Chancery Denies Motion to Vacate Advancement Orders Based on Belated Assertion of Arbitration Provision
Parties in business transactions sometimes decide by contract that disputes relating to or arising out of their contractual relationship shall be resolved by arbitration. If and when a dispute arises, a threshold issue is whether the dispute is covered by arbitration and if so, whether any aspect may be resolved by a court.
December 13, 2023 at 09:00 AM
6 minute read
ContributorsParties in business transactions sometimes decide by contract that disputes relating to or arising out of their contractual relationship shall be resolved by arbitration. If and when a dispute arises, a threshold issue is whether the dispute is covered by arbitration and if so, whether any aspect may be resolved by a court. A less typical issue is whether, if both parties go forward in a court despite the existence of the arbitration clause and the court enters relief, the losing party may seek to undo the court's work by claiming under Delaware Court of Chancery Rule 12(b)(1) that the arbitration provision divested the court of subject matter jurisdiction. The Court of Chancery addressed that issue in Gandhi-Kapoor v. Hone Capital, C. A. No. 2022-0881-JTL (Del. Ch., Nov. 22, 2023, corrected Dec. 4, 2023), holding in a scholarly opinion that by participating in litigation without raising the defense of arbitration, the respondent had waived its right to rely on the arbitration provision. The court thus denied respondent's Rule 12(b)(1) motion to dismiss in favor of arbitration and to vacate the court's orders under Rule 60.
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