The Delaware Court of Chancery has not uncommonly stayed actions in favor of a first-filed arbitration proceeding, especially for the purposes of allowing the arbitration panel to determine the scope of its jurisdiction.
The recent opinion issued in the matter of In re Knowledge Crossing, LLC, C.A. No. 10383-VCG (Del. Ch. May 29, 2015) is no exception to this practice. In Knowledge Crossing, Petitioner filed an action to dissolve the entity as a result of board deadlock. Respondent filed a motion to dismiss or stay the action in favor of a first-filed arbitration proceeding before JAMS, pursuant to the McWane doctrine.
Petitioner asserted that the arbitrator does not have jurisdiction over the dissolution of the company, while Respondent countered that the issues pending before the arbitrator involve the entity’s assets and validity of its operating agreement, and therefore there may be substantial overlap between the two actions. Of note, the scope of the arbitration is an issue currently pending before the arbitrator.
In light of this backdrop, and in the interest of efficiency and judicial economy, Vice Chancellor Glasscock found it appropriate to stay his consideration of Respondent’s pending motion to dismiss or stay until the arbitrator rules on the scope of the matters before him. The Court will await the findings of the arbitrator as to his jurisdiction and the scope of proceedings before him before addressing Respondent’s motion to dismiss or stay.