The inclusion of an arbitration clause in oil and gas leases throughout the Appalachia region, requiring that parties arbitrate disputes arising out of their leases, has become commonplace. As development of these leases continues and royalties are paid for production, disputes over the meaning of lease provisions concerning payment are occurring more frequently. A relatively new battlefront in these arbitrations that is being played out in Pennsylvania right now is whether class-action arbitrations of these lease disputes are authorized.
The U.S. Supreme Court has issued a number of opinions on class-action arbitration in the past decade, but none has definitively resolved these issues. The implications of class-action lease and royalty disputes are significant and are being closely watched by the oil and gas industry.
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