Vitol Inc. v. Copape Productos De Petroleo Ltda

Background

In an earlier opinion, the Court held that the dispute between Vitol, Inc. and Copape Produtos de Petróleo Ltda. was subject to arbitration and compelled the parties to arbitrate. The Court then directed the parties to state whether the federal court case should be dismissed, otherwise ended, or stayed. Vitol requested a stay pending arbitration. Copape requested dismissal and termination of the action.

Reasoning

After the parties submitted their requests, the Supreme Court decided Smith v. Spizzirri. The Supreme Court held that when a federal court finds that a lawsuit involves a dispute subject to arbitration and a party requests a stay, Section 3 of the Federal Arbitration Act requires the court to stay the proceeding. The Court explained that Section 3 applies here because the Federal Arbitration Act’s general provisions apply to cases brought under its international-arbitration chapter when they do not conflict with that chapter or the international arbitration convention incorporated into it. The Court also relied on Section 3’s use of the word “shall,” which creates a mandatory obligation.

Ruling

Judge John P. Cronan stayed this action pending the conclusion of any arbitration between Vitol and Copape, or until further order from the Court. The order did not dismiss or terminate the action.

Effect

The federal court proceeding is paused while arbitration proceeds. The opinion does not state the outcome of the arbitration or impose any additional relief.