Secret Arbitration

HUGE win for the Delaware Coalition for Open Government!

A Delaware law allowing Court of Chancery judges to preside over secret arbitration in business disputes is unconstitutional, a federal judge ruled Thursday.

The ruling came in a lawsuit filed by the Delaware Coalition for Open Government, which argued that the secret proceedings violated the rights of citizens to attend judicial proceedings and access court records.

In a 26-page ruling, U.S. District Court Judge Mary McLaughlin agreed that the Chancery Court, which often presides over high-profile business disputes involving some of the world’s largest corporations, cannot conduct secret arbitration.

McLaughlin noted that under the arbitration process, a sitting judge hears evidence, finds facts and issues enforceable orders.

“The court concludes that the Delaware proceeding functions essentially as a non-jury trial before a Chancery Court judge,” wrote McLaughlin, who heard oral arguments in February. “Because it is a civil trial, there is a qualified right of access and this proceeding must be open to the public.”