The Delaware courts have been asked several times in the last few years to interpret contracting parties’ intent when they have relegated certain disputes to “an expert, not an arbitrator” as a form of alternative dispute resolution. On Jan. 29, the Delaware Court of Chancery issued the latest opinion on this topic in Ray Beyond  v. Trimaran Fund Management, C.A. No. 2018-0497-KSJM, and reiterated that such language will be construed as limiting the ADR professional’s jurisdiction to deciding “factual disputes within the decision-maker’s expertise” rather than binding legal determinations that would be made by a judicial officer.

This dispute arose from the terms of a merger agreement, pursuant to which the plaintiff, Ray Beyond Corp., acquired ChanceLight Inc. from, among others, defendant Trimaran Fund Management L.L.C. One aspect of the terms of the merger was that a portion of the proceeds from the purchase were to be set aside in an escrow to be released upon certain conditions being met. Relevant to this discussion was whether, post-closing, a ChanceLight subsidiary entered into certain “qualifying contracts” with the Chicago Public Schools. The merger agreement’s clauses governing the release of the escrowed funds delegated certain matters to an independent accountant to be resolved. An underlying dispute arose between the parties as to whether a qualifying contract had ever been executed, and therefore, triggered the primary dispute addressed in this opinion: Must the question of whether a qualifying contract was executed be referred to the independent accountant or could it be adjudicated by a judicial officer in a court?