Delaware is reviewing its prospects for launching a public arbitration program, state Supreme Court Chief Justice Leo E. Strine Jr. told a gathering of attorneys June 4 at the Bench and Bar Conference. The chief justice said he expects the proposal to be submitted to the General Assembly for approval by January 2015.
In 2009, the General Assembly passed legislation creating confidential arbitration programs in the Delaware Court of Chancery and Superior Court. A government transparency group, the Delaware Coalition for Open Government, challenged the program, calling it a secret court. The U.S. District Court for the Eastern District of Pennsylvania agreed, declaring the program unconstitutional, a decision that was affirmed by the U.S. Court of Appeals for the Third Circuit.
Gov. Jack Markell, the Delaware State Bar Association’s corporation law council and other attorneys are working on offering an arbitration program that would be compliant with federal law, Strine said during his State of the Judiciary speech at the Chase Center in Wilmington.
”The purpose [of arbitration] is to give entrepreneurs around the world an incentive to form entities in Delaware, because if they do, those entities will have the advantages not only of our well-developed corporate law, but of our state’s proven ability to help them resolve commercial disputes swiftly and expertly,” the chief justice said.
Strine did not offer any specifics on how the new arbitration program will differ from the one declared unconstitutional by the federal court. The Third Circuit provided Delaware with little guidance on how to make the program compliant with federal law. Analysts who spoke with Delaware Business Court Insider, a sibling publication of Delaware Law Weekly, at the time of the appellate court’s ruling said the most likely options are public arbitration or having private arbitration with retired judges. Both the Third Circuit and district court held that the use of public judges conducting arbitrations in taxpayer-funded courthouses made the program akin to a civil trial.
Strine also questioned the Third Circuit judges who upheld the district court’s opinion.
“Regrettably, a federal court in Philadelphia issued a divided ruling striking down these statutes because they violated two judges’ reading of unsettled precedent, a reading that, if good law, would invalidate longstanding dispute resolution procedures used in their own federal court system,” he said. “But consistent with our history, Delaware is not wallowing in defeat.”
The chief justice emphasized that arbitration is necessary to keep Delaware competitive with international legal jurisdictions that offer swift, cost-effective business dispute resolution procedures. He said such a program would make Delaware attractive to emerging Latin American markets considering incorporating in the state.
“This type of initiative is consistent with our best tradition, which rests not on being the cheapest place to form an entity—we are Bergdorf Goodman, not the Dollar Store,” Strine said. “It rests on our genuine integrity, high standards of fiduciary responsibility, and our provision of a neutral playing field on which those whose interests are legitimately at stake can tangle and get well-reasoned decisions with real-world business speed.”
Strine also vowed to create a process to examine Delaware’s problem-solving courts with the goal of creating “consistent, statewide standards and benchmarks for their operation.” He added that state organizations including the Department of Correction, Division of Youth Rehabilitative Services and the Delaware Department of Health and Social Services will be involved in the process.
A contentious debate on these issues is expected, Strine said. But he added that Delaware “cannot avoid the hard work of making a decision on a very good approach to focus on implementing well and consistently.”
The Delaware chapter of the American College of Trial Lawyers will be partnering with the Delaware State Bar Association to survey attorneys on how the court system is operating in key practice areas. Attorneys will be asked how the judiciary can improve its resolution time and reduce court costs. Among the questions the survey will ask is whether areas of administrative law are split between different courts; whether the state needs to reexamine its Administrative Procedures Act; and if the courts consistently apply administrative review, Strine said.
In addition, the study will ask quality-of-life questions to help attorneys achieve a better balance between their work and family lives.
“Our hope is to identify ways to lessen the need for lawyers to make stark choices between professional success and personal and parental fulfillment,” he added.
Strine said he was concerned about clients burdening lawyers with text and email questions at “all times of day with no regard to the concept of a weekend.” The pressure has contributed to attorneys filing non-expedited legal briefs around midnight.
“These practices endanger law practice on both the qualitative and the human dimension,” he said. “The qualitative aspect is often overlooked, but clients who demand hasty, instant answers to problems that even a decade ago would have been the subject of a careful, deliberative process among colleagues will get answers that are not well thought out.”