Friday, August 31, 2012

Delaware Arbitration of Corporate Disputes Must Be Open to the Public Rules Federal Judge

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,ruled a federal judge, and thus the First Amendment qualified right of access mandates that the proceeding must be open to the public. The Delaware proceeding functions as a non-jury trial before a Chancery Court judge, said the federal court. The public benefits of  openness were applicable to the Delaware proceeding. The arbitration proceeding was intended to preserve Delaware’s pre-eminence in offering cost-effective options for resolving corporate and business disputes. (Delaware Coalition for Open Government v. Strine, DC Del., No. 1:11-1015, Aug. 30, 2012).

In the Delaware 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.