Court May Place Lien on Defendant’s Assets During Arbitration

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Arbitration is designed to spare parties the cost and inconvenience of litigating disputes in court. However, under some circumstances, California law allows a party to an arbitration to file a court action asking for a “provisional remedy” even while the arbitration is pending. To obtain such a remedy, the party must show that “the award to which the applicant may be entitled may be rendered ineffectual without provisional relief.” A recent decision of the California Court of Appeal, California Retail Portfolio Fund GMBH & Co. v. Hopkins Real Estate Group, could significantly expand the number of arbitrations in which courts will intervene to award provisional relief. The appellate court held that “the apparent insolvency of a party to an arbitration agreement, or other evidence showing that the party was experiencing severe financial difficulties, is sufficient to satisfy the ineffectual relief requirement.”

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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