An Analysis of an Order to Compel Arbitration: To Dismiss or Stay?

Abstract

The Federal Arbitration Act makes arbitration agreements judicially enforceable. Often, however, one party to a dispute would prefer to litigate, and files suit on the underlying claim. The party preferring arbitration may then file a motion to compel arbitration. If the court grants the motion, the court must then decide whether to stay the suit during the pendency of the arbitration proceedings, or whether to dismiss the suit outright. Though this issue has arisen thousands of times, in probably every federal district court in the country, there is no clear answer as to whether courts should stay or dismiss. This article argues that courts should stay a case when some points of dispute between the parties fall outside the arbitration agreement and cannot be resolved by the arbitrator, and that otherwise courts should have the discretion to dismiss the case in favor of arbitration.

Keywords: FAA, Arbitration, Stay, Dismiss, Compel