The question of whether or not a claim for advancement was subject to arbitration was a question for the arbiter, according to the Court of Chancery.
In Glazer, et al. v. Alliance Beverage Distributing Co. LLC, a limited liability company agreement (“LLC Agreement”) provided that:
Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in the State of Arizona administered by the American Arbitration Association under its Commercial Arbitration Rules and the Supplemental Procedures for Large, Complex Disputes, and judgments on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.
In response to a claim for advancement, the Court determined that it did not have the right to decide whether or not a claim for advancement was subject to arbitration. While such an issue is generally left to the Delaware courts to decide, the LLC Agreement at issue required an arbitrator in Arizona to make this determination. As a result, the Court stayed the claim so that an Arizona arbitrator could determine whether or not a claim for advancement was subject to arbitration.
BOTTOM LINE: Careful; giving the right to determine whether or not a claim must be arbitrated to an arbitrator may delay the resolution of a claim, even when the claim at issue is one that may be subject to the right of the Court to summarily determine the issue.