Under the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1 et seq., if a District Court compels arbitration of all of the claims that are before it, and thereupon dismisses the suit, its order compelling arbitration is final and appealable; but if the District Court stays the suit, its order compelling arbitration is “non-final” and not immediately appealable.  So what’s a right and proper court to do? The Federal Courts of Appeal are divided on the question of whether the FAA requires a stay or dismissal of judicial proceedings after a District Court sends all of the claims in suit before it to arbitration.  Currently, some parts of the U.S. are in effect more “arbitration friendly” in this regard than others.

(Note that we are not considering here the case of an “independent” motion to compel or to stay arbitration.  In that case, a petition under FAA § 4 commences a special proceeding, and no ordinary claim in suit is before the court.)

Section 4 of the FAA enables a party to move to compel a counter-party to arbitrate in accordance with an applicable arbitration agreement. Although federal courts ordinarily disallow appeals from interlocutory orders in order to prevent “piecemeal” litigation, see United States v. MacDonald, 435 U.S. 850, 853 (1978), the FAA permits immediate appeal of a non-final order that is “hostile to arbitration” (e.g., an order denying a motion to compel arbitration), while barring appeals of non-final orders compelling arbitration. Green Tree Fin. Corporation-Alabama v. Randolph, 531 U.S. 79, 85-86 (2000) (comparing FAA § 16(a) with § 16(b)).

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