Delaware Court of Chancery, left, on The Circle in Georgetown, Delaware. Credit: Antony-22 via Wikimedia Commons
Parties to a transaction agreement often include a provision requiring the parties to arbitrate any disputes arising from the agreement. Such provisions are included because arbitration generally resolves disputes quicker and cheaper than litigating disputes before a court. Moreover, arbitration affords the parties greater privacy. As the Delaware Chancery Court’s recent decision in SM Buyer v. RMP Seller Holdings, C.A. No. 2023-0957-JTL (Del. Ch. Feb. 28, 2024, judgment entered Mar. 17, 2024) demonstrates, the deference afforded to an arbitrator may result in decisions with which a reviewing court may disagree but that the court is nonetheless bound to confirm.
Background and the Chancery’s Decision
The owners of a California supermarket chain (sellers), Save Mart Super Markets LLC (Save Mart), entered into an equity purchase agreement with a Los Angeles-based private equity firm, Kingswood Capital Management (buyer). By acquiring Save Mart, the buyer would also acquire a stake in a separate grocery store business (other business).
