A court can adjudicate a dispute only if two conditions are satisfied-
- it must have jurisdiction over the parties and
- it must have jurisdiction over the type of legal issues in dispute.
The first type of jurisdiction is called personal jurisdiction; the other is subject matter jurisdiction. If the persons involved in the litigation are present in the state or are legal residents of the state in which the lawsuit has been filed, or if the transaction in question has a substantial connection to the state, personal jurisdiction is said to be present.
Subject matter jurisdiction refers to the nature of the claim or controversy. In the United States, many state court systems are divided into divisions such as criminal, civil law, family, and probate. A court within any one of those divisions will have jurisdiction to hear cases regarding would lack subject-matter jurisdiction to hear a case regarding matters assigned to another division. However, all states include a superior court that has “general” jurisdiction; that is; it is competent to hear any case over which no other tribunal has exclusive jurisdiction. Because the United States federal courts have exclusive jurisdiction over a very small percentage of cases (e.g., copyright and patent disputes), state courts have the authority to hear the vast majority of cases. The subject matter of law suits may be a criminal infringement, medical malpractice, or the probating of an estate. Subject matter jurisdiction is the power of a court to hear particular types of cases.
In state court systems, different courts generally have boundaries set on their subject matter jurisdiction and in every state, one state court or another has subject matter jurisdiction over any controversy that can be heard in courts of that state. Some courts specialize in a particular area of the law, such as probate law, family law, or juvenile law. For example, a person seeking custody of a child must go to a court that has authority in guardianship matters. A divorce can be granted only in a court designated to hear matrimonial cases. A person charged with a felony cannot be tried in a criminal court authorized to hear only misdemeanor cases.
In addition to the legal issue in dispute, the subject matter jurisdiction of a court may be determined by the amount of money involved in the dispute or the monetary value of the dispute. The pecuniary jurisdiction is imposed on courts to ensure that complicated disputes over large sums of money will be heard in courts that have the time and resources to hear such cases. Small claims courts or conciliation courts are limited by state statutes to small amounts of money in controversy, ranging from $1,000 to $5,000 depending upon the state. Therefore, if a suit is filed in the small claims court for $50,000, the court will not entertain the lawsuit because it lacks subject matter jurisdiction based on the amount in controversy.
The U.S. Constitution gives jurisdiction over some types of cases to federal courts only. Only federal courts can hear cases involving ambassadors and consuls or public ministers, admiralty and maritime cases, and cases in which the United States is a party. Sometimes subject matter jurisdiction is created by statute, which mandates that antitrust suits, most securities lawsuits, bankruptcy proceedings, and patent and copyright cases be heard in federal courts.
The two most important categories of federal subject-matter jurisdiction in non-criminal cases are federal question jurisdiction and diversity jurisdiction. The Constitution confers federal question jurisdiction on federal district courts. By virtue of this, federal district courts can hear cases involving any rights or obligations that arise from the Constitution or other federal law. Federal courts also have diversity jurisdiction, which gives the courts authority to hear cases involving disputes among citizens of different states. However this jurisdiction is limited in the sense that if the amount in controversy is less than $10,000, federal question and diversity jurisdiction will not apply. In such cases, the case should be brought before the state court.
Federal courts also have removal jurisdiction, which is the authority to try cases removed by defendants from state courts and the removal jurisdiction is almost identical to that of original jurisdiction.
A defendant who believes that a court lacks subject matter jurisdiction to hear the case may raise the issue before the trial court or in an appeal from the judgment. If a defect in subject matter jurisdiction is found, the judgment will usually be rendered void, having no legal force or binding effect. According to Rule 12(h) (3) of the Federal Rules of Civil Procedure, a federal court must dismiss a case for lack of subject-matter jurisdiction upon motion of a party or sua sponte, upon its own initiative.