Under what circumstances can a party commence court proceedings despite the arbitration clause in the Chatime agreement?
Chatime Franchise · 2025 FDDAnswer from 2025 FDD Document
(12) Despite anything in this clause 14, a party at any time may commence court proceedings in relation to any dispute or claim arising under or in connection with this Agreement solely for the purpose of obtaining urgent interlocutory relief pending resolution of the Arbitration.
(13) Subject to this clause 14, a party must not commence or maintain a court action or proceeding upon a dispute in connection with this Agreement if the dispute is referred to arbitration under this clause 14.
Source: Item 23 — Receipts (FDD pages 58–262)
What This Means (2025 FDD)
According to Chatime's 2025 Franchise Disclosure Document, despite the arbitration clause, a party can initiate court proceedings under specific circumstances. Specifically, either party may commence court proceedings relating to any dispute or claim arising from or in connection with the Franchise Agreement solely to obtain urgent interlocutory relief while awaiting the outcome of the arbitration process.
This provision allows Chatime or the franchisee to seek immediate court intervention to prevent irreparable harm while the arbitration is ongoing. Interlocutory relief typically involves temporary measures, such as injunctions or restraining orders, designed to maintain the status quo until the arbitration is resolved. This ensures that critical issues can be addressed promptly without waiting for the full arbitration process to conclude.
It is important to note that this exception is narrowly tailored to urgent situations requiring immediate action. The clause explicitly states that court proceedings are permissible only for obtaining urgent interlocutory relief, and any other court action is prohibited if the dispute is already referred to arbitration. This balances the commitment to arbitration with the need to protect a party's interests in time-sensitive situations.