March 31, 2022

March 31, 2022:

A federal court entertaining an application to confirm or vacate an arbitration award under section 9 or 10 of the Federal Arbitration Act must have an independent jurisdictional basis.  The court may not "look through" the application and assert jurisdiction merely because the court would have had jurisdiction over the underlying controversy.  The situation differs from an application to compel arbitration, where the language of section 4 of the FAA authorizes look-through jurisdiction.  Badgerow v. Walters, 142 S. Ct. 1310 (2022).

Section 4 of the FAA provides that a party may "petition any United States district court which, save for such [arbitration] agreement, would have jurisdiction under Title 28 . . . of the subject matter of a suit arising out of the controversy between the parties" for an order compelling arbitration.  In Vaden v. Discover Bank, 556 U.S. 49 (2009), the Court held that the quoted language authorized look-through jurisdiction: Even if the petition to compel did not, by itself, create federal court jurisdiction, the federal court may nonetheless exercise jurisdiction if it would have had jurisdiction over the underlying dispute, for example, if the underlying dispute presented a federal question.             

At issue in Badgerow was whether sections 9 and 10 of the FAA, which govern applications to confirm and vacate arbitration awards respectively, also authorize look-through jurisdiction.  Justice Kagan, writing for an eight-Justice majority, held that they do not.  A federal court entertaining an application to confirm or vacate must have an independent, Title 28 basis for jurisdiction even if it would have had jurisdiction over the underlying dispute.  Justice Breyer dissented.               

Statutory construction drove the Badgerow Court's holding.  Federal courts have limited jurisdiction, defined (as limited by the Constitution) by statute.  The language of section 4 of the FAA quoted above is jurisdictional.  Specifically, it authorizes what is commonly referred to as look-through jurisdiction: Even if a federal court would not have jurisdiction over the application to compel by itself, it may act if, "save for such [arbitration] agreement, [it] would have jurisdiction under Title 28 . . . of the subject matter of a suit arising out of the controversy between the parties."  Sections 9 and 10 of the FAA do not contain this jurisdictional-grant language.  And they do not contain any other language that would give a federal court jurisdicction merely because it would have had jurisdiction over the underlying dispute.      

  

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