The Court Decides, Not the Arbitrator: Who Determines the Existence of an Arbitration Agreement?
In arbitration law, few concepts are as frequently misunderstood—or as critical—as arbitrability. The term refers to whether a dispute falls within the scope of an arbitration agreement and whether the matter should be decided in arbitration or litigated in court. While many presume such threshold questions are always for the arbitrator to decide, recent case law continues to reinforce a foundational principle: Courts—not arbitrators—must determine whether a valid arbitration agreement exists in the first place.
This principle was reaffirmed in two recent decisions by California’s First District Court of Appeal: Garcia v. Stoneledge Furniture LLC, 102 Cal. App. 5th 41 (2024), and Ramirez v. Golden Queen Mining Company, LLC, 102 Cal. App. 5th 821 (2024). Both cases underscore that contract formation—that is, whether an agreement to arbitrate even exists—is a matter for the courts, not arbitrators, regardless of any delegation clause.
Arbitrability vs. Agreement Formation: The Crucial Distinction
In general terms, arbitrability refers to whether a particular issue or claim is subject to arbitration. This includes questions like:
Does the arbitration agreement cover this specific dispute?
Is the arbitration agreement enforceable under applicable law?
Are there limitations or exceptions to the arbitration clause?
These types of questions can be—and often are—delegated to arbitrators through delegation clauses, which expressly assign such determinations to the neutral. But delegation clauses presuppose that the parties actually agreed to arbitration in the first place.
Here lies the critical distinction: before any issue of arbitrability can be addressed, there must first be a determination that a valid and binding arbitration agreement exists. If a party disputes ever entering into such an agreement, courts are required to resolve that gateway issue.
Garcia v. Stoneledge Furniture LLC: Fabricating an Agreement Is Not Enough
In Garcia, the plaintiff argued that he had never entered into an arbitration agreement with the defendant employer. The defendant contended that the matter should be sent to arbitration, invoking a delegation clause and the doctrine that arbitrability is a matter for the arbitrator.
The California appellate court disagreed. Citing the U.S. Supreme Court’s decision in Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010), the court acknowledged that parties may delegate enforceability or scope questions to an arbitrator—but only if a valid agreement to arbitrate exists in the first place.
The court emphasized that allowing an arbitrator to decide whether a party agreed to arbitrate would open the door to abuse. As it explained:
“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 caution highlights the courts’ role as gatekeepers of contract formation. Even the most well-drafted arbitration agreement, including robust delegation clauses, cannot override the court’s responsibility to determine whether an agreement exists at all.
Ramirez v. Golden Queen Mining Company, LLC: Enforceability and Unconscionability Still Belong to the Court
Decided the same day as Garcia, the Ramirez decision reaffirms the same core doctrine: the trial court must decide whether an arbitration agreement exists and whether it is enforceable.
In Ramirez, the challenge wasn’t to the existence of an agreement, but to its enforceability—specifically, whether the agreement was unconscionable. The court held that questions of unconscionability are likewise for the trial court to decide, even when the arbitration clause includes a delegation provision. Unless the delegation clause itself is found to be clear and unmistakable, it cannot be used to avoid judicial scrutiny of whether the agreement is fundamentally fair.
These rulings reflect a national consensus forming in many jurisdictions: courts remain the ultimate authority on the existence and enforceability of arbitration agreements, especially in cases where a party denies ever entering into such a contract.
Why It Matters: Preventing “Gateway” Abuse in Arbitration
Arbitration offers speed, flexibility, and efficiency—but only if built on a solid contractual foundation. When the validity of the agreement is in doubt, allowing the arbitrator to determine their own jurisdiction over the dispute would defeat the contractual nature of arbitration itself.
These cases offer an important safeguard:
Protecting against fabricated or forged agreements
Preventing abuse of delegation clauses to compel arbitration prematurely
Ensuring judicial oversight of foundational contract principles
Arbitrators derive their authority not from courts, but from the consent of the parties. Without that consent, no legitimate arbitration can proceed.
Practical Guidance for Drafters, Counsel, and Disputants
These cases offer several practical lessons for parties drafting or enforcing arbitration clauses:
Clarity is paramount. Ensure the arbitration clause is clearly labeled, plainly worded, and easily identifiable in any agreement.
Document contract formation. Retain reliable proof of acceptance, especially in electronic agreements.
Avoid overreliance on delegation clauses. Even the most robust clause cannot override the court’s duty to decide formation disputes.
Expect judicial review. Courts will—and should—verify whether both parties agreed to arbitrate before sending disputes to arbitration.
Application Across Practice Areas
These rulings have broad implications across:
Employment contracts, especially onboarding and at-will agreements
Consumer transactions, where arbitration clauses are often embedded in online terms of use
Business and commercial disputes, involving layered agreements or changes in contract terms over time
Whether defending a motion to compel arbitration or challenging an agreement’s validity, understanding this threshold doctrine is essential.
Courts as the Gatekeepers of Consent
While arbitration remains a preferred forum for resolving a range of legal disputes, it rests on one fundamental principle: mutual consent. Delegation clauses, arbitration rules, and institutional practices must all yield to the court’s responsibility to determine whether that consent ever existed.
Cases like Garcia and Ramirez illustrate the importance of judicial scrutiny and the continuing role of courts in preserving the integrity of arbitration. Only once consent is confirmed can an arbitrator rightfully address issues like scope, enforceability, and jurisdiction.
Nationwide ADR: Focused on Integrity, Built on Consent
At Nationwide ADR, every arbitration is built on clear, documented, and mutual agreement. Whether resolving business disputes, consumer claims, employment conflicts, or tort matters, the process is rooted in legal rigor and fairness.
In a landscape where delegation clauses and contract challenges can complicate proceedings, it’s critical to work with professionals who understand the nuance—and the law.
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