Because arbitration is “a creature of contract,” the threshold question to be decided on a motion to compel arbitration is whether the parties have agreed to arbitrate. New York law is clear that this question—arbitrability—is typically an issue for judicial determination. It is also clear that when presented with a valid arbitration clause in a fully formed contract, New York courts, relying on New York law and substantive federal precedent, will cede control to the arbitrator to interpret the contract, including when the parties’ dispute goes to the validity of the contract.
What is considerably more opaque, however, is whether the court or the arbitrator decides a challenge to the existence of the contract itself, i.e., a question of contract formation rather than validity. Supreme Court precedent holds that disputes about contract formation are generally for courts to decide. But New York courts are not always uniform about what constitutes a contract formation issue. Unsurprisingly, agreement that “contract formation” is for the court to decide, without consensus about what is covered by the term, results in a muddled body of case law. Adding to the confusion, challenges to contract formation are often, in effect, premised on arguments that a contract is void. In these instances, it is not always clear when New York courts should follow the general rule (that questions about whether a contract is void go to the arbitrator), or the exception (that questions about contract formation should be decided by the court). This article attempts to shed some light on these issues by examining how New York courts approach the question of arbitrability generally and exploring the murky depths of New York case law where that question coincides with a challenge to contract formation.