Parfi Holding AB v. Mirror Image Internet, Inc.
Delaware Supreme Court
817 A.2d 149 (2002)
Mirror Image Internet, Inc. (Mirror) (defendant) was a Delaware subsidiary of Swedish corporation Mirror AB (AB). Xcelera Inc. (Xcelera), Plenteous Corp. (Plenteous), and AB stockholders Grandsen, Ltd. and Gillberg contracted to provide $2 million in funds to Mirror in exchange for stock. The minority stockholders claim that Mirror issued discounted stock to Xcelera to increase Xcelera’s ownership share from 62.5 to 91.8 percent and that Xcelera used its position to advance its own interests. The contract included a provision requiring arbitration of any claims “arising out of or in connection with this Agreement, or the breach, termination or invalidity thereof” in Sweden. Parfi Holding AB (Parfi) (plaintiff) raised a breach of contract claim in a Swedish arbitration, but the arbitration tribunal only awarded damages to Plenteous on the ground that Plenteous relied on Xcelera’s promise that it would not be involved in “corporate action,” like the issuance of new stock, without Plenteous’ consent. Parfi then sued Mirror in the Court of Chancery for breach of fiduciary duties and other claims. The court concluded that the arbitration clause in the agreement was broad enough to include any claims related to the contract and granted summary judgment in favor of Xcelera. Parfi appealed to the Delaware Supreme Court.
Rule of Law
Holding and Reasoning (Veasey, C.J.)