Delaware Uniform Arbitration Act Did Not Permit the Court of Chancery to Confirm or Vacate an Interim Partial Arbitration Award Because It Was Not Final
Astrum Fund I GP, LP v. Maracci, C.A. No. 2020-0919-PAF (Del. Ch. Jan. 27, 2022) Maracci v. Astrum Fund I GP, LP, C.A. No. 2021-0073-PAF (Del. Ch. Jan. 27, 2022)
A limited partnership agreement’s dispute resolution framework mandated arbitration for certain disputes but contained a Delaware forum selection provision for the resolution of damages. Limited partners initiated arbitration proceedings against the partnership and its general partner after a real estate transaction resulted in the loss of their entire investment. The arbitrator issued an interim partial award (“IPA”) after finding that the general partner had breached the agreement and breached the general partner’s duty of care. The arbitrator did not issue a final award because of the agreement’s requirement that a Delaware court determines damages.
The general partner filed a petition in Chancery to vacate the IPA. The general partner moved for summary judgment on its petition, and the limited partners moved to dismiss the petition. The limited partners also filed a petition to confirm the IPA and moved for summary judgment on their petition.
The Court of Chancery denied all three motions. The Court determined that the Delaware Uniform Arbitration Act (DUAA) applied to the actions. DUAA permits confirmation or vacatur of awards that constitute final arbitral decisions. The Court held that the IPA was not final. In the IPA, the arbitrator had determined the limited partners were entitled to relief, but that he lacked arbitral jurisdiction to resolve any damages and enter a final award. The IPA also expressly stated that the IPA was not final and that the arbitrator retained jurisdiction to decide any remaining issues subject to arbitration. Accordingly, the Court concluded that the DUAA did not permit the Court to confirm or vacate the IPA. The Court also noted that the agreement’s bifurcation of liability and damages among two different tribunals was inherently inefficient, appeared to be unique, and required additional input from the parties and the arbitrator to determine its meaning and effect.Share