On March 27, 2025, the First Department entered a decision in Mouli v. Stern, 2025 NY Slip Op. 01872, holding that whether a dispute was subject to an agreement to arbitrate was for the arbitrator to decide under the AAA rules, explaining:
Supreme Court properly granted defendant’s motion to compel arbitration and for a stay of this action, as the parties delegated issues of arbitrability to the arbitrator. The parties’ assignment agreement contains a broad arbitration provision incorporating the rules of the American Arbitration Association and expressly providing that the threshold issue of arbitrability with respect to the repayment of funds at issue would be decided by the arbitrator. Where, as here, the parties explicitly incorporate rules that empower the arbitrator to decide issues of arbitrability, the incorporation serves as clear and unmistakable evidence of the parties’ intent to delegate such issues to an arbitrator. Indeed, where the relevant contract (here, the assignment agreement) delegates the arbitrability question to an arbitrator, the court possesses no power to decide the arbitrability issue, even when the court thinks that the argument that the arbitration agreement applies to a particular dispute is wholly groundless.
Because the threshold issue on appeal is who should decide the issue of arbitrability, plaintiff’s contentions regarding the merits—both as to arbitrability and the parties’ substantive dispute—thus miss the mark. Under the correct procedure, courts will perform the initial screening process designed to determine in general terms whether the parties have agreed that the subject matter under dispute should be submitted to arbitration. Once it appears that there is a reasonable relationship between the subject matter of the dispute and the general subject matter of the underlying contract, the court’s inquiry is ended. Supreme Court properly conducted this initial screening process, leaving the threshold question of arbitrability to the arbitrator.
(Internal quotations and citations omitted).