Court of Chancery Holds That New York COVID-19 Court Closures Render Forum Selection Clause Unenforceable

This case summary was prepared by Patrick Wooding.

Conduent Business Services, LLC, v. Skyview Capital, LLC,[1] is a case recently filed in the Delaware Chancery Court that deals with the issue of the application of a forum selection clause when the selected forum is unavailable. Due to the recent pandemic, courts are likely to deal with an increasing number of cases where a party claims that their chosen forum is unavailable to hear its case. This is especially true, where as in Conduent Business Services, parties are seeking to resolve time sensitive claims.

The dispute between Conduent and Skyview arose from a contract where Conduent agreed to purchase three call centers from Skyview. The sale of the third call center, located in Jamaica, was set to close on April 30, 2020. A dispute arose between the parties when Conduent claimed that the contract required Skyview to reimburse Conduent for the costs of operating the call center prior to closing. The parties first sought to resolve their dispute in the New York court system, however, due to the recent pandemic, the parties instead brought the claim in front of the Delaware Chancery Court. Both parties contend that the looming closing date created an urgency in resolving the rights of each party under the contract.
The Court in this case found, as an initial matter, that Delaware case law holds when the specified forum in a forum selection clause is unavailable, the parties may resort to alternative forum. In order to resort to an alternative forum, appropriate jurisdiction must exist in that forum.

The Delaware Supreme Court has repeatedly held that forum selection clauses are presumed valid and enforceable under Delaware law. Delaware courts have found that the reasonableness of forum selection clauses should be determined on a case-by-case basis and should be enforced unless such enforcement would be unreasonable or unjust. [2]

Under normal circumstances the forum selection clause would render New York as the appropriate forum for this complaint to be heard. Due to the Covid-19 pandemic, however, New York courts are not accepting expedited commercial matters. In Conduent Business Services, the Chancery Court found that this constitutes an "unavailability" for purposes of the forum selection clause.

Courts have previously held that a federal forum may be unavailable due to jurisdictional limitations, or tribunals may become unavailable due to an emergency. The Court found that the recent outbreak of Covid-19 and New York tribunals' unwillingness to hear expedited commercial matters is an ample emergency for New York courts to be considered unavailable.

The Court warns against the abuse of the current unavailability of New York courts however. In dicta, the Court holds that because the additional issues are found to be non-expedited in nature, that any further proceedings should be dismissed or stayed in favor of a New York venue.  

[1] Conduent Business Services, LLC, v. Skyview Capital, LLC, C.A. No. 2020-0232-JTL (Apr. 14, 2020) (transcript).
[2] Ingres Corp. v. CA, Inc., 8 A.3d 1143, 1146 (Del. 2010).