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Arthur Andersen, LLP, et al. v. Carlisle, et al.

Issues

Whether Section 3 of the Federal Arbitration Act entitles parties who are not signatories to an arbitration agreement to receive a stay of trial for arbitration, and whether Section 16 of the Act entitles non-signatories to an immediate appeal if the court refuses them a Section 3 stay.

 

Section 3 of the Federal Arbitration Act ("FAA") allows parties who have agreed to arbitrate to move for a stay of trial proceedings until they have had a chance to attempt arbitration. In addition, Section 16 of the FAA allows an immediate appeal of judgments denying stay under such circumstances. At issue in this case is whether these sections of the FAA extend to non-signing parties affected by an arbitration agreement. Petitioner Arthur Andersen advised Respondent Wayne Carlisle on a business transaction. As a result of this transaction, Carlisle eventually signed a contract, to which Andersen was a not party, that contained an arbitration agreement. After a dispute developed, Andersen sought a stay in the litigation proceedings in order to arbitrate with Carlisle, despite the fact that Andersen had not signed the arbitration agreement. After Andersen appealed the initial denial of its request for a stay, the United States Court of Appeals for the Sixth Circuit held that it did not have jurisdiction to hear Andersen's appeal because Sections 3 and 16 of the FAA only apply to signatories of arbitration agreements. The Supreme Court's decision in this case may clarify the scope of the FAA's application to non-signatories, including the availability of appellate review of denials of stays.

Questions as Framed for the Court by the Parties

(1) Whether Section 16(a)(l)(A) of the FAA provides appellate jurisdiction over an appeal from an order denying an application made under Section 3 to stay claims involving non-signatories to the arbitration agreement.

(2) Whether Section 3 of the FAA allows a district court to stay claims against non-signatories to an arbitration agreement when the non-signatories can otherwise enforce the arbitration agreement under principles of contract and agency law, including equitable estoppel.

Arbitration is a form of alternative dispute resolution, outside litigation proceedings, in which parties submit a dispute to an impartial decision-maker for a binding decision. See American Arbitration Association, Arbitration & Mediation.

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GE Energy Power Conversion France SAS v. Outokumpu Stainless USA LLC

Issues

Does the Convention on the Recognition of Enforcement of Foreign Arbitral Awards, implemented under Chapter 2 of the Federal Arbitration Act, allow a non-signatory to an arbitration agreement to invoke the equitable estoppel doctrine to compel arbitration? 

This case asks the Supreme Court to consider whether the New York Convention permits a non-signatory to an international arbitration agreement to compel a signatory to arbitrate. GE Energy Power Conversion France SAS, Corp. argues that non-signatories may compel a signatory to arbitrate by invoking equitable estoppel because it is available for domestic arbitration under Chapter 1 of the Federal Arbitration Act. GE further argues that this is permissible because the Convention contemplates that countries will apply their pro-arbitration domestic laws. Outokumpu Stainless USA, LLC, et al. disagrees, arguing that the Convention’s text and structure impose a baseline writing requirement to show consent to arbitration. The Court’s decision will affect business parties’ calculation of their arbitration liabilities and how carefully they draft the scope of their arbitration agreements.

Questions as Framed for the Court by the Parties

Whether the Convention on the Recognition and Enforcement of Foreign Arbitral Awards permits a non-signatory to an arbitration agreement to compel arbitration based on the doctrine of equitable estoppel.

On November 25, 2007, Thyssenkrupp Stainless USA, LLC (now Outokumpu Stainless, USA, LLC (“Outokumpu”)), a U.S. corporation, entered into three contracts with F.L. Industries Inc. (now Fives St Corp. (“Fives”)), also a U.S. corporation, for the purchase of cold rolling mills. Outokumpu Stainless USA, LLC v.

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Acknowledgments

The authors would like to thank Professor John J. Barceló III for his insights.

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