by Lionel M. Schooler, FCIArb
Jackson Walker LLP¹

Introduction. In Fu Jing Wu v. Chun Liu, 131 F.4th 1295 (11th Cir. 2025), the United States Court of Appeals for the Eleventh Circuit recently addressed a question rarely encountered at the appellate level: the interplay between arbitration and appellate jurisdiction in the context of a removed case.

Background: Nature of the Claim. Mr. Wu and Mr. Lam established investment funds for aliens, representing that aliens who invested would have the opportunity to emigrate to the United States. Chun Liu was an investor in this enterprise, which was premised upon the replacement of a dilapidated building with a new structure devoted to supporting Chinese immigrants through the federal EB-5 visa program. As part of the arrangement to which he agreed, Mr. Liu signed an agreement which called for arbitration of any dispute.

Background: Proceedings in State Court. As claimed in the original lawsuit Mr. Liu filed in state court in Florida, Mr. Wu and Mr. Lam allegedly fraudulently diverted millions of dollars of those funds rather than apply them legitimately. In response to the state court lawsuit, which mentioned only Florida state law claims, Defendants participated in this litigation for a period of time, including submitting discovery responses and discovery requests. Defendants then invoked the arbitration clause, asserting that the claims in question were all subject to arbitration. In response, Plaintiff Liu asserted that the Defendants had waived their right to invoke arbitration because they had actively participated in the state court lawsuit in ways that were inconsistent with Florida’s arbitration law.

Background: Proceedings Before the District Court. On the same day that such opposition to arbitration was filed, Defendants then removed the action to the United States District Court for the Southern District of Florida. The notice of removal included a motion to compel arbitration under the New York Convention, requesting a stay of the litigation in federal court, and indicating that removal was proper under 9 U.S.C. §203.

Reviewing the situation, the District Court denied the motion to compel arbitration and simultaneously remanded the lawsuit to state court. It determined that there was no basis for federal jurisdiction, given that the New York Convention did not provide one.

Issue Presented. Whether a federal appellate court has jurisdiction to consider a request for arbitration in a case involving an allegedly unsuccessful removal attempt.

Appellate Review. The Court of Appeals commenced its review by noting that the Appellants sought to characterize the issue on appeal as one focusing upon the denial of their motion to compel arbitration. By contrast, Appellee contended that the issue of arbitrability was sufficiently intertwined with subject matter jurisdiction as to bar review pursuant to 28 U.S.C. §1447 (d), which explicitly precludes appellate review of an order remanding a case in circumstances such as those alleged to be present in this case.

The Court recognized that there can be appellate jurisdiction to review certain district court orders that remand a case when these address, and have a conclusive effect upon, substantive merits issues. The Court further recognized that under 9 U.S.C. §16(a), the denial of a motion to compel arbitration can be appealed immediately to the court of appeals.

However, it further recognized that appellate jurisdiction is lacking where the district court’s decision is not merits-based but, rather, essential to the district court’s determination of jurisdiction. Further, the Court concluded that the Federal Arbitration Act did not modify or block the requirements of Section 1447(d) but, rather, required adherence to the jurisdictional restraints placed upon removal jurisdiction.

As a result, the Court concluded that the district court’s ruling did not have any conclusive effect upon the state court action. It therefore dismissed the appeal for lack of jurisdiction.

Conclusion. The Wu v. Liu decision illustrates the extent to which the existence of an arbitration agreement does not pre-empt initial evaluation of subject matter jurisdiction when a remand order is the true focal point of the appeal.

¹ Mr. Schooler is a former member of the Board of the CIArb North America Branch, and the immediate Past Chair of the Texas Chapter.