The Court Decides, Not the Arbitrator
Oftentimes, in arbitration, there exists an issue of arbitrability. Arbitrability refers to whether a particular dispute can be resolved through arbitration rather than in court. It involves assessing whether the subject matter of the dispute falls within the scope of an arbitration agreement. Essentially, it's about determining whether the parties have agreed to submit their specific issue to arbitration. As a general rule, determinations as to arbitrability are made by the arbitrator. If the arbitration agreement contains a delegation clause -- A clause in an arbitration agreement that specifies that the arbitrator, rather than a court, will have the authority to decide certain issues related to the arbitration agreement itself, including whether the arbitration agreement is valid, enforceable, and whether a particular dispute falls within the scope of the arbitration agreement – these issues go to the arbitrator as a function of contract.
But there’s a threshold issue BEFORE the question of arbitrability can be asked. It’s the question of the existence of an arbitration agreement. About a month ago, the First District Court of Appeals in California directly addressed this question in Garcia v. Stoneledge Furniture LLC (102 Cal. App.5th 41). In this case, the parties disputed whether or not they entered into an arbitration agreement. The defendant felt it was an issue for the arbitrator to decide (ie: arbitrability) whereas the plaintiff disagreed. As the court noted, relying upon SCOTUS’s 2010 opinion in Rent-A-Center, West, Inc. v. Jackson (561 US 63), “parties may delegate questions regarding the validity of an arbitration agreement (such as enforceability in the face of a challenge based on unconscionability) or aspect of an arbitration agreement (such as whether a particular claim is subject to the arbitration agreement) to the arbitrator if they clearly and unmistakably agree to do so. However, the delegation of such questions presupposes the existence of an agreement between the parties, which the court necessarily had to decide before it could enforce any such delegation. To conclude otherwise would mean that a party need only fabricate a signature on an alleged arbitration agreement to bypass the courts and send a dispute to arbitration. We do not suggest this occurred here, but we decline to embrace an interpretation of the law that could lead to such results.”
This interpretation of the law was echoed in the same court’s opinion, issued at the same time, in Ramirez v. Golden Queen Mining Company, LLC (102 Cal. App.5th 821). “A trial court is required to rule on the gateway issues of whether an arbitration agreement is enforceable, which includes claims of unconscionability.”
Only after the existence of a valid agreement is determined by the court may an arbitrator then proceed to the issues of arbitrability.
