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Court Of Chancery Limits Scope Of Review Under ADR Clause

PECO Logistics LLC v. Walnut Investment Partners L.P., C.A. 9978-CB (December 30, 2015)

Not infrequently, the parties to a complicated contract include a contractual provision on how to resolve any later disputes. For example, it is common to agree to use an accounting firm to resolve accounting disputes, such as what is due under a payout formula. But what is the scope of review of such a determination?

As this decision points out, absent providing for a post-calculation review by a court or arbitrator, there may only be a limited right of review by a court. Under those circumstances, the Court will only check to see if the chosen intermediary acted in good faith.

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