## Facts

- The Government of the United Kingdom of Great Britain and Northern Ireland (United Kingdom) had separate contracts with The Boeing Company (Boeing) and Textron, Inc. (Textron) relating to a United Kingdom military helicopter and related systems.
- Each contract contained an arbitration clause requiring disputes to be arbitrated under the American Arbitration Association (AAA) Rules in New York City.
- In January 1989, during Boeing’s ground testing of a new electronic fuel control system (FADEC) designed by Textron and installed by Boeing, the United Kingdom’s military helicopter was damaged.
- The United Kingdom filed separate demands for AAA arbitration: one against Boeing and a separate one against Textron.
- The United Kingdom asked Boeing and Textron to consent to consolidation of the two arbitration proceedings; Boeing refused.
- The AAA informed the United Kingdom that it would not order consolidation without the consent of all parties.
- The United Kingdom then petitioned the U.S. District Court for the Southern District of New York to compel consolidated arbitration.
- Relying on Compania Espanola de Petroleos, S.A. v. Nereus Shipping, S.A., the district court concluded it could order consolidation when the proceedings involved common questions of fact and law, even without party consent, and granted consolidation.
- Boeing appealed; the Second Circuit stayed the consolidation order pending appeal.

## Issues

1. Whether a federal district court has authority under the Federal Arbitration Act (FAA) and/or the Federal Rules of Civil Procedure to order consolidation of separate AAA arbitrations arising from separate arbitration agreements when the parties did not agree to consolidation.

## Decision

- The Second Circuit reversed the district court’s judgment.
- The court held that a district court cannot order consolidation of arbitration proceedings arising from separate agreements to arbitrate unless the parties agreed to allow consolidation.
- The court rejected the district court’s reliance on Nereus as a general source of power to compel consolidation where separate contracts contain separate arbitration clauses and no consolidation term.

## Legal Principles

- The FAA requires courts to enforce private arbitration agreements according to their terms; courts may not impose procedures that materially change the parties’ bargain.
- Section 4 of the FAA authorizes compelling arbitration only “in the manner provided for” in the parties’ agreement; refusal to consolidate is not a refusal to arbitrate when the agreement does not call for consolidated arbitration.
- The FAA does not supply an independent, free-standing power for courts to consolidate separate arbitrations when the contracts are silent on consolidation.
- Federal Rules of Civil Procedure 42(a) and 81(a)(3) do not authorize consolidation of private arbitrations: Rule 42 concerns consolidation of actions pending before a court, and Rule 81 addresses procedure in FAA-related court proceedings, not how arbitrations must be conducted.
- Concerns about duplicative proceedings or potentially inconsistent awards do not justify judicially ordering consolidated arbitration where the contracts do not provide for it.

## Conclusion

The Second Circuit ruled that, because the United Kingdom’s contracts with Boeing and Textron contained separate arbitration clauses without any consolidation provision, the FAA and the Federal Rules did not permit a court to compel consolidated AAA arbitration over Boeing’s objection, and it reversed the district court’s consolidation order.


United Kingdom of Great Britain & Northern Ireland v. Boeing Co., 998 F.2d 68 (1993)