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  • Writer's pictureKirk Hartley

Update on Constitutional Challenge to Secret Arbitrations in Delaware Chancery

The Delaware Corporate and Commercial Litigation blog by Francis Pileggi includes an update on the constitutional challenges to the Delaware Chancery rule creating secret arbitrations presided over by Delaware chancery judges. The post includes myriad links – you can follow follow them back to see why most commentators see the procedure as a violation of First Amendment rights to access information, among others. The defense is focused on economics for Delaware lawyers and making business happy, as illustrated by this post:

Bouchard argued repeatedly that Delaware’s Chancery Court needs to have this confidential process to keep it competitive in the field of business litigation, which brings in millions to Delaware every year through state incorporation fees. Businesses must be incorporated in Delaware to access Chancery Court.

Allowing the court to remain competitive and bring in this revenue benefits the citizens of Delaware, Bouchard said. There is no harm to the public, he argued, because the disputes handled by the procedure would otherwise go to private arbitration, where the public already is barred.

It is a "cut to the chase" program, Bouchard said, that is designed to resolve business disputes in as little as 90 days. A civil suit in public court could take years just to get to trial, he said, and cost far more to reach resolution. The program also is different from a bench trial because appeal options and the power of the judge/arbitrator are more limited, he said.

An amicus brief opposes secrecy and was filed by the Reporters’ Committee for Freedom of the Press and media companies, including AP and the NYT. The Sturm College of Law in Denver has collected many of the briefs here.

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