Section 3 of the Federal Arbitration Act: Why it’s important

A CCA Blog*

       By Mark Shank, F.CollArb

While hunkering down and avoiding freezing weather, the Aardvark came across an important arbitration case where the Supreme Court granted certiorari on January 12 of this year on the following issue:   Whether Section 3 of the Federal Arbitration Act requires district courts to stay a lawsuit pending arbitration, or whether district courts have discretion to dismiss when all claims are subject to arbitration.  

Section 3 references staying the court proceeding, but many District Courts dismiss rather than stay.  Why is this important?  Often, a practitioner would prefer to keep the original case alive while pursuing the arbitration to make confirmation of the eventual award easier.  Moreover, should anything arise during the arbitration process that requires court intervention (such as determining arbitrability or enforcement of a subpoena) the case will already be pending. 

Also, as discussed by Professor Christopher Drahozal in this article, the “principal consequence” of stay versus dismissal is that a dismissal is appealable, but a stay is not. 

The Aardvark will keep an eye on this case, which should be decided by the end of June.  Thanks to CCA Fellow Mark Kantor for calling this to my attention and for his analysis.

*We are using the Aardvark moniker to denote our CCA Blog. The Aardvark will provide content from time to time about cases, developments and issues associated with the practice of Arbitration. We hope you will find the blog entries interesting and useful. We encourage you to watch for the Aardvark and its arbitration content that we hope you will enjoy.