Supreme Court rules that arbitration agreements can foreclose classwide arbitration procedures

In a 5-4 decision this week, the Supreme Court ruled that states may not condition the enforceability of arbitration agreements on the availability of classwide arbitration procedures. The Court's decision in AT&T Mobility v. Concepcion solidifies two principles that are of particular interest to businesses: that arbitration is a matter of contract and that class action mechanisms fundamentally degrade the efficiencies that arbitration is designed to offer. Together with the Supreme Court's ruling last Term in Stolt-Nielsen SA v. Animal Feeds International Corp.which held that parties could not be required to engage in classwide arbitration where an arbitration agreement was silent on the issuethe ruling in AT&T will substantially limit, if not eliminate, the situations in which classwide arbitration may be compelled without the express consent of the parties.

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