diff --git a/python/src/com/jetbrains/python/inspections/PyArgumentListInspection.java b/python/src/com/jetbrains/python/inspections/PyArgumentListInspection.java
index eecb8e03a0d3..97a5a365f2ea 100644
--- a/python/src/com/jetbrains/python/inspections/PyArgumentListInspection.java
+++ b/python/src/com/jetbrains/python/inspections/PyArgumentListInspection.java
@@ -16,6 +16,7 @@
 package com.jetbrains.python.inspections;
 
 import com.intellij.codeInspection.LocalInspectionToolSession;
+import com.intellij.codeInspection.ProblemHighlightType;
 import com.intellij.codeInspection.ProblemsHolder;
 import com.intellij.lang.ASTNode;
 import com.intellij.psi.PsiElementVisitor;
@@ -138,7 +139,7 @@ public class PyArgumentListInspection extends PyInspection {
           holder.registerProblem(arg, PyBundle.message("INSP.duplicate.star.arg"));
         }
         if (flags.contains(CallArgumentsMapping.ArgFlag.IS_POS_PAST_KWD)) {
-          holder.registerProblem(arg, PyBundle.message("INSP.cannot.appear.past.keyword.arg"));
+          holder.registerProblem(arg, PyBundle.message("INSP.cannot.appear.past.keyword.arg"), ProblemHighlightType.ERROR);
         }
         if (flags.contains(CallArgumentsMapping.ArgFlag.IS_UNMAPPED)) {
           holder.registerProblem(arg, PyBundle.message("INSP.unexpected.arg"));
diff --git a/python/src/com/jetbrains/python/psi/impl/CallArgumentsMappingImpl.java b/python/src/com/jetbrains/python/psi/impl/CallArgumentsMappingImpl.java
index 432a9ceb1099..5ce309533d62 100644
--- a/python/src/com/jetbrains/python/psi/impl/CallArgumentsMappingImpl.java
+++ b/python/src/com/jetbrains/python/psi/impl/CallArgumentsMappingImpl.java
@@ -180,15 +180,9 @@ public class CallArgumentsMappingImpl implements CallArgumentsMapping {
     for (PyExpression arg : unmatched_subargs) {
       markArgument(arg, ArgFlag.IS_UNMAPPED);
     }
-    // mark past-bound positional args
-    i = positional_bound;
-    while (i<arguments.length) {
-      PyExpression arg = arguments[i];
-      if (!(arg instanceof PyStarArgument) && !(arg instanceof PyKeywordArgument)) {
-        markArgument(arg, ArgFlag.IS_POS_PAST_KWD);
-      }
-      i += 1;
-    }
+
+    markPastBoundPositionalArguments(arguments, positional_bound);
+
     boolean seen_named_args = false;
     // map named args to named params if possible
     Map<String, PyNamedParameter> parameter_by_name = new LinkedHashMap<String, PyNamedParameter>();
@@ -352,6 +346,19 @@ public class CallArgumentsMappingImpl implements CallArgumentsMapping {
     }
   }
 
+  private void markPastBoundPositionalArguments(PyExpression[] arguments, int positionalBound) {
+    boolean seenKwArg = false;
+    for(int i=positionalBound; i<arguments.length; i++) {
+      PyExpression arg = arguments[i];
+      if (arg == myKwdArg) {
+        seenKwArg = true;
+      }
+      if (!(arg instanceof PyStarArgument) && (seenKwArg || !(arg instanceof PyKeywordArgument))) {
+        markArgument(arg, ArgFlag.IS_POS_PAST_KWD);
+      }
+    }
+  }
+
   private static boolean isPositionalArg(PyExpression arg) {
     return !(arg instanceof PyKeywordArgument) && !(arg instanceof PyStarArgument);
   }
diff --git a/python/testData/inspections/PyArgumentListInspection/badarglist.py b/python/testData/inspections/PyArgumentListInspection/badarglist.py
index ee17bcadcdef..627e2ee79ed3 100644
--- a/python/testData/inspections/PyArgumentListInspection/badarglist.py
+++ b/python/testData/inspections/PyArgumentListInspection/badarglist.py
@@ -42,7 +42,7 @@ f3(1, 2, <warning descr="Unexpected argument">3</warning>)
 f3(b=2, a=1)
 f3(b=1, <warning descr="Duplicate argument">b=2</warning>, a=1)
 f3(1, b=2)
-f3(a=1, <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">2</warning><warning descr="Parameter 'b' unfilled">)</warning>
+f3(a=1, <error descr="Cannot appear past keyword arguments or *arg or **kwarg">2</error><warning descr="Parameter 'b' unfilled">)</warning>
 
 def f4(a, *b):
     pass
@@ -52,4 +52,4 @@ f4(1, 2)
 f4(1, 2, 3)
 f4(1, *(2, 3))
 f4(*(1,2,3))
-f4(a=1, <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">2</warning>, <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">3</warning>)
+f4(a=1, <error descr="Cannot appear past keyword arguments or *arg or **kwarg">2</error>, <error descr="Cannot appear past keyword arguments or *arg or **kwarg">3</error>)
diff --git a/python/testData/inspections/PyArgumentListInspection/parameterWithDefaultAfterKeywordContainer.py b/python/testData/inspections/PyArgumentListInspection/parameterWithDefaultAfterKeywordContainer.py
new file mode 100644
index 000000000000..6601fc76d18c
--- /dev/null
+++ b/python/testData/inspections/PyArgumentListInspection/parameterWithDefaultAfterKeywordContainer.py
@@ -0,0 +1,5 @@
+def foo(**kwargs): pass
+
+two = 0
+kw = {}
+foo(**kw, <error descr="Cannot appear past keyword arguments or *arg or **kwarg">two=1</error>)
diff --git a/python/testData/inspections/PyArgumentListInspection/py1268.py b/python/testData/inspections/PyArgumentListInspection/py1268.py
index e6c578134dba..4e33321bb520 100644
--- a/python/testData/inspections/PyArgumentListInspection/py1268.py
+++ b/python/testData/inspections/PyArgumentListInspection/py1268.py
@@ -19,7 +19,7 @@ def f2(a, b, c=1, *d):
 f2(c=3, *(1,2))
 f2(1,2,3, *(1,2))
 f2(*(1,2), c=20)
-f2(*(1,2), <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">20</warning>) # fail: positional past *
+f2(*(1,2), <error descr="Cannot appear past keyword arguments or *arg or **kwarg">20</error>) # fail: positional past *
 
 def f3(a=1, b=2, c=3, *d):
   return a,b,c,d
diff --git a/python/testData/inspections/PyArgumentListInspection/py3k.py b/python/testData/inspections/PyArgumentListInspection/py3k.py
index bb85744ba8bb..a43c848f77d3 100644
--- a/python/testData/inspections/PyArgumentListInspection/py3k.py
+++ b/python/testData/inspections/PyArgumentListInspection/py3k.py
@@ -13,7 +13,7 @@ namedpast(1,2,3, foo='a') # pass
 namedpast(*args, foo='b') # pass
 namedpast(foo='c') # pass
 namedpast() # pass
-namedpast(foo='1', <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">2</warning>) # fail
+namedpast(foo='1', <error descr="Cannot appear past keyword arguments or *arg or **kwarg">2</error>) # fail
 
 def a23(a, *b, c=1):
     pass
@@ -21,7 +21,7 @@ def a23(a, *b, c=1):
 a23(1,2,3, c=10) # pass
 a23(1,2,3, c=10, <warning descr="Duplicate argument">a=1</warning>) # fail
 a23(c=10, a=1) # pass
-a23(c=10, <warning descr="Cannot appear past keyword arguments or *arg or **kwarg">1</warning><warning descr="Parameter 'a' unfilled">)</warning> # fail
+a23(c=10, <error descr="Cannot appear past keyword arguments or *arg or **kwarg">1</error><warning descr="Parameter 'a' unfilled">)</warning> # fail
 a23(<warning descr="Multiple values resolve to positional parameter 'a'">*args</warning>, a=1) # fail
 a23(*args, c=1) # pass
 
diff --git a/python/testSrc/com/jetbrains/python/inspections/PyArgumentListInspectionTest.java b/python/testSrc/com/jetbrains/python/inspections/PyArgumentListInspectionTest.java
index affc095d1c3a..703b2ebbc9bd 100644
--- a/python/testSrc/com/jetbrains/python/inspections/PyArgumentListInspectionTest.java
+++ b/python/testSrc/com/jetbrains/python/inspections/PyArgumentListInspectionTest.java
@@ -168,4 +168,8 @@ public class PyArgumentListInspectionTest extends PyTestCase {
   public void testDictFromKeys() {
     doTest();
   }
+
+  public void testParameterWithDefaultAfterKeywordContainer() {  // PY-9934
+    doTest();
+  }
 }