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Federal Courts Have No Jurisdiction Over Many Arbitration Suits
Description Federal court properly dismissed appeal from an arbitration decision because the parties were bound by the arbitration clause and forum selection clause. The Federal Arbitration Act does not confer subject matter jurisdiction on federal courts. Jurisdiction must arise from another basis not existing in this case.
Topic Alternative Dispute Resolution
Key Words Arbitration, Federal Arbitration Act, Federal Question, Forum Selection
C A S E   S U M M A R Y
Facts The Baltins entered into a brokerage contract with ATC that contained an arbitration clause and a forum selection clause (Illinois). When a dispute arose, ATC sued the Baltins in state court in Illinois. Baltins moved to force the dispute to arbitration, which the court ordered. Arbitration was in south Florida; ATC won. Baltins then sued in federal court in Florida to have the award vacated or modified. ATC moved to dismiss on the basis of the forum selection clause. The district court granted ATC's motion, holding that it has "permissive jurisdiction" to hear the case but that it should have been brought in Illinois. Baltins appealed.
Decision Affirmed. "In a given case a federal district court must have at least one of three types of subject matter jurisdiction:
  1. jurisdiction under a specific statutory grant;
  2. federal question jurisdiction ...: or
  3. diversity jurisdiction....
In this case, the district court did not have any of the three types of subject matter jurisdiction."

The Supreme Court has noted that the FAA is "something of an anomaly in the field of federal-court jurisdiction. It creases a body of federal substantive law establishing and regulating the duty to honor an agreement to arbitrate, yet it does not create any independent federal-question jurisdiction." The district court properly dismissed the suit, but for the wrong reason.

Citation Baltin v. Alaron Trading Corp., 128 F.3d 1466 (11th Cir., 1997)

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