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Delaware Chief Justice Announces New Arbitration Process to Replace “Secret Court”

Friday, June, 6, 2014


Newly appointed Chief Justice Leo E. Strine Jr. has announced a new private arbitration program for business litigants in the famously pro-corporate state of Delaware.  The new program will replace Delaware’s previous arbitration rules, which were struck down by a Federal court in Philadelphia that ruled the old program constituted a “secret court.”

 

Chief Justice Strine stated he disagrees with the ruling, but announced that Delaware’s governor, the Corporate Law Council and members of the State bar are formulating new arbitration rules to deal with the new requirements centered on the secrecy provisions of the previous program, which lacked any sort of public disclosure mechanism to discover the parties involved or even the nature of their dispute.  The fact that the arbitrations were held behind closed doors was also ruled to violate the First Amendment right of free speech.

 

Delaware is a popular state for businesses to incorporate in, due to a business-friendly court and legal system and very low corporate tax rates.  Many corporations that do business primarily in other areas of the country incorporate in Delaware for this reason.  The new arbitration rules will not be announced until January, but it is expected they will be formulated as closely to the previous version as legally possible.