What happens when a dispute is subject to an arbitration agreement but, unless a court enters an injunction preserving the status quo pending arbitration, the arbitration proceeding will be rendered meaningless? Does a motion to compel arbitration strip a court of its power to grant an injunction?
Suppose, in a case involving an alleged Ponzi scheme, a receiver seeks a preliminary injunction pending arbitration to freeze funds which may otherwise be transferred beyond the reach of creditors. Can he get one, or does the court have to stay for arbitration?
Suppose a professional basketball team has a dispute with one of its players. Can it obtain a preliminary injunction prohibiting the player from joining another team pending arbitration?
Suppose a company claims it has the right to purchase another company's assets but the asset purchase agreement has an arbitration provision. Can the company get an injunction to stop a sale of the assets to another company before arbitrating because there may not be much point in arbitrating after the assets are transferred?
One of the drawbacks of arbitration, despite its purported speed and efficiency, is that the procedure takes time. The parties have to agree on the arbitrators, set an arbitration date, and conduct a hearing. If a party must go through the administrative process before obtaining injunctive relief, that party may suffer irreparable harm which may render any arbitration award meaningless.
Oddly, in Texas the answer to the question whether injunctive relief can be obtained pending arbitration may depend...
