Establishing Jurisdiction Over Federal Court Motions To Confirm, Vacate Or Modify Domestic Arbitral Awards

As discussed in earlier posts, the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1, et seq., does not provide an independent basis for federal subject matter jurisdiction over federal court proceedings concerning domestic arbitrations. See Vaden v. Discover Bank, 556 U.S. 44, 50 (2009). (In the case of international and non-domestic arbitrations, where the New York Convention applies, FAA § 203 (9 U.S.C. § 203) establishes a federal district court's subject matter jurisdiction.) Thus, absent diversity jurisdiction in the judicial proceeding in question, a petitioner must show federal question jurisdiction under 28 U.S.C. § 1331 in order to bring an application to confirm, vacate or modify a domestic arbitral award in federal court. But, as is frequently the case in the United States regarding such jurisdiction issues, the Federal Courts of Appeals are split on how that can be done.

In Vaden, the U.S. Supreme Court considered the subject matter jurisdiction of a federal court over a motion to compel arbitration under FAA § 4, ruling that the federal court would have such jurisdiction if it would have had jurisdiction over the underlying substantive dispute -- i.e., "look through" jurisdiction.

Since Vaden, the Courts of Appeals have (of course) diverged concerning whether the Supreme Court's reasoning also applies to petitions to confirm, vacate, or modify an arbitral award under FAA §§ 9-11. The Seventh, D.C., and Third Circuits hold that Vaden's "look through" jurisdiction analysis does not apply to such petitions. See Magruder v. Fid. Brokerage Servs. LLC, 818 F.3d 285, 288 (7th Cir. 2016) (existence of basis for federal question jurisdiction over underlying dispute does not establish district court's subject matter jurisdiction over petition, pursuant to FAA §§ 9 or 10, to confirm or vacate arbitral award); Kasap v. Folger Nolan Fleming & Douglas, Inc., 166 F.3d 1243, 1247 (D.C. Cir. 1999) (declining to "look through" petition to vacate arbitral award under FAA § 10); Goldman v. Citigroup Global Mkts., Inc., 834 F.3d 242, 255 (3d Cir. 2016) (same).

The Second Circuit, among others, took a different tack, looking to the Vaden decision for guidance in considering a petition to vacate an arbitral award under FAA § 10. The Court of Appeals reasoned that (i) "[Section] 4 of the FAA does not enlarge federal-court jurisdiction"; and (ii) the Supreme Court endorsed the 'look through' test for determining whether there is subject-matter...