Background
In March 2020, Trellis Software and ClearList Holdings entered into eight agreements establishing an equity swap arrangement and services relationship. The critical instruments were: an Operating Agreement (OA) governed by Delaware law with an exclusive Delaware court forum selection clause; a Subscription Agreement also governed by Delaware law; and a Services Agreement governed by New York law containing a broad arbitration clause requiring disputes “arising out of or related to” the Services Agreement to proceed under AAA rules. In September 2021, the parties amended the OA into an Amended and Restated Operating Agreement (AOA) with identical forum selection language but including a carveout allowing “side letters or similar agreements” to govern for specific members.
In August 2025, Trellis demanded books and records to value its membership interest in ClearList. After ClearList refused most of the demand, Trellis filed suit in Delaware Chancery Court seeking injunctive relief. ClearList responded by filing an arbitration claim in New York alleging breach and fraudulent inducement of the Services Agreement, seeking rescission of Trellis’s membership interest and a declaration that the books-and-records demand is arbitrable.
The Court’s Holding
Vice Chancellor Fioravanti denied Trellis’s motion for a preliminary injunction to stop the arbitration and granted ClearList’s motion to compel arbitration, staying the Delaware litigation. The court held that the Services Agreement’s broad arbitration provision, combined with AAA rules that delegate arbitrability questions to the arbitrator, constitutes “clear and unmistakable” evidence that the parties intended to arbitrate whether disputes fall within the arbitration agreement itself—a concept termed “substantive arbitrability.”
The court adopted a “fourth-order” analysis for resolving conflicts when multiple agreements contain different dispute resolution mechanisms. Although the AOA’s forum selection clause ordinarily would bar arbitration, the AOA explicitly allows “side letters or similar agreements” to govern, and both parties conceded the Services Agreement is such a side letter. Construing these provisions together, the arbitration agreement controls. The court rejected Trellis’s argument that because the arbitration claims seek rescission of membership (which implicates the AOA), they must be arbitration-free. The court found the arbitration claims do not expressly invoke or rely on the AOA; arguments that they “really” fall under the AOA are substantive arbitrability questions for the arbitrator under Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63 (2019).
Key Takeaways
- Broad arbitration clauses using “arising out of or related to” language reach disputes that incidentally implicate non-arbitration agreements, and the court will not recharacterize claims to avoid arbitration.
- When an operating agreement contains a carveout allowing side letters to govern for particular members despite conflicting forum provisions, the arbitration clause in the side letter is enforceable.
- Once parties clearly delegate questions of arbitrability itself to an arbitrator—via broad language plus incorporation of AAA or similar rules—courts lack subject-matter jurisdiction to decide whether specific claims fall within the arbitration agreement.
- Integration clauses with general language do not override earlier arbitration agreements unless the later agreement unambiguously expresses intent to revoke arbitration.
Why It Matters
This decision reinforces that Delaware courts will honor arbitration delegation across multiple interrelated agreements when contracts contain clear carveouts or cross-incorporation language. Practitioners structuring multi-agreement transactions face a critical lesson: forum selection and arbitration clauses in one agreement will likely govern disputes touching interconnected agreements, even if those disputes nominally implicate non-arbitration language elsewhere. The “fourth-order” framework—determining which contract governs the question of who decides arbitrability—provides a roadmap for courts facing conflicting dispute resolution mechanisms.
The decision also narrows the scope of judicial review of arbitrability after Henry Schein. Trellis’s attempt to repackage a substantive arbitrability argument as a contract interpretation question failed; courts will not entertain arguments that claims “should have been” brought under a non-arbitration agreement once an arbitrator has been delegated authority to decide arbitrability. This may frustrate parties seeking to escape arbitration in multi-party, multi-contract disputes, but it reflects federal arbitration policy favoring enforcement of arbitration agreements according to their terms.