{"id":352,"date":"2026-08-10T08:49:40","date_gmt":"2026-08-10T12:49:40","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/?p=352"},"modified":"2026-08-10T08:49:42","modified_gmt":"2026-08-10T12:49:42","slug":"arbitrating-internal-affairs-disputes-two-new-chancery-opinions-chart-the-path-under-dgcl-%c2%a7-12218","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/delawarebusinesslaw\/2026\/08\/10\/arbitrating-internal-affairs-disputes-two-new-chancery-opinions-chart-the-path-under-dgcl-%c2%a7-12218\/","title":{"rendered":"Arbitrating Internal Affairs Disputes: Two New Chancery Opinions Chart the Path Under DGCL \u00a7 122(18)"},"content":{"rendered":"\n

Two recent Delaware Court of Chancery opinions\u2014Mayya v. Lee<\/em> (C.A. No. 2023-0382-NAC, July 27, 2026<\/a>) and The Special Committee of Iridium Industries, Inc. v. Sassouni<\/em> (C.A. No. 2025-1488-NAC, Aug. 5, 2026)<\/a>\u2014offer critical guidance for transactional practitioners seeking to route internal corporate governance disputes to arbitration via stockholder agreements.\u00a0 These two opinions follow closely on the heels of an April 2026 opinion from the same court addressing these matters, which this blog discussed here<\/a>.<\/p>\n\n\n\n

The Legislative Evolution of Section 122(18)<\/em><\/h3>\n\n\n\n

Before August 2024, Delaware law firmly held that fiduciary duty and other internal affairs claims were “status-based” and arose independent of any contract. Under the Delaware Supreme Court’s Parfi Holding<\/em> framework, and in subsequent application of that framework, corporations wishing to route internal affairs claims to a particular forum could only do so through charter or bylaw provisions compliant with DGCL \u00a7 115. A provision in a stockholder agreement or other contract simply “would not do the trick.”<\/p>\n\n\n\n

The General Assembly abrogated that precedent by enacting Senate Bill 313, effective August 1, 2024, which added \u00a7 122(18) to the DGCL. This provision authorizes Delaware corporations and their stockholders to agree\u2014through stockholder agreements covered by the statute\u2014to route claims implicating the corporation’s internal affairs to non-Delaware fora, including arbitration. As Vice Chancellor Cook explained in Mayya<\/em>, “Section 122(18) takes a different approach” by “authoriz[ing] stockholder agreements that route internal affairs claims related thereto exclusively to a non-Delaware forum.”<\/p>\n\n\n\n

Two Cases, Two Outcomes<\/em><\/h3>\n\n\n\n

In Mayya v. Lee<\/em>, the Court denied a motion to compel arbitration of fiduciary duty claims arising from a controlling stockholder’s alleged self-dealing. The reason was temporal: this action commenced in March 2023\u2014over a year before \u00a7 122(18) took effect. Because the statute expressly provides it “shall not apply to or affect any civil action or proceeding completed or pending on or before” its effective date, the pre-122(18) regime controlled, and, therefore, the parties lacked authority to agree in advance to arbitrate those fiduciary claims via its stockholder agreements.<\/p>\n\n\n\n

By contrast, in Iridium Industries<\/em>, decided just nine days later, the same Vice Chancellor granted a motion to stay proceedings pending arbitration. There, a longstanding stockholder agreement from 1998 contained a broad arbitration clause covering “any claim or controversy” pertaining to the company. Because no statutory temporal bar applied, the Court held that \u00a7 122(18) “statutorily abrogated the Independent-Source Principle” as to stockholder agreements, meaning the arbitration clause would be enforced according to its terms\u2014even for claims implicating the board’s authority under \u00a7 141(a).<\/p>\n\n\n\n

Practical Takeaways<\/em><\/h3>\n\n\n\n

These opinions confirm that stockholder agreements are now a powerful vehicle for directing governance disputes away from public, often-lengthy, and usually very expensive open-court litigation in state or federal courts. Thus, practitioners structuring investments, joint ventures, or closely held company arrangements should consider these lessons where a smaller stockholder base makes it both desirable and feasible:<\/p>\n\n\n\n