Delaware Business Litigation Report

Court Of Chancery Enjoins Suit In Another Jurisdiction

ASDC Holdings LLC v. The Richard J. Malouf 2008 All Smiles Grantor Retained Annuity Trust,  C.A. 6562-VCP (September 14, 2011)

Frequently a contract will have a provision selecting Delaware as the forum to litigate any dispute.  What happens then when a case is filed elsewhere and one party seeks to enforce the forum selection clause by an injunction in Delaware against the prosecution of the other litigation?   Well, this decision tells us the result and resolves possible conflicting holdings in other courts including the Delaware Supreme Court.  Briefly:

1. The Court of Chancery will grant the injunction if the forum selection clause properly confers jurisdiction in Delaware courts.  Note that this means that selecting the Court of Chancery may not work if the dispute is not subject to equitable jurisdiction in that court.  Better to select  "any" court with jurisdiction in Delaware over the subject matter of the dispute.

2. The forum selection clause must be broad enough to include any dispute "arising out of" or "related" to the dispute.  A narrower clause may not work.

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