Cadwalader, Wickersham & Taft LLP
MONTH-IN-BRIEF (Apr 2022)
Dispute Resolution
Supreme Court Restricts the Ability of Federal Courts to Confirm or Vacate Arbitral Awards
By Leslie Ann Berkoff, Partner at Moritt Hock & Hamroff LLP, Chair of Dispute Resolution Practice Group
A recent decision of the Supreme Court, Badgerow v. Walters et al., 142 S.Ct. 1310 (March 31, 2022), has restricted the ability of the federal courts to confirm or vacate arbitral awards under Sections 9 and 10 of the Federal Arbitration Act (FAA). Justice Elena Kagan authored a decision on behalf of an 8–1 majority of the court, finding that the “look through” approach endorsed by the Court in decisions concerning Section 4 of the FAA does not apply for petitions to confirm or vacate an award under Sections 9 or 10 of the FAA.
The “look through” approach developed in the case of Vaden v. Discover Bank et al., 556 U.S. 49 (2009), directs a Court to look past the existence of an arbitration agreement and examine the facts of an underlying dispute when determining whether it has jurisdiction to hear a petition to compel arbitration. Specifically, Section 4 of the FAA only allows a party to compel arbitration in a “United States district court which, save for the [arbitration] agreement, would have jurisdiction.” This has been interpreted to mean that if the facts and nature of the dispute would either give rise to either a federal question or diversity jurisdiction, the Court could rule on the motion to compel.