The Court of Chancery opinion in the case styled In Re: Good Technology Corporation Stockholder Litigation, C.A. No. 11580-VCL (Del. Ch. Oct. 27, 2017), provides a pithy, persuasive analysis of a binding arbitration agreement that specifically appoints a named arbitrator–but that arbitrator later recused himself.
Overview: This decision provides reasoning supported by ample citations to authority to explain why that recusal of a specified arbitrator will not nullify the binding nature of the arbitration clause. Rather, assuming that the arbitration provision provides for the applicability of rules of an arbitration service such as JAMS or the AAA, the issue of how to deal with an unavailable name arbitrator will be treated as an issue of “procedural arbitrability”, and a successor arbitrator can be selected by the particular arbitral forum or, if the Federal Arbitration Act applies, under some circumstances a court may name a substitute arbitrator.
Holding: In the procedural context of this case, the court granted a motion to dismiss an attempt to enforce a term sheet that should be decided by binding arbitration.
Takeaway: An important aspect of the decision is that a binding dispute resolution provision will not be nullified simply because the specifically named arbitrator becomes unavailable.