M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Wednesday, February 26, 2014

Tres Amigos ... one more thing

OK, so one more thing.  All of the amici refer in an off-hand way to the fact that these proceedings aren't really secret.  Sure, the proceedings are confidential -- and they don't even appear in the docketing system.  But!  In the event, the resulting order is appealed, the proceeding is public.  The Business Roundtable sums it up nicely:

Arbitration proceedings shall be considered confidential and not of the public record until such time, if any, as the proceedings are the subject of an appeal.

Here's the thing.  At first glance we might think that that means that the entire record is made public and that the Delaware Supreme Court will be able to provide perhaps a de novo review of the arbitral order. That would be okay, I guess, because novel questions would reach the Delaware Supremes and they could continue to build the common law.    

But, as A-Rod recently found out after he came to his senses, that is not what the court will be permitted to do.  Appeals of arbitral orders - to be consistent with the FAA - are much narrower and do not involve a de novo appeal.  As noted in NASDAQ's brief:

[Appeals are limited] under Federal Arbitration Act to cases of fraud on or corruption, misconduct, or abuse of power by the arbitrator.

So, no de novo review of arbitral awards from Chancery.  

So let's say, Delaware notwithstanding the FAA, Delaware decides that no, it's arbitral program is 'special'.  And, unlike any other arbitral program in the United States, the Delaware program will have the benefit of de novo - or substantive - review by a public court.  That would be unique -- in fact -- by not having FAA-consistent review as the current procedure suggests (but only suggests), the whole Chancery Court arbitration procedure would look exactly like a trial.  (Inconvenient, no?)

Well, I'd love to be a litigator on the first substantive appeal to the Delaware Supreme Court of an arbitral award, cause after they are done with it, we're going straight to the US Supreme Court where the nine have consistently ruled that there is no de novo review of FAA-consistent arbitrations, only reviews for fraud, corruption, or misconduct by the arbitrator.

So, if you want the Delaware Supreme Court to provide a substantive review of an arbitral award our of Chancery litigants would have to come to the court prepared to argue that the Chancellor who handled to the arbitration was incompetent, drunk, or otherwise.  Yeah. Good luck with that.

Ok, I'm done.

-bjmq

http://lawprofessors.typepad.com/mergers/2014/02/tres-amigos-one-more-thing.html

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