The US Supreme Court Thursday narrowed the role of federal courts in enforcing certain provisions of the Federal Arbitration Act (FAA). In an 8-1 decision authored by Justice Elena Kagan, the court held in Badgerow v. Walters that federal courts do not have jurisdiction to confirm or vacate certain arbitral awards, even where the claim would normally fall within federal jurisdiction.

The case concerned Denise Walters, who formerly worked for a business owned in part by the defendant, Greg Walters. Under a claim of wrongful termination pursuant to Title VII of the Civil Rights Act, Walters initiated an arbitration proceeding as required by her employment contract. The arbitration resulted in a ruling for the defendant, which Walters then challenged in Louisiana state court. The defendant then removed to federal court, requesting confirmation of the arbitration decision.

In 2008, the court held in Vaden v. Discover Bank that federal courts have jurisdiction to compel arbitration under certain claims. The court has authority to compel arbitration if a court “looks through” the arbitration agreement to the substantive issue and it is one over which federal courts can traditionally exercise jurisdiction.

However, the court refused to extend this analysis to the case at hand. Justice Kagan wrote that the court’s decision in Vaden was influenced by the particular language in Section 4 of the FAA, the provision that concerns enforcement of arbitration. To confirm or vacate the arbitral decision, however, falls within Sections 9 and 10 of the FAA. Neither of these sections include the language considered in Vaden. According to the court, the fact that Congress did not extend the language to sections 9 and 10 indicated that Congress did not intend federal courts to have the same power of review over arbitration in the early stages as it does in the latter.

Employer arbitration has been the subject of recent policy shifts. In March, Congress passed a bill to end mandatory arbitration for workplace disputes. President Biden also signed into law a bill that prohibits forced arbitration for workplace sexual harassment claims.

On Wednesday, the court also heard oral arguments in another arbitration case, Viking River Cruises v Moriana. The court’s decision, expected by the end of June, could make pursuing legal action more difficult for employees who signed an arbitration agreement as a condition of their employment.