Using the FAA to Confirm an Arbitration Award: A Jurisdictional Cautionary Tale for Litigators
On July 17, the U.S. Court of Appeals for the Ninth Circuit vacated a federal court’s confirmation of an arbitration award in favor of Tesla and Elon Musk. The opinion, while seemingly procedural, offers an instructive lesson for litigation counsel engaged in arbitration: even a well-earned arbitration award can falter at the confirmation stage if jurisdictional requirements are not satisfied. The ruling is a reminder that when navigating post-award proceedings under the Federal Arbitration Act (FAA), precision and planning matter just as much as persuasive argument.
For attorneys who regularly handle complex disputes — and who occasionally find themselves in arbitration — this decision is worth a closer look. It also underscores the value of working with arbitrators who not only adjudicate fairly and efficiently, but who also understand the legal environment into which their awards will be launched.
The Case at a Glance
The underlying dispute was brought by Cristina Balan, a former Tesla engineer known for her high-profile work within the company. Balan asserted that her termination was retaliatory — a response to whistleblower concerns she had raised about braking systems in Tesla vehicles. She also alleged that Tesla’s explanations for her dismissal were defamatory.
As often happens in employment disputes involving senior personnel, the matter was resolved through arbitration. The arbitrator issued an award in favor of Tesla and Musk. No damages were awarded; the award simply denied Balan’s claims.
Tesla and Musk petitioned the U.S. District Court for the Northern District of California to confirm the award under the FAA. The court granted the petition and entered judgment. Balan appealed, and the Ninth Circuit reversed.
The court’s opinion can be accessed here: click here.
The Legal Issue: No Jurisdiction, No Confirmation
The pivotal question before the Ninth Circuit was whether the District Court had subject-matter jurisdiction to confirm the arbitration award under the FAA. The panel unanimously concluded that it did not.
Relying on Badgerow v. Walters, 596 U.S. 1 (2022), the Ninth Circuit emphasized that federal courts may no longer “look through” a petition to the substance of the underlying arbitration dispute to find jurisdiction. Jurisdiction must appear on the face of the petition itself — either through complete diversity of citizenship with the requisite amount in controversy, or through a claim that arises under federal law.
In Tesla’s case, the award was for zero dollars. No damages, no costs, no injunctive relief — nothing that could be counted toward the $75,000 threshold for diversity jurisdiction. Nor did the petition assert any independent federal question. The only statute invoked was the FAA, and the FAA alone does not confer jurisdiction.
The court’s conclusion was clear: “For federal question jurisdiction to attach in a suit brought under the FAA, the complaint must include an averment under federal law other than sections 9 or 10 of the FAA.”
Implications for Litigators: Procedural Sophistication is Now a Strategic Advantage
Post-Badgerow, the jurisdictional landscape for FAA-related petitions has changed. Litigators accustomed to seeking federal court confirmation of awards — often for the perceived neutrality and experience of federal judges — must now ensure that all jurisdictional requirements are satisfied within the four corners of the petition. Failure to do so risks reversal, wasted resources, and a re-litigation of post-award issues in a different forum.
For litigators advising clients with complex or high-stakes matters, this means:
Evaluating Jurisdiction Early: Before even stepping into arbitration, consider how the award will be enforced. If federal confirmation will be desired, structure claims and relief accordingly — especially in light of potential jurisdictional hurdles.
Drafting Petitions with Jurisdiction in Mind: The petition must either plead a federal cause of action or allege facts sufficient to meet the amount-in-controversy requirement for diversity jurisdiction. A zero-dollar award, as this case demonstrates, may be fatal to federal confirmation.
Choosing Arbitrators Who Understand the Full Legal Lifecycle: Arbitrators who are aware of the practicalities of post-award proceedings can structure awards in a way that reduces ambiguity, anticipates jurisdictional challenges, and ensures enforceability.
The Arbitrator’s Role: More Than Just a Decision-Maker
In arbitration, the quality of the final award is only part of the equation. Effective arbitrators recognize that their work doesn’t end with issuing a decision — it must also hold up under judicial scrutiny and provide a viable path to enforcement.
An award that is clear, well-reasoned, and procedurally sound is far less likely to be challenged or vacated. But beyond that, arbitrators who are steeped in procedural doctrine — including the limitations of the FAA — can anticipate and avoid situations where jurisdictional issues become an unexpected barrier.
For example:
Awards can include findings that clarify the scope of relief, which may influence how the value of the award is assessed for jurisdictional purposes.
Where parties seek fees, costs, or declaratory relief, the arbitrator’s articulation of those elements can help counsel build a stronger jurisdictional foundation later.
The arbitrator’s procedural rigor — from managing the record to framing dispositive issues — can significantly affect the ease with which a petition for confirmation is presented and supported.
Why This Matters in Practice
Litigators who partner with capable arbitrators can more confidently navigate not just the arbitration hearing itself, but the procedural steps that follow. When awards are structured with foresight, confirmation becomes a smoother, more predictable process.
In high-value, document-heavy, or legally nuanced cases — especially those involving multi-state parties or cross-border issues — this becomes even more critical. The last thing clients want after investing in arbitration is to find that a procedural misstep has erased their victory.
Takeaway: Arbitrators Should Reflect the Needs of Sophisticated Litigation Practice
The Tesla decision provides a valuable opportunity for litigators to re-evaluate the criteria by which arbitrators are selected. Subject-matter experience and fairness are essential — but so too is an understanding of how arbitration fits within the broader litigation lifecycle.
Experienced arbitrators who bring procedural fluency, judicial temperament, and strategic insight help ensure that arbitration is not just faster or less expensive than litigation — but also more durable and more effective.
The post-Badgerow world demands more from those who adjudicate complex disputes. Arbitrators who rise to meet that standard will serve litigation counsel — and their clients — far better in the long run.