

In the past, courts had taken different positions on the question. Some courts had ruled class actions not permissible in arbitration, while other courts had ruled class actions permissible and directed the arbitrators to entertain them.

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*Arbitral & Judicial Decisions
**Stanley H. Fuld Professor of Law and Director, Center for International Arbitration and Litigation Law. The author gratefully acknowledges the assistance of Svetla Dalbokova, Columbia University School of Law, Class of 2005, in the preparation of this Comment.