What You Need to Know for 2025 SCOTUS Ruling Strengthens Arbitration: No Immediate Appeals Allowed

Last year, in Smith v. Spizzirri, 144 S. Ct. 1173 (2024), the U.S. Supreme Court reaffirmed the enforcement of arbitration agreements by precluding parallel appellate court proceedings, thereby enabling arbitration to proceed without the burden of additional proceedings. This decision strongly reinforces the pro-arbitration stance of U.S. courts and aims to prevent undue delays caused by premature litigation in appellate courts.

The Supreme Court unanimously ruled that parties cannot immediately appeal a lower court’s decision to compel arbitration while the arbitration process is still ongoing. The Court clarified that under the Federal Arbitration Act (FAA), a trial court is required to stay – rather than dismiss – a case when ordering arbitration. Specifically, the Court emphasized that Section 3 of the FAA mandates a stay of legal proceedings, meaning the case is paused, not terminated. This ruling prevents parties from seeking an immediate appeal, ensuring that arbitration is completed before litigation can resume.

The ruling also affirms courts’ roles in supporting arbitration by appointing arbitrators, enforcing subpoenas, and confirming arbitration awards. This decision reversed the Ninth Circuit’s ruling that allowed cases to be dismissed after compelling arbitration, impacting all federal courts.

This ruling will likely encourage parties to engage more seriously in arbitration, knowing that appellate review will only be available after the conclusion of proceedings. It may also prompt businesses to reconsider arbitration clauses in contracts, particularly in industries where prolonged disputes can be costly.

For arbitration practitioners, the decision signals a strong judicial commitment to arbitration-friendly policies, aligning the U.S. more closely with global arbitration standards. As arbitration continues to grow as a preferred method of dispute resolution, parties should carefully consider their strategies for challenging arbitration orders in light of this new precedent.

The Supreme Court’s decision represents a pivotal moment in arbitration jurisprudence. By eliminating immediate appeals of decisions compelling arbitration, the ruling ensures that arbitration remains an efficient and effective alternative to litigation.

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