Supreme Court hears dispute over whether FAA Section 3 requires stays or allows dismissal

The Supreme Court heard argument Monday in Smith v. Spizzeri over whether Section 3 of the Federal Arbitration Act requires courts to "stay the trial of the action" while arbitration proceeds, or whether a dismissal without prejudice may satisfy that command.

Mister Geyser, counsel, told the court that "Section 3 unambiguously mandates a stay pending arbitration," arguing that the FAA's text, structure and purpose point to a categorical stay. He said dismissal would "activate a premature right to appeal," invite wasteful disputes over whether to stay or dismiss, and leave parties without "a seat to come back to" if arbitration fails.

Mister Rosenkrantz, representing the opposing position, urged a different reading: when Congress directed courts to "stay the trial of a case," it meant courts should stop the litigation but not necessarily retain jurisdiction. "It did not mean you must retain jurisdiction," Rosenkrantz said, arguing that dismissals without…