I am usually asked to contribute to volumes like this one because of my expertise as an arbitrator. This expertise is based on my decades of handling arbitral proceedings. That is surely not the case here. I suspect that I have been asked to contribute because the only decision in the sole class action arbitration in which I have been involved - the Stolt-Nielsen case - is being argued right now before the US Supreme Court.

The whole topic of class action arbitration is so new that I can pose many questions about it without giving many, if any, definitive answers. This is not a problem, because you cannot start getting the answers until you first ask the questions. And I am an expert in asking questions.

1. IS THERE SUCH A THING AS INTERNATIONAL CLASS ARBITRATION?

The answer to this question is both 'yes' and 'not yet'.

'Yes' - at least in terms of the American Arbitration Association (AAA). It has devised the Supplementary Rules for Class Arbitrations, which have been used in 283 cases (121 of which are active). The AAA Rules are drafted so as to be applicable to international as well as domestic arbitration. The parties in the Stolt-Nielsen case agreed to use these rules for the purpose of dealing procedurally with the class action issues. Of course, most of the AAA cases have been domestic, and the fact that the Stolt-Nielsen case involves maritime contracts may be a reason why it is now before the Supreme Court.

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'Not yet' - because national courts are the ultimate enforcers of arbitral awards. One could say that there cannot be such a thing as 'international class arbitration' until the judiciaries of several major commercial centres enforce awards in such arbitrations. As no such award has yet come up for enforcement, we simply do not know.

2. WHAT DOES IT LOOK LIKE?

The class action as developed in the US court system allows certain named parties to bring claims on behalf of third parties similarly situated. Even in the United States, class action arbitration is so recent that the first institutional rules dealing with such proceedings - the AAA Supplementary Rules for Class Arbitrations - were not drafted until 2003. This was just after the US Supreme Court issued its first class action arbitration decision in Green Tree Fin. Corp. v. Bazzle. 1

These AAA Rules provide for three sequential determinations:

• The first - 'class construction' - establishes whether the arbitration agreement (or agreements) permit class action arbitration.

• If this is the case, the second - 'class certification' - determines whether the arbitration meets the requirements for a class action to proceed.

• If the first two criteria are met, then a decision ensues on the merits.

The Stolt-Nielsen case has only reached the first stage. What the Supreme Court is about to consider is whether the arbitration agreements permit class action arbitration.

If international class arbitration is to become a reality, then the second stage set forth in the AAA Rules - that is, whether the particular case meets the requirements for a class action - becomes the most important. The AAA Rules adapt the requirements set forth in the US Federal Rules of Civil procedure for judicial class actions. Among these rules, there are five important criteria:

(i) Numerosity:

Is the class so numerous that the joinder of separate arbitrations on behalf of all members is impracticable?

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(ii) Commonality:

Are there questions of fact or law common to the class?

(iii) Typicality:

Are the defence claims of the representative parties typical of those of the class?

(iv) Adequacy of representation:

Will the representative parties and class counsel fairly and adequately protect the interest of the class?

(v) Similarity:

Has each class member signed an agreement with an arbitration clause substantially similar to that signed by the other class members?

The AAA Rules recognize that, even if an arbitration clause can be construed to encompass a class action, not all cases are appropriate for resolution as a class action.

3. IS IT VERY DIFFERENT FROM OTHER MULTI-PARTY ARBITRATIONS?

Multi-party arbitrations are no longer unusual. I have been involved in insurance arbitrations with many parties. However, they most often involved a single insured and many insurers where the issues of coverage and amounts owed arose from the same event. Also, all the parties usually had one single arbitration clause with the same terms and applicable law. Examples include the Bermuda Form and ARIAS Rules.

Construction cases, too, often have many parties. They can include owners, architects, engineers and prime contractors, as well as their many subcontractors. In addition, they can often involve different contracts with differing arbitration rules. Nonetheless, some courts have granted consolidation and have ordered such cases to arbitration. When that happens, the arbitral tribunal has to sort out the various procedural problems. A good example of this is the Boston Tower case, which involves 26 different parties (albeit that the case was brought pursuant to an insurance policy).

Class arbitration differs even more from ordinary arbitration. It can comprise many different parties, with each member having different arbitral clauses, different rules, different applicable laws and different hearing locales.

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The primary difference between multi-party arbitration and class arbitration is that in class arbitration it is important to be (i) especially vigilant about the need to protect the interests of absent members of the class and (ii) especially conscientious about due process and public interest concerns.

4. HOW ARE THE ARBITRATORS SELECTED?

Fairness issues may be raised by allowing the representative parties to select arbitrators without the participation or consent of absent class members. The designation of an impartial appointing authority to select the tribunal may serve to obviate such issues.

5. HOW DO YOU MANAGE MANY DIFFERENT LAW FIRMS?

Again, fairness issues may arise. Usually, in US judicial class actions, one or two law firms are chosen by the court as lead class counsel, and class members are permitted to retain counsel. Both the Federal Rules of Civil procedure and the AAA Rules require the court or tribunal to make a determination to ensure that lead counsel fairly and adequately represents the interests of the class as a whole.

6. HOW MUCH IS WITHIN THE ARBITRATOR'S CONTROL?

I can personally attest to the fact that this is a matter in flux! One of the questions before the Supreme Court in the Stolt-Nielsen case is whether arbitrators can authorize class arbitration where the arbitration agreement is silent on the subject.

7. WHAT IS THE ROLE OF THE COURTS IN CLASS ARBITRATIONS?

In Green Tree Fin. Corp. v. Bazzle, 2 the Supreme Court held - albeit in a plurality opinion - that when parties agree to arbitrate, the question as to whether the agreement permits class arbitration is generally one of contract interpretation, and one to be determined by the arbitrators. The extent of that arbitral authority is one of the issues now before the Supreme Court in Stolt-Nielsen.

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8. IS AN AWARD DECIDING ON THE CONSTRUCTION OF AN ARBITRATION CLAUSE IN FAVOUR OF CLASS ARBITRATION FINAL?

In Stolt-Nielsen SA v. Animalfeeds Int'l Corp., 3 the arbitrators interpreted a contract clause that allowed for arbitration 'in the City of New York or in the City of London' in order to permit class arbitration. The district Court, in a case of first impression, set aside the arbitral award for manifest disregard of the law. The Appeals Court reinstated the award. 4 Certiorari has been granted in the Stolt-Nielsen case by the US Supreme Court, and the case is scheduled to be argued very soon. We may then get answers to some of the problems faced by arbitrators.

9. WHAT WILL THE SUPREME COURT DECIDE?

As I said at the beginning, I have no answers but many questions. Here are some of them:

(i) does the Federal Arbitration Act permit arbitrators to conduct class arbitration, where the arbitral clause is 'silent' regarding class arbitration?

(ii) Is class arbitration - where clauses are silent on the issue - consistent with the Federal Arbitration Act?

(iii) did the arbitrators exceed their powers under the Federal Arbitration Act, 9 U.S.C. 10(a)(4), when they applied ordinary principles of contract interpretation to hold that a broad arbitration clause of '[a]ny dispute' arising from the contract permits class-wide arbitration?

(iv) Is a petition to vacate an arbitral tribunal's interim decision, based upon class construction, ripe for judicial review where the tribunal has not yet made a decision on classification to certify a class ruled on the merits of the claim?

(v) Is a standard maritime broad-form arbitration clause ever subject to class arbitration?

(vi) Can an award involving foreign commerce be set aside for manifest disregard of law by US courts?

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(vii) Is judicial review of arbitral awards limited exclusively to the grounds listed in the Federal Arbitration Act?

(viii)Is a broad-form arbitration clause really silent?

(ix) does the pro-arbitration policy in US courts apply to class arbitration?

(x) Who decides the default rule when the arbitral clause is silent - the courts or arbitrators?

(xi) Is the availability of class action procedures in arbitration an issue for arbitrators to decide?

There are lots of questions that need addressing. perhaps the Supreme Court will provide us with some answers!

Endnote: "On April 27, 2010, the U.S. Supreme Court in Stolt-Nielsen S. A. v. Animalfeeds Int'l Corp. No. 08-1198 held that arbitrators could not impose class arbitration on parties whose arbitration clauses are silent on that issue."

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1
539 U.S. 444 203 (2003).

2
Ibid.

3
435 F.Supp. 2d 382 (S.d.N.Y., 2006).

4
548 F.3d 85 (2d Cir., 2008).