Federal Question Jurisdiction
and the Federal Arbitration Act
Richard A. Bales & Jamie L. Ireland
The Federal Arbitration Act (“FAA”) gives signatories to an arbitration agreement the right to have that agreement specifically enforced. The FAA does not, however, confer federal subject matter jurisdiction. Absent federal jurisdiction, a party seeking enforcement under the FAA must sue in state court. State courts, however, are far more likely than federal courts to use state contract law doctrines to avoid enforcing arbitration agreements. This has led parties seeking enforcement to look for other ways into federal court.
Some federal courts have found jurisdiction over enforcement actions when the underlying dispute involves a federal question, such as when an employer is seeking to enforce an arbitration agreement against an employee who has sued for employment discrimination under Title VII. These courts reason that the text and history of the FAA require courts to “look through” the dispute about enforceability to the underlying dispute. Other courts, however, have concluded that such a “look through” is inconsistent with the text and history of the FAA and with the well-pleaded complaint rule.
Imre Szalai published an excellent article entitled The Federal Arbitration Act and the Jurisdiction of the Federal Courts on this issue in 2007, in which he argued that the courts should adopt the “look through” approach. We agree. Our Article nonetheless makes a unique contribution to the scholarly literature in three ways. First, our Article explains that the difficulty of choosing one approach over the other is exacerbated because the same interpretive tools can be marshaled in favor of each approach, and because the arguments made using each interpretive tool are not mutually exclusive. Second, our Article argues that the “look-through” approach is most consistent with the strong policy favoring arbitration that has been espoused by the Supreme Court for the last two decades. Third, because a very large number of federal circuits are evenly divided on this issue, it is important for courts to know that there is a scholarly consensus.