In a notable clarification of removal and arbitration procedure, the Fifth Circuit in Odom Industries, Inc. v. Sipcam Agro Solutions, LLC, No. 24-60410 (5th Cir. June 4, 2025), held that a defendant may remove a case to federal court to compel arbitration—even when a contractual forum-selection clause requires remand—as long as federal jurisdiction exists.

Ordinarily, motions to remand are evaluated on jurisdictional grounds. If a federal court lacks subject-matter jurisdiction (typically due to lack of diversity or an insufficient amount in controversy), remand is mandatory. That is the general rule. But Odom illustrates a strategic exception in arbitration cases: when removal would be proper but for a forum-selection clause, the federal court must first resolve a motion to compel arbitration before addressing non-jurisdictional remand arguments. 

In Odom, the district court bypassed a pending arbitration motion and remanded the case based on a forum-selection clause requiring the suit to be “filed and maintained in . . . state court.” The Fifth Circuit reversed, holding that forum-selection clauses do not deprive federal courts of jurisdiction. Once removal is complete and jurisdiction is unchallenged, the Federal Arbitration Act requires the district court to prioritize the determination of a pending motion to compel arbitration. Separately, the Fifth Circuit affirmed that, unlike other remand cases, a district court’s order of remand based on the interpretation of a contractual forum-selection clause is “immediately appealable.” That means a defendant seeking to compel arbitration has a backstop to cure premature remands in such cases.

The Fifth Circuit ultimately reaffirmed that forum-selection clauses pointing to state court should be enforced through the doctrine of forum non conveniens, not through a jurisdictional challenge. 

Strategic Takeaway: Even where a contract includes a state-court forum-selection clause, a defendant can remove to federal court to compel arbitration. This strategy hinges on the fact that forum clauses are contractual, not jurisdictional, and cannot override federal district courts’ obligation to resolve arbitration matters first. This is a narrow but potentially powerful maneuver that can shift the playing field in early-stage litigation for defendants that seek to obtain the benefits of federal court before compelling the case to arbitration. Whether the federal court will retain its standard supervisory role over a compelled arbitration—as contemplated by the Supreme Court’s decision in Smith v. Spizziri (2023)—remains an unresolved question for another day.

“Parties may neither confer subject matter jurisdiction on the [federal] court nor strip it of such jurisdiction by agreement or waiver.”