Arbitration and the Future of Delaware’s Corporate Law Franchise

Abstract

In an effort to maintain Delaware’s competitive position in the market for adjudications, Delaware recently adopted a Chancery Court-sponsored arbitration procedure. That procedure relies on the good offices of the Court to undertake confidential arbitration proceedings. There are serious constitutional questions with respect to the propriety of sitting judges conducting confidential arbitrations. In addition, it is not clear that the supposed benefits of a state-sponsored arbitration system outweigh the costs to the state’s ability to develop and maintain its own corporate law brought on by such a system. Although Delaware may simply be making the best of what it considers a bad situation, given the state’s interest in maintaining its position as a leader in the corporate law Delaware and the public may be better served by abandoning the Chancery-sponsored arbitration system altogether.