As 2019 drew to a close, one of the Delaware Court of Chancery’s final opinions of the decade clarified certain issues surrounding when the courts of Delaware are the proper fora for adjudicating matters that are—or might be—subject to the parties’ agreement to arbitrate their disputes. On Dec. 30, 2019, Chancellor Andre Bouchard issued his memorandum opinion in Gulf LNG Energy v. ENI USA Gas Marketing, C.A. No. 2019-0460, in which he enjoined, in part, the prosecution of a second arbitration between the parties as a later, and impermissible, collateral attack on the final award in a prior arbitration.

In 2007 the plaintiffs and defendant had entered into an agreement pursuant to which the plaintiffs would construct a terminal in Mississippi to handle the importation of liquefied natural gas, and the defendant would contract to use the facility and pay certain fees to the plaintiffs. The plaintiffs spent over $1 billion to construct the facility, but because of changes in the natural gas markets, the defendant sought to have the agreement declared terminated because its fundamental purpose had become frustrated. To that end, in March 2016, the defendant here filed an arbitration proceeding before the American Arbitration Association’s International Centre for Dispute Resolution seeking a declaration that the purpose of the agreement had been frustrated and that the agreement had been terminated, and a declaration that the agreement could be terminated by the defendant at any time because the plaintiffs had breached certain terms of the agreement (the first arbitration). In June 2018, the arbitration tribunal issued its final award, in which it declared that the purpose of the agreement had been frustrated by the change in the natural gas markets; and, therefore, the agreement had been terminated. The arbitration tribunal did not, however, decide the contractual claim before it, as it deemed it “academic and deserving of no further consideration.” The arbitration tribunal also ordered the defendant to pay the plaintiffs $462 million as restitution for certain benefits the defendant received from the plaintiffs’ partial performance of the terms of their agreement related to the terminal facility. On Feb. 1, 2019, the Court of Chancery confirmed the final award from the first arbitration.

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