Group arbitration – "class" versus "collective" and other foundational aspects
Commercial class arbitration

Group arbitration can offer certain advantages over class litigation (not least, the ability to enforce awards across multiple jurisdictions). However the consent-based nature of arbitration can lead to jurisdictional obstacles for such claims. This article explores the US line of authorities dealing with group arbitration of commercial disputes, one of the most developed globally.

Group arbitration – "class" versus "collective" and other foundational aspects

It is important to distinguish between two types of group arbitration. "Collective arbitration" (which refers to any joint, consolidated or mass arbitration) is a procedure allowing a group of similarly situated claimants to pursue identical or related claims in a single action. By contrast, "class arbitration" is an arbitration brought by a class representative asserting claims on its own behalf and on behalf of similarly situated (absent) class members. Whereas collective arbitrations bind absent parties only if they opt in, class arbitrations bind absent parties unless they opt out.

Group arbitration stems from the same economic imperative that drives class actions in the litigation context. When a party bound by an arbitration agreement has a claim of relatively low value that does not justify the cost or burden of commencing an individual arbitration, that party may benefit from joining others with similar claims to advance those claims in a single arbitration, thereby splitting the cost of the proceeding among all claimants instead of each claimant having to commence and pay for its own arbitration. Assuming that some of the individual claimants would have proceeded on an individual basis notwithstanding the costs, proceeding on a group basis may have additional benefits stemming from the avoidance of multiple parallel proceedings against the same defendant (such as avoiding duplicative discovery and briefing and inconsistent awards). Further, group arbitration may have advantages over class litigation, notably in respect of selecting a specialist neutral, tailoring procedure to the particularities of the case and enforcing the award across multiple jurisdictions. Group arbitration may therefore represent real and effective access to justice versus a theoretical or notional right to commence arbitration that cannot be exercised in any practical or realistic way.

Even so, the putative efficiencies of group arbitration often come up against a roadblock embedded in the very foundation of arbitration: the notion of consent. The issue of a collective or class arbitration is straightforward where parties have expressly consented to proceed as such: there can be no objection by a respondent to a claimant bringing such a proceeding. More typically, however, claimants have attempted to bring a collective or class arbitration based on a standard arbitration clause, which is silent on the issue.

Under the legal framework for arbitration, strictly speaking, the only parties who can take part in an arbitration are the parties that are bound by the same arbitration clause in the same agreement. Thus, in these circumstances, there is a tension between any efficiency rationale favouring group arbitrations and the consent-based framework governing arbitration.

In the commercial context, the United States has grappled with this tension the most and has adopted a relatively strict approach. Recent developments in this context are described below.

Commercial class arbitration

US courts have recognised that by consenting to arbitrate their disputes, parties to an arbitration agreement select the benefits of private dispute resolution by foregoing comprehensive judicial procedures and substantive appellate review. Under the Federal Arbitration Act (FAA), the United States' primary arbitration statute, US courts place arbitration agreements on an equal footing with other contracts and enforce them according to their terms. The contractual requirements for class arbitration, however, have been subject to additional scrutiny.

Historically, US courts generally maintained a strict approach to interpreting arbitration clauses and rejected attempts by claimants to bring collective or class arbitrations unless the parties' arbitration agreement expressly provided for it. In the early 1980s, some courts began to favour class arbitrations, reasoning that economic efficiency and effective access to justice justified avoiding the unfair result of forcing numerous individual parties to litigate individually in separate arbitral fora.

The pro-class arbitration trend arguably reached its pinnacle in 2003. In Green Tree Financial Corp v Bazzle,(1) the Supreme Court was asked to determine whether the FAA permitted class arbitrations when arbitration agreements were "silent" on the issue. In a plurality opinion, the Court held that absent express language to the contrary, whether an arbitration agreement authorises class arbitration is an issue for an arbitrator to decide. On the underlying facts of the case, the
Court vacated the state supreme court's judgment and remanded the case so that the arbitrator could determine whether the parties' arbitration agreement was actually "silent" on the availability of class arbitrations.

The Bazzle decision led to a substantial increase in class arbitrations in the United States. By remanding cases for further proceedings, courts were signalling that class arbitrations were not necessarily inconsistent with the FAA and that the availability of class arbitration depended on the terms of the parties' arbitration agreement. Subsequent decisions from the Supreme Court, however, clarified and curtailed the availability of class arbitration.

In Stolt–Nielsen SA v AnimalFeeds International Corp,(2) the Supreme Court addressed the question it had not reached in Bazzle and held that a party may not be compelled to submit to class arbitration if the parties' agreement is "silent" on the issue. The Court reasoned that a shift from bilateral arbitration to class arbitration is a fundamental change to the "nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to an arbitrator". Thus, consent to arbitrate a dispute, without more, is not consent to arbitrate a dispute on a class basis, and the parties' arbitration agreement must explicitly authorise class arbitration or class procedures.

More recently, the Supreme Court has restricted access to class arbitration even further. In Lamps Plus, Inc v Varela,(3) the Court held that "ambiguous" arbitration agreements do not provide the necessary contractual basis to compel class arbitration. Relying on Stolt-Nielsen, the Court found that "[l]ike silence, ambiguity does not provide a sufficient basis to conclude that parties to an arbitration agreement agreed to 'sacrifice[ ] the principal advantage of arbitration'" by agreeing to class arbitration.

Recent cases point to at least one way in which parties might access class arbitration: incorporation into their arbitration agreement of arbitration rules that give judges a basis to determine that it is up to the arbitrator to decide, in what seems like a throwback to the approach adopted in Bazzle. In Blanton v Domino's Pizza Franchising LLC, the Sixth Circuit held that incorporation of the American Arbitration Association (AAA) National Rules for the Resolution of Employment Disputes (the AAA employment rules), which provide that an arbitrator shall have the power to rule on their own jurisdiction, "clearly and unmistakably" demonstrated that the parties agreed to arbitrate "arbitrability".(4) The Fifth Circuit ruled to the same effect in Sun Coast Resources, Inc v Conrad.(5) In Blanton, the Sixth Circuit also found that the AAA employment rules, by extension, empowered the arbitrator to decide whether the arbitration would proceed as a class arbitration, which the Court ruled was an issue of arbitrability.


While there exist substantial barriers to commercial group arbitration, the mechanism may be available in the right circumstances.

For further information on this topic please contact Martin J Valasek at Norton Rose Fulbright's Montreal office by telephone (+1 514 847 4747) or email ([email protected]). Alternatively, contact Ernesto M Hernández at the firm's Washington, DC office by telephone (+1 202 662 0200) or email ([email protected]). The Norton Rose Fulbright website can be accessed at


(1) 539 US 444 (2003).

(2) 559 US 662 (2010).

(3) 139 S Ct 1407 (2019).

(4) (962 F 3d 842 (6th Cir 17 June 2020), cert denied sub nom. Piersing v Domino's Pizza, No. 20-695, 2021 WL 231566 (US 25 January 2021).

(5) 956 F 3d 335 (5th Cir April 16, 2020).