This is locally a very old bug, but it became a problem with Networked IK update: before Networked IK, the issue would only appear to the local player...
Anything that locks my player capsule (chairs, ingame menu) will restrict arm movement and move my arms to the side if a given arm moves too far from the player capsule.
I understand this arm locking behavior is useful to prevent issues when a controller loses tracking. I am requesting that arms move to the side when too far from the head, rather than too far from the player capsule.
As an example, this is infuriatingly frustrating as a fullbody user where I might be "seated" but offset from the center of the chair, lying down or otherwise trying to reach over to give a head pat, and my arms fold down to my side, preventing such non-verbal social interaction from taking place.
As a related bug, I do not like that menus/chairs lock my avatar chest orientation (especially in full body), and it causes the avatar to behave in creepy ways if I turn around while seated or with my ingame menu open (head goes backwards, arms swing around the wrong way). Expected behavior would be to allow twist of the avatar chest (at least in full body mode)
I believe these two cannys may be related: