In HDS Investment Holding, Inc. v. The Home Depot, Inc., (Del. Ch., Oct. 17, 2008), read opinion here, the Chancery Court (for the second time in about a week in two unrelated cases), decided that the agreement between the parties required the court to decide certain contractual issues, and enjoined an attempt by one of the parties to have those issues decided pursuant to an arbitration clause. See blog summary of prior week’s TowerHill case here. The prior case dealt primarily with the issues involved with deciding substantive arbitrability where there were two separate agreements with conflicting provisions. In this case there was only one agreement and the court determined that the scope of its ADR provision was narrow.
A useful tool from the opinion can be found in footnote 1 where the court observed that in a motion to dismiss on the basis of subject matter jurisdiction, the court "may consider documents outside the complaint".
Also of practical value for future reference is the court’s recitation of the prerequisites for a preliminary injunction at page 21. Even though New York substantive law applied, the Delaware procedural standard for a preliminary injunction applied as follows:
A preliminary injunction may be granted where the moving party demonstrates:
“(1) a reasonable probability of success on the merits at a final hearing;
(2) an imminent threat of irreparable injury; and
(3) a balance of the equities that tips in favor of issuance of the requested relief.”31 The moving party is required to make some showing for each element, and a “strong demonstration as to one element may serve to overcome a marginal demonstration of another.”32 A preliminary injunction is an extraordinary remedy that should only be granted sparingly. 33 (citations omitted).