DELAWARE COURT OF CHANCERY’S CONFIDENTIAL ARBITRATION PROCEEDING DECLARED UNCONSTITUTIONAL
In 2009 Delaware adopted a rather unique process for the arbitration of business disputes by a sitting judge of the Court of Chancery, which was intended “to preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology matters.” Del. H.B. 49, at 4 (2009). A public interest group filed suit challenging the section of the new statute requiring that the proceedings be considered “confidential and not of public record.” 10 Del C. § 349(b). The federal district court in Delaware recently held that since the arbitration process essentially functions like a civil trial the confidentiality provision violates the qualified right of access to criminal and civil trials protected by the First Amendment. The court concluded that the proceedings function like a non-jury trial because: 1) the Chancellor, not the parties, selects the judge; 2) the Chancery Court discovery rules apply instead of the rules for arbitration discovery, and 3) a sitting judge of the Chancery Court, rather than a third party arbitrator, presides. The arbitration process remains in force in all other respects. Delaware Coalition for Open Government v. Strine, Case No. 1:11-01015 (USDC D. Del. Aug. 30, 2012).
This post written by Abigail Kortz.
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