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From Securities Regulation Daily, February 27, 2014

Chamber and Business Roundtable urge Supreme Court to take Delaware judicial arbitration case

By Jim Hamilton, J.D., LL.M.

The Chamber of Commerce and the Business Roundtable asked the U.S. Supreme Court to review a Third Circuit panel ruling that dealt a fatal blow to the new Delaware arbitration system by holding that the First Amendment requires arbitrations by state judges be open to the public. In an amicus brief, the business groups argued that, because confidentiality is a time-honored and common sense prerequisite for successful arbitration, the appeals court effectively doomed Delaware’s arbitration system and any similar arbitration regimes enacted by other states. The petition will be considered at the Court’s March 21 conference (Strine v. Delaware Coalition for Open Government, Inc., Dkt. No. 13-869).

The business groups said that the lower court decision guts Delaware’s arbitral scheme, declaring its confidentiality requirements invalid after concluding that the First Amendment provides the public a right of access to arbitration by chancery court judges. The appeals court applied the logic and experience analysis devised by the Court in the context of access claims to criminal proceedings. In so doing, the panel determined that despite the longstanding practice of arbitrations being conducted on a confidential basis, arbitrations involving state judges in state courthouses must be open to the public.

The brief noted that the circuits are divided over how to apply the Court’s logic and experience test. This conflict of authority is alone a sufficient reason to grant certiorari, contended the business groups. Given that the Court has yet to analyze a right-of-access case in the civil context, and has not decided a right-of-access case for nearly two decades, reasoned the amici, it is not surprising that its guidance is now sorely needed. The decision below makes matters worse by misapplying both the experience and logic inquiries. The business groups urged the Court to bring needed uniformity to this area of law.

In addition, in the view of amici, the case raises a question of significant national importance. Arbitration has become an increasingly important tool in resolving commercial disputes across the country. The court of appeals’ decision effectively destroys the potential of arbitration programs conducted by state judges, because businesses would rarely agree to arbitrate without the assurance of confidentiality.

Deciding whether a right of access applies to arbitration by state judges goes to the very heart of whether this form of alternative dispute resolution can meaningfully exist. If arbitrations are opened to the public, as a practical matter, they will rarely be used, if ever. The business groups urged the Court to use this case as an historic and important opportunity to provide necessary guidance about the scope of the logic and experience test outside the context of criminal prosecutions.

Companies: U.S. Chamber of Commerce; The Business Roundtable

MainStory: TopStory Arbitration DelawareNews

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