A March 15 decision by the Appellate Division, First Department, to stay a shareholder lawsuit over the New York Stock Exchange’s proposed merger with Atlanta-based Intercontinental Exchange, although on its face a merely procedural move, will likely put the fate of the merger in the hands of the Delaware Chancery Court.

The appeals court issued a 60-day interim stay in In re NYSE Euronext Shareholders/ICE Litigation, 654496/12, for further briefing on whether to stay the case pending appeal of Manhattan Supreme Court Justice Shirley Kornreich’s March 1 decision allowing it to go forward. Kornreich (See Profile) ruled that, even though a similar action was filed first in Delaware and is now pending before Chancellor Leo Strine, New York has a "significant interest" in the possible sale of one of its "iconic institutions," and should be allowed to continue alongside the Delaware action.

The Delaware court, however, is set to hear arguments on a preliminary injunction in the case on April 26, weeks before the end of the 60-day interim stay. The outcome of merger lawsuits hinges on the preliminary injunction, since it is difficult for plaintiffs to obtain effective relief once a merger has been consummated, and, conversely, parties may walk away from a deal in the face of a preliminary injunction. That means that if Strine decides the preliminary injunction motion during the 60-day stay, the New York action could become moot.

Herman Cahn, of counsel at Milberg, represents the shareholders. William Savitt, a partner at Wachtell, Lipton, Rosen & Katz, represents the NYSE. Brian Frawley, a partner at Sullivan & Cromwell, represents IntercontintentalExchange. The attorneys declined to comment.