On May 17, 2021, the U.S. Supreme Court granted certiorari in Badgerow v. Walters, No. 20-1143. The question presented is whether federal courts have subject-matter jurisdiction to confirm or vacate an arbitration award under sections 9 and 10 of the Federal Arbitration Act (FAA) when the only basis for jurisdiction is that the underlying dispute involved a federal question.
Badgerow is thus a suit regarding when, if at all, the U.S. federal courts have jurisdiction over a FAA confirmation/vacatur dispute. It will be of primary interest to U.S. litigators seeking a court ruling on whether a local state court or a federal court is the proper forum to decide whether an arbitration award can be confirmed or vacated under the FAA.
As is well known, federal courts are forums of limited jurisdiction. Long-standing jurisprudence holds that the FAA itself does not create federal jurisdiction. Rather, a party seeking to have a federal court forum for an FAA-related dispute must find an independent ground for jurisdiction. Badgerow poses the question of whether a federal court may “look through” the confirmation/vacatur issues to see if the underlying subject matter of the arbitration award resolves a “federal question” and, if the answer is “yes,” take jurisdiction of the case.
Petitioner’s cert petition summarizes the legal issue and circuit split succinctly.
In Vaden v. Discover Bank, 556 U.S. 49 (2009), this Court held that a federal court, in reviewing a petition to compel arbitration under Section 4 of the Act, may “look through” the petition to decide whether the parties’ underlying dispute gives rise to federal-question jurisdiction. In so holding, the Court focused on the particular language of Section 4, which is not repeated elsewhere in the Act.
After Vaden, the circuits have squarely divided over whether the same “look-through” approach also applies to motions to confirm or vacate an arbitration award under Sections 9 and 10. . . . In the proceedings below, the Fifth Circuit . . . applied the “look-through” approach to establish jurisdiction. That holding was outcome-determinative, and this case is a perfect vehicle for resolving the widespread disagreement over this important threshold question.
The dispute will likely come up for oral argument before the U.S. Supreme Court sometime in its October term.
The implementing statutes for the New York and Panama Conventions do, however, expressly create federal subject matter jurisdiction for their covered international awards. Consequently, the issue does not arise for those awards.
