Court Erred When It Held Pending Divorce Overrode Parties’ Arbitration Agreement Regarding Their Collective Business Arrangement

As described by a Texas appellate court in In re Bowers, “the question presented in this case is whether a party to a pending divorce proceeding can compel the other party to arbitrate a business dispute concerning the sale of one party’s interest in a limited liability company when that interest is subject to the trial court’s standing order prohibiting the transfer or encumbrance of community assets.”

Reversing the trial court, which denied a motion to compel arbitration for the reason that it would violate a Texas statute imposing a temporary restraining order on the transfer of assets subject to a pending divorce, the appellate court held that the divorcing couple’s agreement to arbitrate disputes regarding their commercial relationship was enforceable.