The district court held that a secret Delaware Chancery Court arbitration proceeding set up to decide corporate governance and other business disputes submitted by private entities was essentially a civil trial and thus the First Amendment qualified right of access mandates that the proceeding must be open to the public. The
functions as a non-jury trial before a Chancery Court judge, said the federal district
proceeding, the parties submit
their business dispute to a sitting judge acting pursuant to state authority,
using state personnel and facilities. The judge finds facts, applies the
relevant law and issue an enforceable order dictating the obligations of the
parties. A judge bears a special responsibility to serve the public interest,
said the federal court, an obligation that is undermined when a judge acts as
an arbitrator bound only by the parties’ interest. The parties’ consent could
not alter the judge’s public role as a judicial officer. Delaware
To determine whether arbitration by Court of Chancery judges is subject to a limited public right of access, noted the brief, the Third Circuit applies the experience and logic test. A key question arising under the logic prong of the test is what public benefit, if any, is served by requiring such arbitration to be conducted in the open. The answer is none, said the business groups.
Indeed, since confidentiality is essential to arbitration, if arbitration by Court of Chancery judges were made public businesses that would otherwise avail themselves of it would turn instead to other non-public fora to resolve their disputes. Thus, whatever public benefit might accrue in theory from open arbitration proceedings in the Court of Chancery, emphasized the business groups, none will be realized in practice.
The district court wrongly conflated arbitration with a civil trial based on the single fact that the arbitrator is a Chancery Court judge, said the business groups. Court of Chancery arbitration is consensual, they pointed out, while litigation is not. That the Court of Chancery arbitrator is a judge who also resolves other disputes between other parties in judicial proceedings governed by other rules and resulting in precedential decisions does not somehow transform consensual arbitration into non-consensual litigation.
In the view of amici, the district court’s reasoning amounts to a per se rule that any proceeding conducted with public funds by a state judicial officer is necessarily “civil litigation” and therefore subject to a qualified First Amendment right of access. But that conclusion is clearly overbroad, contended the business groups, and contrary to settled practice in courts throughout the country. For example, it would invalidate the numerous state programs authorizing judges to act as arbitrators in court-annexed or similar arbitration programs.