Mandatory Primacy of Arbitration Motions Under the Federal Arbitration Act

Introduction

This commentary examines the Fifth Circuit’s per curiam decision in Odom Industries, Inc. v. Sipcam Agro Solutions, LLC, No. 24-60410 (5th Cir. June 4, 2025). The dispute arose out of an Asset Purchase Agreement between Odom Industries and Sipcam Agro entities, which contained both an arbitration clause and a forum-selection clause. After Odom sued in Mississippi state court, Sipcam removed to federal court and moved to compel arbitration. Odom countered with a motion to remand based on the forum-selection clause. The district court granted remand without first resolving arbitration. The Fifth Circuit reversed, holding that, once federal jurisdiction is established, a motion to compel arbitration under the Federal Arbitration Act (FAA) must be decided before other non-jurisdictional motions, including those seeking enforcement of a forum-selection clause.

Summary of the Judgment

The Fifth Circuit held that:

The district court had diversity subject-matter jurisdiction under 28 U.S.C. § 1332 and never questioned it.
A contractual forum-selection clause does not divest federal courts of subject-matter jurisdiction or bar them from ruling on motions to compel arbitration.
Under 9 U.S.C. § 4 and Supreme Court precedent, a district court must decide a motion to compel arbitration once jurisdiction is secure, before addressing other non-jurisdictional issues.
The district court erred by granting remand on contractual grounds without first ruling on Sipcam’s motion to compel arbitration.
The proper vehicle to enforce a forum-selection clause pointing to state court is forum non conveniens, not remand.

The Fifth Circuit therefore reversed the remand order and remanded for the district court to resolve the arbitration motion in the first instance.

Analysis

Precedents Cited

Waters v. Browning-Ferris Indus., Inc., 252 F.3d 796 (5th Cir. 2001) – forum-selection clause remand is not jurisdictional and is immediately appealable.
McDermott Int’l, Inc. v. Lloyds Underwriters, 944 F.2d 1199 (5th Cir. 1991) – contractual waiver of removal rights does not affect subject-matter jurisdiction.
Dynamic CRM Recruiting Sols., LLC v. UMA Educ., Inc., 31 F.4th 914 (5th Cir. 2022) – de novo review of remand based on forum selection.
Ashley v. Clay Cnty., 125 F.4th 654 (5th Cir. 2025) – burden of establishing federal jurisdiction; distinction between jurisdictional and non-jurisdictional motions.
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) – federal courts have limited, statutory jurisdiction.
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) – FAA leaves no discretion: courts “shall” compel arbitration.
Reyna v. Int’l Bank of Com., 839 F.3d 373 (5th Cir. 2016) – arbitrability is a threshold question.
Auto Parts Mfg. Miss., Inc. v. King Const. of Houston, LLC, 782 F.3d 186 (5th Cir. 2015) – arbitration agreements must be considered before other issues.
Texaco Exploration v. AmClyde Engineered Prods. Co., 243 F.3d 906 (5th Cir. 2001) – sequence of arbitration motion resolution.
Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (2007) – jurisdictional issues take priority over merits.
Hines v. Stamos, 111 F.4th 551 (5th Cir. 2024) – no bypassing jurisdictional challenges for arbitration motions.
Atl. Marine Const. Co. v. U.S. Dist. Ct. for W. Dist. of Tex., 571 U.S. 49 (2013) – enforce forum-selection via forum non conveniens, not removal remand.
Mills v. Beech Aircraft Corp., 886 F.2d 758 (5th Cir. 1989) – sua sponte venue transfer under 28 U.S.C. § 1404(a); forum non conveniens principles.
Ballew v. Continental Airlines, Inc., 668 F.3d 777 (5th Cir. 2012) and Buchner v. FDIC, 981 F.2d 816 (5th Cir. 1993) – parties cannot confer or strip subject-matter jurisdiction by agreement.

Legal Reasoning

The court’s core rationale rests on the FAA’s clear command: once jurisdiction is established, a federal court “shall” hear and decide a motion to compel arbitration before proceeding to other issues (9 U.S.C. § 4). The district court’s remand, based solely on a contractual forum-selection clause, bypassed that mandatory sequence. The Fifth Circuit emphasized that:

Forum-selection clauses do not affect subject-matter jurisdiction.
Decisions resting on contractual waivers of removal rights are non-jurisdictional and must be distinguished from true jurisdictional defects.
The appropriate remedy for enforcing a forum-selection clause is forum non conveniens, not remand.

Impact

This decision cements the primacy of arbitration motions under the FAA in the Fifth Circuit. Practitioners should note:

District courts must resolve arbitration motions before other non-jurisdictional motions, including those seeking to enforce forum-selection clauses.
Removing parties cannot be deprived of their FAA rights by a contractual forum-selection clause alone.
Enforcement of forum-selection clauses pointing to state court must proceed via forum non conveniens analysis or motion to transfer, not by remand on contractual grounds.
The decision may increase efficiency in resolving arbitrability disputes early in litigation.

Complex Concepts Simplified

Subject-Matter Jurisdiction: Federal courts may only hear cases authorized by statute (e.g., diversity cases under § 1332). They cannot be “contracted away” by private agreement.
Forum-Selection Clause vs. Arbitration Clause: A forum-selection clause designates the court and location for litigation, whereas an arbitration clause requires private arbitration. They operate independently.
Federal Arbitration Act (FAA) § 4: Mandates that, once a valid arbitration agreement is before a federal court, the court “shall” compel arbitration if no genuine dispute exists about the agreement’s validity.
Forum Non Conveniens: A doctrine allowing federal courts to dismiss or transfer cases when an alternative forum is significantly more appropriate, often used to enforce forum-selection clauses.

Conclusion

Odom Industries v. Sipcam Agro reaffirms that federal courts must honor the FAA’s mandatory sequence by deciding arbitration motions once jurisdiction is secured, before tackling contractual forum-selection disputes. It clarifies that forum-selection clauses do not divest federal courts of subject-matter jurisdiction or override FAA commands. The proper mechanism for enforcing such clauses is forum non conveniens, not remand. Going forward, this decision will guide practitioners and courts in prioritizing arbitration determinations and preserving the integrity of both arbitration agreements and federal jurisdictional principles.