Delaware - Chapter 4 - Interim Measures in the United States in Aid of Arbitration

Robert J. Katzenstein is litigator before the Court of Chancery and a member of the panel of commercial arbitrators of the American Arbitration Association. He handled contests involving the control of corporations and partnerships, stockholder derivative actions, stock list cases and contract cases. He has extensive experience litigating cases in Superior Court, and in particular the Complex Commercial Litigation Division (“CCLD”) of that Court. Mr. Katzenstein is an original member of the CCLD Advisory Committee, which recommended the CCLD policies and procedures.

Jason Z. Miller is an Associate at Smith, Katzenstein & Jenkins LLP. He concentrates his practice on corporate and commercial litigation in the Delaware Court of Chancery, Delaware Superior Court, and the United States District Court for the District of Delaware. Mr. Miller represents clients on a variety of corporate matters, including fiduciary duty claims, corporate and alternative entity control disputes, advancement and indemnification claims, and other breach of contract disputes.

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Originally from Interim Measures in the United States in Aid of Arbitration

PREVIEW

RELIEF PROVIDED BY COURTS

1. Are courts in your state authorized to issue orders of attachment, injunctions or other provisional orders with respect to arbitration proceedings?

Yes.

(a) If so, please describe the nature of any such provisional relief that is available.

We have found no cases where Delaware courts issued orders of attachment with respect to arbitration proceedings, so we cannot answer the questions herein that deal with orders of attachment and arbitration. However, Delaware courts have issued injunctions regarding arbitrations.

The most notable of such cases is James & Jackson, LLC v. Willie Gary, LLC, 906 A.2d 76, 79–80 (Del. 2006), wherein the Delaware Supreme Court denied a motion to dismiss a complaint filed by a plaintiff seeking to block an arbitration. The Court held (1) the question of arbitrability is an issue for judicial determination, and (2) the arbitration provision of the contract stated that “the nonbreaching Members shall be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and specifically to enforce the terms hereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction thereof.” The court emphasized that its holding hinged on the quoted arbitration provision:

As a matter of policy, we adopt the majority federal rule that reference to the AAA rules evidences a clear and unmistakable intent to submit arbitrability issues to an arbitrator. We do so in the belief that Delaware benefits from adopting a widely held interpretation of the applicable rule, as long as that interpretation is not unreasonable. The majority rule does not, however, mandate that arbitrators decide arbitrability in all cases where an arbitration clause incorporates the AAA rules. Rather, it applies in those cases where the arbitration clause generally provides for arbitration of all disputes and also incorporates a set of arbitration rules that empower arbitrators to decide arbitrability.

Id. at 80.

In at least one case, Kansas City Southern v. Grupo TMM, S.A., 2003 WL 22659332 (Del. Ch. Nov. 4, 2003), discussed in the next paragraph, the Court of Chancery granted a preliminary injunction in favor of an arbitration claimant to preserve the status quo pending the arbitration.