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Shalit v. Johnston

A-3204-98T2 (N.J. Super. App. Div. 2000) (Unpublished)

PARTNERSHIPS; DISSOLUTION; ARBITRATION—Judicial dissolution can be subject to arbitration if a partnership agreement provides that all disputes are to be arbitrated.

A limited partner of a limited partnership sought to judicially remove one of the general partners of the partnership. The partnership agreement, however, contained a provision that read, in part: “[A]ny controversy or difference of any of the Partners arising out of or relating to this Agreement or concerning an interpretation thereof, including a dispute as to whether any particular dispute is subject to arbitration, or any controversy or claim arising out of a breach or enforcement of any of the terms of this Agreement, shall be settled by arbitration… .” Rather than resorting to the arbitration process, the limited partner instituted an action in the Chancery Division, seeking a dissolution of the limited partnership pursuant to that part of the statute providing for judicial dissolution. The Court wrote that “[w]e are not aware of any New Jersey cases holding that judicial dissolution ... is immune from being contractually determined to be arbitrable.” The Court pointed out that arbitrators do have the right to resolve questions of law when interpreting contracts. Therefore, it held that the question of whether the broad wording of the arbitration clause in this limited partnership agreement permitted the issue of partnership dissolution was to be resolved through arbitration. The lower court dismissed the complaint on the basis that the parties had agreed to arbitration as the sole dispute resolution process and the Appellate Division affirmed.


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