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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Showing 75 posts in Arbitration.
This is another decision explaining the narrow circumstances when the Court of Chancery will vacate an arbitration award. It is very hard to get that relief.
The Court of Chancery often addresses the question of who, as between the Court and an arbitrator, should decide whether certain disputes are arbitrable. The analysis of this substantive arbitrability question is complicated where, as in this case, the parties’ relationship is governed by multiple contracts containing different choice of law, choice of forum, and dispute resolution provisions. In short, under Willie Gary, where the relevant contract generally refers all disputes to arbitration, and incorporates a set of rules for the arbitrator to follow, the arbitrator, not the Court, will decide substantive arbitrability. However, under McLaughlin, the Court still will not send the question of substantive arbitrability to the arbitrator where it is clear that only frivolous arguments support arbitration of a particular dispute.
This is another instance of the Court of Chancery addressing the overlap of advancement and the question of substantive arbitrability under Willie Gary. Here, the Court explains that once Willie Gary’s two-part test is satisfied and non-frivilous arguments exist in favor of arbitrability, the Court must defer the question of substantive arbitrability to the arbitrator. That the case is one involving advancement does not change the analysis.
This case involves the overlap of an advancement dispute and the question of substantive arbitrability under Willie Gary. The two-part test of Willie Gary asks whether the parties (i) generally referred all disputes to arbitration, and (ii) referred to a set of arbitration rules that empower an arbitrator to decide arbitrability. This decision focuses on the less clear question of what it means to generally refer all disputes to arbitration, and the effect carve-outs for certain disputes might have on this analysis. Broadly speaking, carve-outs must be expansive in order to prevent the question of substantive arbitrability from being passed onto the arbitrator.
This decision addresses issues that may arise when there are successive arbitrations involving the same basic set of facts, if different parties. It concludes that when engaging in the limited judicial review which asks whether an arbitrator exceeded its authority, the issue of whether the first arbitration’s findings are preclusive in the second arbitration is for the second arbitrator to decide, not the Court.
Jiampietro v. The Goldman Sachs Group Inc., C.A. 12601-VCL (Transcript, August 11, 2016)
Many employment agreements require that any dispute be arbitrated. But when the dispute is over the employee’s right to indemnification under bylaws or statute, then the arbitration clause better expressly cover that claimed right or otherwise the non-contractual right remains for a court to decide.
This is a great decision on when the provisions of a contract bar tort claims of fraud and tortious interference. Briefly, when the contract speaks to an issue (e.g., expressly permitting certain acts, or imposing no duty to act), a party may not assert a tort claim that would deny the other party the benefit of its bargain. Further, when the contract between two parties selects a judicial forum for dispute resolution, arbitration is not part of the deal even if provided in a collateral contract involving one of those parties, at least not where there are no grounds for binding the non-signatory to the arbitration clause.
This is another in a line of decisions that explains when the issue of arbitrability should be sent to the arbitrator to decide. When the familiar tests are applied that favor letting the arbitrator decide that issue, only a strong argument for not sending the issue to arbitration will avoid doing so.
Court Of Chancery Decides If Arbitration Required When Arbitration Clause Not In One Of Two Contracts
When only one of two related contracts has an arbitration clause, the Court can still require arbitration of a dispute under the contract lacking that clause. The question is whether the two contracts deal with the same subject matter and that is not as easy to decide as it may appear. For example, if the two contracts need to be read together to accomplish the parties’ intent, such as where one contract defines certain necessary terms while the other does not, then an arbitration clause in one contract may require arbitration of disputes that nominally arise under the other contract as well. While employing Illinois law, this decision helps guide how to determine if the relationship between the contracts warrants compelling arbitration.
As this decision explains, you can be bound by an arbitration clause even if you do not sign a contract containing such a provision. The issue is did you agree to be bound by that contract’s terms and if you did, then you are in for all of its terms.
This decision explains the timelines for seeking to vacate an arbitration award. It illustrates that an arbitration proceeding has its own rules that the parties better understand or lose their rights.
It is now established that a pending arbitration qualifies for purposes of applying Delaware’s law on when to stay a case in favor of a prior proceeding. This decision extends that law to enter a stay to let the arbitrator decide if he is going to deal with the issues in the later-filed Delaware case.
Utilipath LLC v. Hayes, C.A. 9922-VCP (April 15, 2015) A non-exclusive forum selection clause in the parties' agreement means that a McWane motion asserting an improper forum is doomed to fail.
LG Electronics Inc. v. Interdigital Communications Inc., No. 465, 2014 (April 14, 2015) For the first time, the Delaware Supreme Court held that an arbitration proceeding qualifies as a having been first filed, warranting dismissal of a later filed suit under the McWane doctrine on forum selection. The facts here are somewhat unusual, but the decision has broad implications, particularly when the actual dispute was over the interpretation of a contract that did not have an arbitration clause.
3850 & 3860 Colonial Blvd. LLC v. Griffin, C.A. 9575-VCN (March 30, 2015) This decision explains how hard it is to appeal an order staying litigation in favor of arbitration. Even when there are some good arguments over whether the dispute is subject to arbitration, the Supreme Court precedent strongly disfavors an interlocutory appeal.