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         S    Congressional                                              ______
           R a    esearch Service






Smith v. Spizzirri: Supreme Court to Consider

Whether Federal Courts May Dismiss a

Lawsuit Subject to Arbitration



March 4, 2024

In Smith v. Spizzirri, the Supreme Court will consider whether Section 3 of the Federal Arbitration Act
(FAA) permits federal trial courts to dismiss a lawsuit, rather than stay the case, when all of the claims are
subject to arbitration. Federal courts of appeals have split on this issue, and the Supreme Court's eventual
decision could affect the availability of significant procedural rights in disputes involving arbitration
agreements. This Legal Sidebar provides background on the FAA and Section 3's stay provision,
examines the lower court's ruling in Spizzirri and the circuit split, and discusses considerations for
Congress.

Background

In general, the FAA requires courts to treat written arbitration agreements as valid, irrevocable, and
enforceable, and requires courts to rigorously enforce the agreements according to their terms. The
Supreme Court has characterized the FAA as establishing a national policy favoring arbitration and
reflecting Congress's intent to move the parties to an arbitrable dispute out of court and into arbitration
as quickly and easily as possible. Under Section 3 of the FAA, a party to an arbitration agreement faced
with a federal lawsuit may request a stay of the court case pending arbitration. A stay pauses the judicial
proceeding, but the court retains jurisdiction over the case. Relatedly, under Section 4, a party may seek to
compel an adversary to resolve the dispute in binding arbitration pursuant to the agreement.
Staying a court case pending arbitration rather than dismissing it has a number of potential procedural
consequences. Perhaps most significantly, when a court stays a case and orders the parties to arbitrate the
dispute, the party opposing arbitration does not have the right to an immediate appeal of that interlocutory
(i.e., non-final) order compelling arbitration. Instead, a party seeking to challenge the order compelling
arbitration generally has to wait until the arbitration concludes, unless the district court and appellate
court both agree to permit a discretionary appeal under 28 U.S.C. § 1292(b). In contrast, when a court
dismisses a lawsuit rather than staying it, the court's dismissal order is a final decision subject to
immediate appeal.

                                                                Congressional Research Service
                                                                  https://crsreports.congress.gov
                                                                                    LSB11122

CRS Legal Sidebar
Prepared for Members and
Committees of Congress

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