Will Delaware enforce this arbitration clause, and who decides whether a given dispute is arbitrable?
A written agreement to arbitrate a controversy existing at or arising after the effective date of the agreement is valid, enforceable and irrevocable except on grounds that would revoke any contract, and it confers jurisdiction on the Court of Chancery to enforce the agreement and enter judgment on an award; the court may not consider whether the claim is tenable or otherwise pass on the merits. On WHO decides arbitrability, Delaware follows the federal rule that courts decide substantive arbitrability unless there is clear and unmistakable evidence otherwise, and holds that a reference to the AAA rules is such evidence, but only where the clause generally refers ALL disputes to arbitration as well as incorporating rules that empower the arbitrator to decide arbitrability.
The trap
The Willie Gary two-part test punishes the most common drafting habit in commercial agreements: a broad AAA arbitration clause with a carve-out letting a party run to court for injunctive relief or specific performance. In Willie Gary the LLC agreement's clause 12.12 read 'Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement shall be settled by arbitration ... in accordance with the then-existing rules of the American Arbitration Association' and then preserved court access for injunctions and specific performance; because not all disputes went to arbitration, the AAA reference no longer delegated arbitrability, and the Supreme Court held that 'There being no such clear and unmistakable evidence of intent, the trial court properly undertook the determination of substantive arbitrability.' Also note the forum: § 5701 vests enforcement in the Court of Chancery, but under § 5702(a) only where the agreement specifically references the Delaware Uniform Arbitration Act and the parties' desire to have it apply; otherwise, by § 5702(c), the Court of Chancery decides in conformity with the Federal Arbitration Act, which is the law Willie Gary itself applied ('Because the LLC Agreement involves interstate commerce, the Federal Arbitration Act (FAA) governs'); and Delaware case law answers which Act governs by exactly that route and no further. The Court of Chancery has taken a provision that made no reference to the Delaware Act and held that “the Federal Arbitration Act governs”, so a clause simply silent on the Delaware Act is a question the Delaware courts have decided, not an open one. What is not settled by anything read for this rule is the harder case behind it: the decisions restate § 5702's own test rather than construing it, they are Court of Chancery decisions and so bind no higher court, and nothing read says what happens when a clause references the Delaware Act only partially or ambiguously, or whether § 5702(a)'s reference requirement can be met other than by naming the Act. A consumer-credit arbitration agreement goes to the Court of Common Pleas 'and not the Court of Chancery' (§ 5702(d)). And one whole category is outside the chapter by its own words: 10 Del. C. § 5725 provides that, notwithstanding anything in the chapter to the contrary, “this chapter shall not apply to labor contracts with either public or private employers where such contracts have been negotiated by, or the employees covered thereby are represented by, any labor organization or collective bargaining agent or representative”, so a collectively bargained agreement does not get § 5701’s validity rule or the Court of Chancery jurisdiction that comes with it, however the arbitration clause is drafted.
12 authorities
- statute10 Del. C. § 5701enactment date not established
The words that state the rule
A written agreement to submit to arbitration any controversy existing at or arising after the effective date of the agreement is valid, enforceable and irrevocable, save upon such grounds as exist at law or in equity for the revocation of any contract, without regard to the justiciable character of the controversy, and confers jurisdiction on the Chancery Court of the State to enforce it and to enter judgment on an award.
The words that state the rule
As a matter of policy, we adopt the majority federal view that reference to the AAA rules evidences a clear and unmistakable intent to submit arbitrability issues to an arbitrator. We do so in the belief that Delaware benefits from adopting a widely held interpretation of the applicable rule, as long as that interpretation is not unreasonable. The majority view does not, however, mandate that arbitrators decide arbitrability in all cases where an arbitration clause incorporates the AAA rules. Rather, it applies in those cases where the arbitration clause generally provides for arbitration of all disputes and also incorporates a set of arbitration rules that empower arbitrators to decide arbitrability.
- statute10 Del. C. § 5725enactment date not established
The words that state the rule
Notwithstanding anything contained in this chapter by word or inference to the contrary, this chapter shall not apply to labor contracts with either public or private employers where such contracts have been negotiated by, or the employees covered thereby are represented by, any labor organization or collective bargaining agent or representative.
- statute10 Del. C. § 5701enactment date not established
The words that state the rule
In determining any matter arising under this chapter, the Court shall not consider whether the claim with respect to which arbitration is sought is tenable, or otherwise pass upon the merits of the dispute. This chapter also applies to arbitration agreements between employers and employees or between their respective representatives, except as otherwise provided in § 5725 of this title.
The words that state the rule
In this case, the arbitration clause begins by requiring arbitration of any controversy arising out of or relating to the LLC Agreement in accordance with the AAA rules. But it continues by expressly authorizing the nonbreaching Members to obtain injunctive relief and specific performance in the courts. Thus, despite the broad language at the outset, not all disputes must be referred to arbitration. Since this arbitration clause does not generally refer all controversies to arbitration, the federal majority rule does not apply, and something other than the incorporation of the AAA rules would be needed to establish that the parties intended to submit arbitrability questions to an arbitrator. There being no such clear and unmistakable evidence of intent, the trial court properly undertook the determination of substantive arbitrability.
The words that state the rule
12.12 Arbitration Any controversy or claim arising out of or relating to this Agreement or the breach of this Agreement shall be settled by arbitration ... in accordance with the then-existing rules of the American Arbitration Association (“AAA”).... Each Member agrees with the other Members that the other Members would be irreparably damaged if any of the provisions of this Agreement are not performed in accordance with their specific terms.... Accordingly, it is agreed that, in addition to any other remedy to which the nonbreaching Members may be entitled, at law or in equity, the nonbreaching Members shall *80 be entitled to injunctive relief to prevent breaches of the provisions of this Agreement and specifically to enforce the terms and provisions hereof in any action instituted in any court of the United States or any state thereof having subject matter jurisdiction thereof.
- statute10 Del. C. § 5702enactment date not established
The words that state the rule
The term “Court” means the Court of Chancery of this State, except where otherwise specifically provided. The making of an agreement described in § 5701 of this title specifically referencing the Delaware Uniform Arbitration Act [§ 5701 et seq. of this title] and the parties’ desire to have it apply to their agreement confers jurisdiction on the Court to enforce the agreement under this chapter and to enter judgment on an award thereunder, except as provided in § 5718 of this title.
- statute10 Del. C. § 5702enactment date not established
The words that state the rule
Unless an arbitration agreement complies with the standard set forth in subsection (a) of this section for the applicability of the Delaware Uniform Arbitration Act, any application to the Court of Chancery to enjoin or stay an arbitration, obtain an order requiring arbitration, or to vacate or enforce an arbitrator’s award shall be decided by the Court of Chancery in conformity with the Federal Arbitration Act [9 U.S.C. § 1 et seq.], and such general principles of law and equity as are not inconsistent with that Act. In such cases, the other provisions of this Delaware Uniform Arbitration Act are without standing and cases shall be adjudicated in accordance with the Court of Chancery’s Rules of Procedure.
- statute10 Del. C. § 5702enactment date not established
The words that state the rule
(d) Jurisdiction of the Court of Common Pleas. — Notwithstanding anything to the contrary in this Chapter 57 of this title, the term “Court” in this chapter shall refer to the Court of Common Pleas with respect to all actions arising from an arbitration agreement in or relating to a contract to provide consumer credit, and the making of such an agreement to arbitrate issues arising from the extension of consumer credit shall confer jurisdiction on the Court of Common Pleas, and not the Court of Chancery, to enforce the agreement and to enter judgment on an award.
The words that state the rule
Because the LLC Agreement involves interstate commerce, the Federal Arbitration Act (FAA) governs.
- caseC.A. No. 2019-0762-JTL (Del. Ch. Aug. 4, 2020)Menacker v. Overture, L.L.C.Del. Ch.decided 2020
The words that state the rule
Unless an arbitration agreement “specifically referenc[es] the Delaware Uniform Arbitration Act . . . and the parties’ desire to have it apply to their agreement,” id. § 5702(a), “any application to the Court of Chancery to . . . obtain an order requiring arbitration . . . shall be decided by the Court of Chancery in conformity with the Federal Arbitration Act . . . and such general principles of law and equity as are not inconsistent with that Act,” id. § 5702(c). The Arbitration Provision does not reference the Delaware Uniform Arbitration Act, so the Federal Arbitration Act governs.
- caseC.A. No. 2025-0011-DH (Del. Ch. Feb. 16, 2026)SpecialtyCare, Inc. v. Medcost, LLCDel. Ch. (Master’s final report)decided 2026
The words that state the rule
The Court of Chancery possesses jurisdiction to confirm and review arbitration awards under the FAA, provided the parties agreed to jurisdiction within Delaware.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.