How Emails Between Counsel Can Bind Their Clients To ADR

The Court of Chancery of the State of Delaware recently issued a Memorandum Opinion finding that feuding members of a Delaware limited liability company had validly entered into an agreement to mediate, and if necessary arbitrate, their dispute where their respective counsel had engaged in an email exchange the court found to contain the elements of a binding agreement.

In Gomes v. Karnell, et al., C.A. No. 11814-VCMR (Del. Ch. Nov. 30, 2016), Vice Chancellor Montgomery-Reeves held she did not have subject matter jurisdiction to hear certain aspects of the dispute because she held that the parties were bound by the representations of their attorneys and rejected plaintiff’s arguments that no agreement could exist because it was missing essential terms.  While recognizing that there is no consensus among courts regarding what constitute the “essential terms” of an agreement to arbitrate, she found that the email exchange contained (i) evidence of assent; (ii) identified the parties to the potential ADR proceeding; (iii) identified the scope of the potential ADR proceeding and (iv) set forth the timing of the potential ADR proceeding.  The court found these terms were sufficient to constitute a binding agreement to mediate and/or arbitrate the dispute, and to the extent any other terms needed to be supplied, the parties should look to the Federal Arbitration Act.