Arbitrating the challenges of contract formation: putting the cart before the horse?

Because arbitration is “a creation of the contract,” the preliminary question to be decided on a request for binding arbitration is whether the parties have agreed to arbitrate. New York law is clear that this issue — arbitrability — is typically a question for a court decision. It is also clear that when presented with a valid arbitration clause in a fully formed contract, the courts of New York, relying on New York law and substantial federal case law, will cede control to the arbitrator. to interpret the contract, including when the dispute between the parties to the validity of the contract.

What is much more opaque, however, is whether the court or the arbitrator decides to challenge the existence of the contract itself, i.e. a matter of contract training rather than validity. The case law of the Supreme Court maintains that disputes concerning the formation of contracts are generally a matter for the courts. But New York courts are not always uniform on what constitutes a matter of contract formation. Unsurprisingly, the agreement that “forming the contract” belongs to the court, without consensus on what is covered by the term, results in confused case law. Adding to the confusion, challenges to the formation of a contract are often based on arguments that a contract is void. In these cases, it is not always clear when New York courts should follow the general rule (that questions about the invalidity of a contract go to the arbitrator) or the exception (that questions about the invalidity of a contract are referred to the arbitrator). formation of the contract must be decided by the court). This article attempts to shed light on these questions by examining how New York courts approach the question of arbitrability in general and by exploring the obscure depths of New York jurisprudence where this question coincides with a challenge to the formation of contracts.

Arbitrability in New York: An Overview

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