United States: Powers Of A District Court To Grant Interim Relief After Compelling Arbitration Of All Claims Before It

Last month, we described the split among Federal Circuit Courts regarding the question of whether the Federal Arbitration Act ("FAA"), 9 U.S.C. § 3, mandates a stay rather than dismissal of a judicial proceeding after a district court compels arbitration of all of the claims in an action before it. ( LINK) But what is the practical significance of the district court's retaining jurisdiction? Among other things, it may thus be able to grant interim relief in order to preserve the status quo pending arbitration.

However (no surprise) the Circuit Courts are not unanimous in their holdings in this regard either. The majority of the U.S. Courts of Appeal have held that district courts may grant injunctive relief to preserve the status quo pending arbitration in the absence an express contractual provision permitting it. But the Eighth Circuit has held that granting an injunction under such circumstances is contrary to the spirit of the FAA, see Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286, 1291 (8th Cir. 1984), and three other circuits have yet to weigh in on the issue (but acknowledge the jurisprudential divide), see, e.g., RGI, Inc. v. Tucker & Assocs., 858 F.2d 227, 229-30 (5th Cir. 1998) ("The crux of the problem is whether the commands of the [FAA] require that a federal court immediately divest itself of any power to act to maintain the status quo once it decides that the case before it is arbitrable.").

Moreover, the Supreme Court declined to resolve the Circuit court split before it deepened, and has not had occasion to revisit the issue since. See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. McCollum, 469 U.S. 1187 (1985) (denying certiorari).

The Majority Rule

The First, Second, Third, Fourth, Sixth, Seventh, Ninth, and Tenth Circuits each have held that a district court can and may afford injunctive relief pending arbitration. In Blumenthal v. Merrill Lynch, Pierce, Fenner & Smith, 910 F.2d 1049, 1053 (2d Cir. 1990), the Second Circuit explained that arbitration could become a "'hollow formality' if parties are able to alter irreversibly the status quo before the arbitrators are able to render a decision in the dispute." The First Circuit in Teradyne, Inc. v. Mostek Corp., 797 F.2d 43, 51 (1st Cir. 1986), reasoned that because it preserves the live controversy and its stakes for the arbitrators, injunctive relief "reinforces rather than detracts from the policy of the [FAA]." Accord, Ortho Pharm. Corp. v. Amgen, Inc., 882 F.2d 806, 813-14 (3d Cir. 1989) (district court has jurisdiction to provide injunctive relief pending arbitration, provided movant satisfies traditional four-pronged test); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bradley, 756 F.2d 1048, 1050-55 (4th Cir. 1985); Performance Unlimited Inc. v. Questar Publishers, Inc., 52 F.3d 1373, 1377-80 (6th Cir. 1995) ("a district court has subject matter jurisdiction under § 3 of the [FAA] to grant preliminary injunctive relief"); Sauer-Getriebe, KG v. White Hydraulics, Inc., 715 F.2d 348, 351-52 (7th Cir. 1983); Toyo Tire Holdings of Ams., Inc. v. Cont'l Tire N. Am., Inc., 609 F.3d 975, 981-82 (9th Cir. 2010); Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Dutton, 844 F.2d 726, 726-28 (10th Cir. 1988).

The Minority View

The Eighth Circuit is the only federal appellate court to have decided the issue differently. In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Hovey, 726 F.2d 1286 at 1291, it reversed the district court's order of a preliminary injunction pending arbitration. Unlike the First Circuit in Teradyne, the Eighth Circuit concluded that granting injunctive relief under the same circumstances "abrogates the intent of the Federal Arbitration Act and consequently was an abuse of discretion." Id. The Hovey court reasoned that "the judicial inquiry requisite to determine the propriety of injunctive relief necessarily would inject the court into the merits of issues more appropriately left to the arbitrator." Id. at 1292 (citing Buffalo Forge Co. v. United Steelworkers of Am., AFL-CIO, 428 U.S. 397, 412 (1976) (emphasis added)). The court held that "where the [FAA] is applicable and no qualifying contractual language [permitting injunctive relief] has been alleged, the district court errs in granting injunctive relief." Id.

The Eighth Circuit later revisited its Hovey decision in Peabody Coalsales Co. v. Tampa Electric Company, 36 F.3d 46, 47 (8th Cir. 1994) (emphasis added), because the Hovey court did not decide "whether injunctive relief could be granted if the contract contains 'qualifying language'." In Peabody Coalsales, the Eighth Circuit held that, pursuant FAA § 4, a district court may only grant a preliminary injunction pending the arbitration when the contract at issue "require[s] continued performance as part of the dispute resolution process." 36 F.3d at 48 (citing Volt Info. Sciences, Inc. v. Leland Stanford Jr. Univ., 489 U.S. 474-75 (1989) (holding that FAA § 4 confers only the right to obtain an order directing that 'arbitration proceed in the manner provided for in [the parties' agreement]") (emphasis in original)).

The Undecideds

The Fifth Circuit has expressly declined to reach the issue. See RGI, supra, 858 F.2d at 230 (affirming grant of preliminary injunction where contract at issue provided for maintenance of the status quo pending arbitration); Janvey v. Alguire, 647 F.3d 585, 595 (5th Cir. 2011) (affirming grant of preliminary injunction where district court had not yet decided whether the claims in question were arbitrable). However, most district courts within the Fifth Circuit follow the majority position. See Amegy Bank N.A. v. Monarch Flight II, LLC, 870 F. Supp. 2d 441, 452 (S.D. Tex. 2012) (citing Speedee Oil Change Sys., Inc. v. State Street Capital, Inc., 727 F. Supp. 289, 292 (E.D. La. 1989)).

Finally, neither the Eleventh Circuit nor the D.C. Circuit have had occasion to address the issue. See, e.g., Amtrak v. Expresstrak, 233 F. Supp.2d 39, 51 (D.D.C. 2002).

The Consequences for Litigants

Arguing that the Supreme Court should have granted certiorari in McCollum, Justice White noted that "[w]hether the Arbitration Act bars the issuance of a preliminary injunction pending arbitration appears to be a frequently litigated question of considerable importance to the parties to arbitration agreements." McCollum, 469 U.S. at 1131 (White, J., dissenting). Confusion or uncertainty in the district courts on this question is particularly troubling because their decisions to grant or deny interlocutory relief "are often effectively final, given that the imminence of arbitration may sharply limit a party's incentives to appeal an adverse decision." Id. at 1130. Absent immediate entry of an injunction to maintain the status quo pending arbitration, most subsequent requests for injunctive relief are effectively moot.

For now, it seems prudent that a party who foresees a need to maintain the status quo pending the resolution of disputes in arbitration should include language in its arbitration clause providing, for example, that the relevant commercial contract shall continue in full force and effect until a decision is rendered in the arbitration. See, e.g., RGI, 858 F.2d at 230 (affirming grant of injunctive relief where contract contained qualifying language); Peabody Coalsales, 36 F.3d at 47-48 (reversing district court's order denying motion for an order requiring continuing performance where contract provided that "performance of [the parties'] respective obligations under this Agreement shall be continued in full by the parties during the dispute resolution process....").

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.