Court Of Chancery Affirms Arbitration Order And Denies Motion For Preliminary Injunction Based On The Preclusive Effect Of The Order
Agspring LLC v. NGP X US Holdings L.P., C.A. No. 2019-1021-JRS (Del. Ch. Jan. 19, 2022); Agspring LLC v. NGP X US Holdings L.P., C.A. No. 2019-0567-JRS (Del. Ch. Jan. 19, 2022)
Delaware follows the rule that an arbitrator’s award is “not lightly disturbed.” Accordingly, the applicable standard of review is “one of the narrowest standards of judicial review in all American jurisprudence.” To overturn an arbitrator’s order, a court must find that the arbitrator acted in “manifest disregard” of the law.
In these complementary decisions, the Court of Chancery – relying on this superlatively deferential standard – confirmed the arbitrators’ Orders that they had jurisdiction and that the agreements at issue provided advancement rights. In the second decision, the Court denied a motion for preliminary injunction seeking to enjoin the Order, which was premised on arguments that previously were made and addressed in the arbitration. The Court found that the arbitration Order, which the Court confirmed, constituted res judicata on the issue of advancement.
In a related ruling of note, the Court exercised its discretion to grant the defendants’ motion to stay the substantive claims against them. Although they had advancement rights against the plaintiff’s subsidiary (as the arbitrators so held), the subsidiary did not make advancement payments, purportedly due to financial distress. In light of the potential prejudice to the defendants from being denied advancement, as well as the benefit of having certain legal issues decided in the anticipated appeal from the confirmation decision, the Court granted a stay.Share