Last week, the Supreme Court held that federal courts that compel arbitration and stay a case pending completion of that arbitration under Section 3 of the Federal Arbitration Act (FAA[1]) retain their jurisdiction to confirm or vacate the resulting arbitration award. Jules v. Andre Balazs Properties, No. 25-83 (May 14, 2026) (Jules).[2] In a unanimous decision authored by Justice Sonia Sotomayor, the Court left no doubt that federal courts in such circumstances can resolve post-arbitration petitions to confirm or vacate an award by exercising the same jurisdictional authority used to compel arbitration and stay the original federal case. Parties seeking to confirm or vacate an award under §§ 9 or 10 of the FAA can simply return to the same federal court that compelled arbitration, and are not required to establish an independent basis for federal jurisdiction over their petition.
The Court’s decision in Jules resolves any ambiguity resulting from its 2022 decision in Badgerow v. Walters[3], which held that federal courts lack jurisdiction to confirm or vacate arbitration awards in suits that were initially brought only in arbitration or in state court and that did not otherwise involve a federal court. In such circumstances, where a party brings a “free-standing” action to confirm or vacate an award, the Badgerow Court held that federal courts could not “look through” to the underlying dispute to establish federal jurisdiction. Rather, Badgerow requires that an action to confirm, vacate or modify an arbitration award brought under the FAA be filed in state court, unless there is federal diversity jurisdiction or the petition itself raises a question of federal law.
In Jules, the Court stated plainly that these additional requirements are not necessary for cases brought initially (and properly) in federal court and then compelled to arbitration. The Court reasoned that no “look through” was required in these circumstances because it retained the jurisdiction it already established over the original federal claims it stayed. Under Jules, the federal court does not relinquish its jurisdiction over the claims by compelling arbitration. Rather, by staying the claims, they remained pending, and the parties could bring post-award petitions back to the same federal court as part of the same case. This aligns with the Court’s recent holding in Smith v. Spizzirri[4], which held that Section 3 of the FAA requires courts to stay, rather than dismiss, claims it compels to arbitration.
While Jules involved employment discrimination claims brought under federal and state law, its holding extends to any claims brought first in federal court and then compelled to arbitration. This has particular implications for claims brought under the federal securities or commodities laws, which are commonly arbitrated before FINRA or NFA arbitration panels. Katten frequently represents broker-dealers, FCMs, proprietary trading firms and other market participants in high-stakes arbitrations before these and other Self-Regulatory Organizations (SROs). These cases often originate in state or federal court and are compelled to arbitration under a contract between the parties. The Jules decision incentivizes parties who wish to adjudicate any such post-arbitration proceedings in federal court to either file suit there or, if defending, remove a state court case to federal court before compelling arbitration and seeking a stay. This enables a party to establish jurisdiction over any subsequent enforcement proceeding at the outset of the litigation and to ensure it is afforded the streamlined federal enforcement process under the FAA.
[1] 9 U.S.C. §§ 1-16.
