On January 20, 2017, in Ortiz-Espinosa v. BBVA Securities of Puerto Rico, Inc., the US Court of Appeals for the First Circuit held that district courts may look through a petition filed under Sections 9, 10, or 11 of the Federal Arbitration Act (9 U.S.C. §§ 9-11), to determine if the underlying dispute raises a federal question ( (1st Cir. Jan 20, 2017)).

The plaintiffs commenced arbitration proceedings against their former securities brokerage firm and broker before the Financial Industry Regulatory Authority (FINRA), alleging violations of federal and Puerto Rican securities laws. After a FINRA arbitration panel issued an award denying all claims, the plaintiffs petitioned to vacate or modify the award in Puerto Rico Superior Court. The defendants then removed the case to the United States District Court for the District of Puerto Rico, asserting that the underlying claims were based on federal securities laws under the "look-through approach," and that the district court would have had jurisdiction if the claims were filed in federal court.

The plaintiffs, in turn, moved to remand the case for lack of jurisdiction. The district court denied the motion, applying the look-through approach and concluding that the underlying claims arose under federal law. The district court then confirmed the arbitration award, holding that the plaintiffs failed to demonstrate any plausible ground to vacate or modify the award.

On appeal, the First Circuit affirmed, holding that:

In holding that the district court properly exercised jurisdiction over the plaintiffs' petition, the court extended the U.S. Supreme Court's holding in Vaden v. Discover Bank, 556 U.S. 49 (2009) to petitions to confirm, vacate, or modify an arbitration award under the FAA. In Vaden, the Supreme Court held that a federal court may look through a petition to compel arbitration under Section 4 of the FAA to determine whether it is based on an action arising under federal law.

Although a textual difference exists between Section 4 (at issue in Vaden) and Sections 9-11 (at issue in this case), the First Circuit reasoned that:

The First Circuit's decision deepened a circuit split on whether a federal court has subject matter jurisdiction to review or enforce an arbitration award simply because the underlying dispute arose under federal law (compare Doscher v. Sea Port Grp. Sec., LLC, 832 F.3d 372, 388 (2d Cir. 2016) (courts may look through underlying claims to determine whether action arises under federal law) with Goldman v. Citigroup Global Markets, Inc., 834 F.3d 242, 353-55 (3d Cir. 2016) and Magruder v. Fid. Brokerage Servs. LLC, 818 F.3d 285, 288 (7th Cir. 2016) (federal courts do not have subject matter jurisdiction to review or enforce an arbitration award simply because the underlying dispute arises under federal law)). In so doing, the court may have opened the door for the Supreme Court to decide whether the jurisdictional look-through approach applies to petitions to confirm, vacate, or modify an arbitration award under FAA sections 9-11.