Stays and Immediate Appeals of Orders Denying Arbitration

In June 2023, in Coinbase, Inc. v Bielski, 143 S Ct 1915, 1921 [2023], the US Supreme Court held that where a district court denies a motion to compel arbitration, the party losing that motion (i.e., the party seeking to compel arbitration) is entitled under tSection 16(a) of the Federal Arbitration Act to a stay of the district court proceeding pending an [immediate] appeal of that order denying arbitration." As the Supreme Court explained, "The common practice in § 16(a) cases, therefore, is for a district court to stay its proceedings while the interlocutory appeal on arbitrability is ongoing. That common practice reflects common sense. Absent an automatic stay of district court proceedings, Congress's decision in § 16(a) to afford a right to an interlocutory appeal would be largely nullified. If the district court could move forward with pre-trial and trial proceedings while the appeal on arbitrability was ongoing, then many of the asserted benefits of arbitration (efficiency, less expense, less intrusive discovery, and the like) would be irretrievably lost—even if the court of appeals later concluded that the case actually had belonged in arbitration all along. Absent a stay, parties also could be forced to settle to avoid the district court proceedings (including discovery and trial) that they contracted to avoid through arbitration. That potential for coercion is especially pronounced in class actions, where the possibility of colossal liability can lead to what Judge Friendly called “blackmail settlements.” H. Friendly, Federal Jurisdiction: A General View 120 (1973)."