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Chancery Court Decides Arbitrability Issues

By Francis G. X. Pileggi, Esq.

Carder v. Carl M. Freeman Communities, LLC, (Del Ch., Jan. 5, 2009), read opinion here, is a Chancery opinion that addresses a common issue: should a claim proceed in court or is it subject to an arbitration clause. This opinion revisits the perennial distinction between "procedural arbitrability" and "substantive arbitrability". The former is usually decided by an arbitrator and covers matters such as whether proper notice of the arbitration claim, if required, was given to the other party.

Substantive arbitrability deals with whether a particular claim is covered within the scope of the arbitration clause. There  is a presumption, generally, unless the agreement provides otherwise, that such a question will be decided by the court. If a particular claim is covered by an arbitration clause, the court lacks authority to hear the case and, as here, a motion to dismiss for lack of  jurisdiction will be granted.

Full post as published by Delaware Corporate and Commercial Litigation Blog on January 20, 2009 (boomark / email).