Delegated Arbitrability and District Court Jurisdiction to Confirm Arbitration Awards Post-FAA §3 Stay

Introduction

Jules v. Andre Balazs Properties is a Second Circuit summary order issued April 25, 2025, resolving two pro se appeals arising from a district court’s stay of a federal discrimination suit pending arbitration and its subsequent confirmation of the arbitration award. Plaintiff-appellant Adrian Jules and interested-party-appellant Thomas Farinella challenged (1) the district court’s refusal to lift the stay based on an alleged material breach of the arbitration agreement by Chateau Holdings, Ltd., and (2) the court’s authority and procedure in confirming the arbitration award. Defendants-appellees (Andre Balazs Properties and related entities) and intervenor Chateau Holdings sought to uphold the stay and the confirmation under the Federal Arbitration Act (FAA). Key issues included (a) whether arbitrability disputes regarding an alleged breach of the arbitration agreement belong to the court or the arbitrator, and (b) whether a district court that invoked FAA §3 to stay proceedings retains jurisdiction to confirm an award under FAA §§9-10.

Summary of the Judgment

The Second Circuit unanimously affirmed both district court orders. First, it held de novo that the parties clearly and unmistakably delegated the question of a material breach—timely payment of arbitration fees—to the arbitrator by virtue of a broadly worded arbitration clause and incorporation of JAMS rules. Second, it reaffirmed that a district court which stays an action under FAA §3 retains jurisdiction to confirm (or vacate) any ensuing arbitration award, relying on Supreme Court precedents Cortez Byrd Chips and Marine Transit Corp. and the Second Circuit’s own Smiga and Marchant decisions. The court rejected appellants’ challenges to subject-matter jurisdiction post-Badgerow, upheld the procedure allowing Chateau (a non-party to the lawsuit but a party to the arbitration) to join the confirmation motion, and found no ground under FAA §10 or non-statutory doctrines to vacate the award.

Analysis

Precedents Cited

• Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79 (2002): procedural questions are presumptively for the arbitrator.
• Rent-A-Center, W., Inc. v. Jackson, 561 U.S. 63 (2010): “gateway” arbitrability issues may be delegated if the parties so agree.
• Republic of Ecuador v. Chevron Corp., 638 F.3d 384 (2d Cir. 2011): “clear and unmistakable evidence” standard for delegation.
• Cortez Byrd Chips, Inc. v. Bill Harbert Constr. Co., 529 U.S. 193 (2000): §3 stay implies power to confirm awards.
• Marine Transit Corp. v. Dreyfus, 284 U.S. 263 (1932): stay under the FAA carries forward jurisdiction.
• Smiga v. Dean Witter Reynolds, Inc., 766 F.2d 698 (2d Cir. 1985) & Marchant v. Mead-Morrison Mfg. Co., 29 F.2d 40 (2d Cir. 1928): district courts retain jurisdiction to confirm awards after a stay.
• Badgerow v. Walters, 596 U.S. 1 (2022): look-through jurisdiction applies to §4 petitions but not necessarily to §§9-10 confirmations.
• Vaden v. Discover Bank, 556 U.S. 49 (2009): “look through” for subject-matter jurisdiction under §4.
• MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, Inc., 471 F.3d 377 (2d Cir. 2006): non-parties should intervene under Rule 24.

Legal Reasoning

1. Delegation of arbitrability. The court applied Howsam and Rent-A-Center to distinguish “questions of arbitrability” (for courts absent clear delegation) from procedural matters (for arbitrators). Because the arbitration agreement broadly covered “any dispute arising out of this Agreement” and expressly incorporated JAMS rules empowering the arbitrator to decide jurisdictional issues, the court found clear and unmistakable evidence that delegates the material-breach dispute to arbitration.

2. Retained jurisdiction post-§3 stay. Jules and Farinella relied on Badgerow’s limitation of look-through jurisdiction for §§9-10 confirmations, but the Second Circuit recognized an exception: when a federal court has already assumed jurisdiction and stayed under §3, Cortez Byrd Chips and decades of consistent precedent (Smiga, Marchant) mean the court retains authority to confirm the award without a separate jurisdictional inquiry on the petition’s face.

3. Non-party procedure. The panel acknowledged that Chateau was not a party to the original lawsuit and that, procedurally, Rule 24 intervention would ordinarily be required. Nonetheless, because the FAA §9 text authorizes “any party to the arbitration” to seek confirmation, and Chateau was indisputably a signatory to the arbitration agreement, its joinder was permissible in this unique posture.

4. Confirmation and vacatur standards. Applying the FAA’s narrow grounds for vacatur under §10 and the “very narrow set of circumstances” recognized by courts, the panel found no error in the district court’s confirmation of the award.

Impact

This decision solidifies two important arbitration doctrines in the Second Circuit:

• Broad arbitration clauses that incorporate institutional rules delegating arbitrability will be enforced strictly, leaving threshold disputes to arbitrators.
• Federal courts that stay actions under FAA §3 will retain subject-matter jurisdiction to confirm or vacate awards under §§9-10, notwithstanding Badgerow’s rejection of a look-through test for one-off petition filings.

The ruling discourages litigants from relitigating arbitrability or jurisdiction in district court once they have agreed to a broad arbitration regime. It also clarifies that challengers to an award face a “heavy burden” under §10, reinforcing finality and efficiency in arbitration.

Complex Concepts Simplified

• Arbitrability vs. Procedural Questions: “Arbitrability” asks who decides a dispute or what disputes are covered, normally for courts unless the contract says otherwise. “Procedural questions” (e.g., fee payment deadlines) arise during arbitration and typically go to the arbitrator.
• FAA §3 Stay: When parties compel arbitration, the court must stay its proceedings rather than dismiss. Under §3, that stay does not end the court’s power over the case—it merely pauses it.
• Look-Through Jurisdiction: For motions to compel arbitration (FAA §4), courts may “look through” the petition to the underlying dispute to see if they have jurisdiction (e.g., federal question or diversity). Badgerow clarified that this look-through does not apply to confirmation/vacatur petitions under §§9-10 in standalone cases.
• Delegation Clause: A contractual provision saying that “any dispute” or “any question of interpretation” goes straight to the arbitrator automatically shifts arbitrability questions away from courts.

Conclusion

The Second Circuit in Jules v. Andre Balazs Properties reaffirmed that parties who agree to broad arbitration clauses—including institutional rules—unequivocally delegate arbitrability issues to arbitrators. It also confirmed that courts which stay suits under FAA §3 maintain jurisdiction to resolve confirmation or vacatur motions under §§9-10, insulating them from jurisdictional challenges under Badgerow in this context. Finally, it underscored the procedural rigor of Rule 24 for non-parties but recognized a narrow exception when the FAA itself authorizes their participation. Collectively, these holdings deepen the stability and predictability of the arbitration framework, emphasizing finality and the streamlined resolution of post-award proceedings.