M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Tuesday, October 25, 2011

Arbitration system challenged in Delaware (updated)

Reuters is reporting that the Delaware Coalition for Open Government has sued the Chancery Court in the federal district court in Delaware for holding "secret hearings."  The secret hearings they are worried about are confidential arbitration hearings held pursuant to Delaware's recently adopted arbitration rules.  The basic outlines of the Open Government Coalition's argument are that arbitration is okay, but that if it is going to be conducted by sitting chancellors of the Chancery Court, then it must be open to the public.  I'll post the complaint when it's available.


Update:  Here's the Complaint (Delaware Coalition for Open Govt v. Leo Strine, et al).  The essence of the complaint against all the chancellors and the State of Delaware goes as follows: 

Pursuant to the First Amendment to the Constitution of the United States (ratified by Delaware on December 7, 1787), the public has a presumptive right of access to judicial proceedings and records, civil and criminal. This right of access is considered to be a right of contemporaneous access, meaning that the public has the right to attend judicial proceedings (as opposed to merely reviewing a transcript at a later time) and to review documents as they are filed with the Court or introduced into evidence.

10 Del. C. §349 and Chancery Court Rules 96, 97 and 98 deny plaintiffs, and the general public, their right of access to judicial proceedings and records. Although the statute and rules call the procedure “arbitration,” it is really litigation under another name. Although procedure may vary slightly, the parties still examine witnesses before and present evidence to the Arbitrator (a sitting judge), who makes findings of fact, interprets the applicable law and applies the law to the facts, and then awards relief which may be enforced as any other court judgment. The only difference is that now these procedures and rulings occur behind closed doors instead of in open court.

Because arbitration proceedings are conducted by judges, presumably in the courthouse, the Open Government Coalition is arguing that they must be public proceedings, notwithstanding the prior agreement of the parties to engage in a confidential arbitration proceeding.


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