At least three courts of appeals have held that a non-contracting party who loses a motion to compel arbitration under the doctrine of "equitable estoppel" has to wait until the end of a court case to appeal. See "Antitrust Class Beats Arbitration-by-Estoppel". The Second Circuit parted company with its sister courts (the Sixth, Tenth, and D.C. Circuits). See "Supremes to Settle Arbitration Appeal Split".
The U.S. Supreme Court today took the minority view also. In Arthur Andersen LLP v. Carlisle, No. 08-146 (U.S. May 4, 2009), six of the nine justices agreed that section 16(a)(1)(A) of the federal Arbitration Act controls. It provides a right to a midstream appeal from "an order . . . refusing a stay of any action under section 3." It thus allows anyone who loses a motion to stay a lawsuit pending arbitration to appeal right away:
By that provision’s clear and unambiguous terms, any litigant who asks for a stay under § 3 is entitled to an immediate appeal from denial of that motion—regardless of whether the litigant is in fact eligible for a stay. Because each petitioner inthis case explicitly asked for a stay pursuant to § 3, App. 52, 54, 63, 65, the Sixth Circuit had jurisdiction to review the District Court’s denial.
Id., slip op. at 3.
But what of section 3 itself, which limits stayable actions to ones "referable to arbitration under an agreement in writing"? The majority of the courts of appeals read section 3 to bar relief if the losing party didn't bind itself to "an agreement in writing" and instead argued that equitable estoppel allowed it to enforce the clause against one who did so bind himself. Justice Scalia, writing for the Court, would have none of it:
Respondents argue that, as a matter of federal law, claims to arbitration by nonparties are not "referable to arbitration under an agreement in writing . . . because they seek to bind a signatory to an arbitral obligation beyond that signatory's strictly contractual obligation to arbitrate," Brief for Respondents 26. Perhaps that would be true if § 3 mandated stays only for disputes between parties to a written arbitration agreement. But that is not what the statute says. It says that stays are required if the claims are "referable to arbitration under an agreement in writing." If a written arbitration provision is made enforceable against (or for the benefit of) a third party under state contract law, the statute’s terms are fulfilled.
Id. at 7 (emphasis in original).
Justice Souter wrote a dissent, in which Chief Justice Roberts and Justice Stevens joined.
