{"id":9987,"date":"2026-03-09T04:41:40","date_gmt":"2026-03-09T04:41:40","guid":{"rendered":"https:\/\/usatrustedlawyers.com\/blog\/second-circuit-holds-that-employees-release-agreement-superseded-agreement-to-arbitrate-in-prior-commercial-agreement\/"},"modified":"2026-03-09T04:41:40","modified_gmt":"2026-03-09T04:41:40","slug":"second-circuit-holds-that-employees-release-agreement-superseded-agreement-to-arbitrate-in-prior-commercial-agreement","status":"publish","type":"post","link":"https:\/\/usatrustedlawyers.com\/blog\/second-circuit-holds-that-employees-release-agreement-superseded-agreement-to-arbitrate-in-prior-commercial-agreement\/","title":{"rendered":"Second Circuit Holds that Employee\u2019s Release Agreement Superseded Agreement to Arbitrate in Prior Commercial Agreement"},"content":{"rendered":"\n
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On January 22, 2024, the Second Circuit held, in The Resource Group International Ltd. v. Chishti<\/em>, that a forum selection clause in a settlement agreement can supersede a prior commercial agreement to arbitrate, even in the absence of an explicit waiver of the right to arbitration.\u00a0 This decision underscores the importance of carefully drafting forum selection clauses in employment and other agreements to avoid unintentionally overriding preexisting arbitration agreements.<\/p>\n

Background<\/h3>\n

The Research Group International (TRGI) is a holding company that invests in technology companies.\u00a0 In 2005, TRGI received a large investment from a group of outside investors.\u00a0 As part of the investment, TRGI and its management\u2014including then-chairman Muhammad Ziaullah Khan Chishti\u2014entered a stock purchase agreement (SPA) with the outside investors.\u00a0 The SPA also included an arbitration provision providing that \u201c[a]ll disputes and controversies arising under or in connection with this Agreement shall be settled by arbitration.\u201d<\/p>\n

In 2021, Chishti resigned from his position as chairman.\u00a0 In connection with his departure, TRG Pakistan\u2014a TRGI affiliate\u2014repurchased shares held by Chishti and Chishti executed an agreement pursuant to which he agreed to release claims and not to commence litigation against TRGI and certain other parties.\u00a0 The release agreement provided for \u201cthe exclusive jurisdiction of the state and United States federal courts located in the state of New York\u201d to resolve disputes, and expressly \u201csupersede[d] all prior arrangements or understandings\u201d among the parties.<\/p>\n

In February 2023, Chishti initiated an arbitration against TRGI, TRG Pakistan, and several of its affiliates and directors (the TRGI Parties), as well as several other parties, claiming that the TRGI Parties had breached the SPA and their fiduciary duties to shareholders.\u00a0 In response, the TRGI Parties filed suit against Chishti in the Southern District of New York, seeking, among other relief, a preliminary injunction to stay the arbitration proceedings on the basis that the release agreement\u2019s forum selection clause superseded the SPA\u2019s arbitration agreement.\u00a0 The district court denied the TRGI Parties\u2019 request for a preliminary injunction, concluding that \u201c[the TRGI Plaintiffs] were unlikely to succeed on the merits of their claim[]\u201d that the SPA\u2019s arbitration agreement was unenforceable because the release agreement did not explicitly mention prior arbitration agreements, and therefore did not supersede it.<\/p>\n

The Second Circuit vacated the district court\u2019s decision.\u00a0 It held that \u201cthere is no requirement that [a] forum selection clause [definitively] mention arbitration.\u201d\u00a0 Instead, \u201can agreement to arbitrate is superseded by a later-executed agreement containing a forum selection clause if the clause specifically precludes arbitration.\u201d\u00a0 Thus, because the release agreement contained both a forum selection clause requiring that court in New York have \u201cexclusive jurisdiction\u201d over disputes between the parties, as well as a merger clause \u201csupersed[ing] all prior arrangements or understandings,\u201d the Second Circuit concluded that the district court should not have determined that the release agreement could not have superseded the preexisting arbitration agreement.\u00a0 Instead, the release agreement superseded the SPA\u2019s arbitration agreement \u201cas it relates to the subject matter of the Release Agreement.\u201d\u00a0 The Second Circuit remanded the case to the district court to determine which claims, if any, were covered by the release agreement (and therefore no longer subject to arbitration) and which claims, if any, were not covered by the release agreement (and therefore still subject to arbitration under the SPA).<\/p>\n

Implications<\/h3>\n

Chishti <\/i>demonstrates that a forum selection clause may negate previous agreements to submit disputes to arbitration even if the forum selection clause makes no mention of arbitration.\u00a0 Parties should be careful in drafting multiple agreements not to inadvertently supersede preexisting arbitration agreements.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"

On January 22, 2024, the Second Circuit held, in The Resource Group International Ltd. v. Chishti, that a forum selection clause in a settlement agreement can supersede a […]<\/p>\n","protected":false},"author":1,"featured_media":9988,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[1612,7546,610,3563,676,1876,1478,1783,7545],"class_list":["post-9987","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lawyers","tag-agreement","tag-arbitrate","tag-circuit","tag-commercial","tag-employees","tag-holds","tag-prior","tag-release","tag-superseded"],"_links":{"self":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/9987","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=9987"}],"version-history":[{"count":0,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/9987\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media\/9988"}],"wp:attachment":[{"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=9987"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=9987"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/usatrustedlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=9987"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}