Rapid arbitration comes to the capital of business litigation

Delaware, the capital of business litigation, put into effect a rapid arbitration act this week.

Passed overwhelmingly by the Delaware House and unanimously by the Senate last month, the law “reflects the desire of many businesses to avoid the expensive, lengthy discovery that often accompanies full-blown litigation,” wrote Kellen Kasper, an associate with Foley & Lardner on the firm’s site.

Among requirements for its application are:

• All parties must agree to arbitrate under the Delaware Rapid Arbitration Act–either before or after a specific dispute arises
• At least one of the parties to the arbitration agreement must be a Delaware business entity or have its principal place of business in Delaware
• The agreement must provide that it will be governed by Delaware law and must explicitly refer to the DRAA.
• No party to the agreement can be a consumer

The act replaces a previous Delaware arbitration regime in which vice chancellors of the Court of Chancery served as arbitrators out of the public view. That system was declared unconstitutional in 2013 by the U.S. Court of Appeals for the Third Circuit as violating the First Amendment’s guarantee of public access to court proceedings.