Delaware Court Of Chancery Dismissed Partnership Lawsuit, Upholds Arbitration Agreement

The Delaware Court of Chancery has upheld a pre-dispute arbitration provision in the case of Wildfire Productions, L.P. v. Team Lemieux LLC and Lemieux Group—a partnership dispute involving the owners of the Pittsburgh Penguins of the National Hockey League (NHL). The court emphasized that the Federal Arbitration Act (FAA) strongly favors the enforceability of arbitration agreements. Here, our West Palm Beach partnership dispute attorney discusses the decision and key issues in more detail.

Partnership Dispute Over Controlling Interests of the NHL’s Pittsburgh Penguins 

Back in December of 2021, the controlling ownership group of the NHL’s Pittsburgh Penguins agreed to sell the majority interest in the team to another group of investors. A minority owner of the team is asserting a wide range of different legal claims in effort to challenge the proposed transaction. The partnership dispute eventually made its way to a Delaware Court of Chancery.

Partnership Lawsuit Dismissed, Arbitration Provision Upheld 

The Delaware Court of Chancery dismissed the minority owner’s partnership lawsuit on the grounds that the matter was preempted by a binding arbitration provision. The court declined to weigh in on the actual merits of the case. Instead, the court noted that public policy and the Federal Arbitration Act (FAA) strongly favored the enforcement of voluntarily agreed upon pre-dispute arbitration clauses in contracts, including in partnership agreements.

The investment agreement (partnership contract) signed by the minority owner in this case contained a binding arbitration provision that required this dispute to be adjudicated by the NHL’s Commissioner. Indeed, the pre-dispute arbitration clause holds that the NHL Commissioner has full authority to arbitrate any disputes arising from the partnership agreement. The minority owner challenged the enforceability of the provision. The Delaware Court of Chancery has upheld it.

 What to Know About the Federal Arbitration Act (FAA)

 The Federal Arbitration Act (FAA) is a law that governs how courts will interpret/enforce arbitration of disputes between private parties. The FAA requires that arbitration be conducted in accordance with certain rules and procedures. These rules and procedures are designed to ensure that arbitrations are fair and impartial. The FAA also gives businesses and individuals the right to bring legal action to enforce arbitration agreements. Indeed, this is one of the most important things to understand about the FAA. It provides private parties with a strong tool to enforce arbitration provisions. Courts around the country, including in Florida, lean heavily in favor of upholding arbitration agreements.

 Set Up a Fully Confidential Consultation With a Palm Beach County Partnership Law Attorney

At Pike & Lustig, LLP, we have a strong record of success handling complex business law disputes, including arbitration cases. If you have any specific questions or concerns about a partnership dispute and the enforceability of an arbitration agreement, our attorneys can help. Give us a call now to arrange your confidential case review. We handle partnership disputes throughout Palm Beach County, including in West Palm Beach, Boca Raton, Jupiter, Greenacres, and Boynton Beach.

Source:

law.justia.com/cases/delaware/court-of-chancery/2022/c-a-no-2021-1072-paf.html