The Supreme Court to determine issues concerning subject matter jurisdiction
By Leslie A. Berkoff, Moritt Hock & Hamroff LLP
On 17 May 2021, the US Supreme Court granted certiorari to address the question of whether federal courts have subject matter jurisdiction to confirm or vacate an arbitration award under the Federal Arbitration Act (“FAA”) where the only basis for jurisdiction is that the underlying dispute involves a question of federal law (see Badgerow v. Walters, No. 20-1143). The appeal challenges a Fifth Circuit decision finding that under Section 4 of the FAA, a petition to compel arbitration can be determined by “any United States district court which, save for [the arbitration] agreement, would have jurisdiction …[over the subject matter]” (9 U.S.C. § 4).
The Supreme Court has previously held that the proper analysis to determine federal court jurisdiction over petitions to compel arbitration under Section 4 of the FAA should focus on whether the underlying dispute involves a federal claim and should analyse whether the court would have jurisdiction absent the arbitration agreement; this is known as the “look through” approach. However, the decision has led to a circuit split as to whether the same analysis applies not just to petitions to compel arbitration under Section 4, but also to petitions to confirm, vacate or modify awards under Sections 9-11.
Given that the enforcement of arbitral awards is an important issue for the federal courts, the Supreme Court’s resolution of Badgerow could have far-reaching consequences. Of course, this will depend on whether the Court renders a decision limited to Section 4, focused solely on the language of that Section or chooses to apply a broader approach to all arbitration related to proceedings consistent with the overall policy of the FAA.
Merits briefing in Badgerow is to be completed in September 2021.
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Moritt Hock & Hamroff is a full-service commercial law firm providing a wide range of legal services to businesses, corporations and individuals worldwide. The firm has 19 practice areas and offices in Garden City, NY, and New York City, NY, USA.
Leslie A. Berkoff is a Partner with the firm and Chair of its Bankruptcy Practice Group. She concentrates her practice in the area of bankruptcy representing a variety of corporate debtors, trustees, creditors and creditors’ committees, both nationally and locally.
Publsihed: Litigation & Dispute Resolution Newsletter, No. 15, Autumn 2021 l Photo: raulcrego - stock.adobe.com