Supreme Court: Federal Courts Retain Jurisdiction Over Arbitral Awards After Section 3 Stays

The Court held that, following a stay order under Section 3 of the Federal Arbitration Act (FAA), federal courts retain jurisdiction to confirm or vacate subsequent arbitral awards under Sections 9 and 10 of the FAA, even when the motions to confirm or vacate do not independently present a basis for federal jurisdiction. 

Adrian Jules filed federal discrimination claims in the Southern District of New York against his former employer following the termination of his employment at the Chateau Marmont Hotel. The defendants moved to stay the litigation pending arbitration. The federal district court granted the stay in 2021, finding that Jules’ claims were covered by the arbitration agreement he signed upon hiring. After the arbitrator ruled against Jules and awarded approximately $34,500 in sanctions against him, the parties returned to the same New York federal court. The defendants moved to confirm the award under Section 9, and Jules cross-moved to vacate under Section 10. 

Jules argued that, under the Court’s 2022 decision in Badgerow v. Walters, 596 U.S. 1 (2022), the district court lacked jurisdiction because the Section 9 and 10 motions neither presented federal questions nor satisfied the requirements for diversity jurisdiction under 28 U.S.C. § 1332(a). The district court disagreed and confirmed the award, and the Second Circuit affirmed. The Supreme Court granted certiorari to resolve a split among the Second, Third, and Seventh Circuits (which held that pre-existing federal jurisdiction survived), and the Fourth Circuit (which applied Badgerow to all Section 9 and 10 motions regardless of procedural history). 

The Court’s Holding

A federal court that grants a Section 3 stay does not lose jurisdiction over the stayed claims while the parties arbitrate because “[j]urisdiction to decide [a] case includes jurisdiction to decide [a] motion” within that case. Accordingly, the district court’s original federal-question jurisdiction under 28 U.S.C. § 1331 extended to the post-arbitration Section 9 and 10 motions without the need for any independent jurisdictional basis. The Court distinguished Badgerow on the ground that it involved a “freestanding” action — one commenced in federal court for the sole purpose of confirming or vacating an arbitral award, where no underlying federal claims had ever been filed. In such a case, the only places to look for jurisdiction are the face of the FAA motions or the underlying dispute that was never before the court. Here, by contrast, there was “an obvious third place to look for jurisdiction: the original claims themselves.”¹

The Court expressly rejected policy concerns raised about “anchor suits” designed to manufacture federal jurisdiction, finding them “conjectural” and unsupported by evidence from circuits that have long applied the same rule. The Court noted that Jules’ approach would instead create “unnecessarily complex dual-track litigation” where confirmation proceedings would proceed in state court while arbitrability appeals remained pending in federal court.²

This decision provides some clarity for parties engaged in federal litigation involving arbitration agreements. Most significantly, clients who file or defend federal claims that are subsequently stayed pending arbitration can now be confident that the same federal court will adjudicate any post-arbitration motions to confirm or vacate, without the need to identify a separate jurisdictional basis. Parties will no longer face the potential inefficiency of filing a new state-court action — with new filing fees and service requirements — simply to confirm or challenge an arbitral award when a federal case is already on the docket, eliminating the risk of bifurcated proceedings and potential inconsistencies. 

By establishing federal jurisdiction at the outset and obtaining a stay, parties may preserve access to a federal forum for all post-arbitration proceedings. Under Spizzirri³, and now Jules, the mandatory stay is the mechanism that keeps the court’s jurisdiction alive. Agreeing to a voluntary dismissal (following an order compelling arbitration) could forfeit the jurisdictional anchor this decision provides. For parties who proceed directly to arbitration without a federal case, early evaluation of jurisdiction remains essential, as Badgerow continues to require an independent jurisdictional basis for freestanding confirmation or vacatur actions. 

[1] Jules v. Andre Balazs Properties, 608 U.S. ___, slip op. at 8 (2026).

[2] Jules v. Andre Balazs Properties, 608 U.S. ___, slip op. at 15 (2026).

[3] Smith v. Spizzirri, 601 U.S. 472 (2024)