Its first attempt having been stricken by the Third Circuit, the Delaware General Assembly recently enacted the Delaware Rapid Arbitration Act that seems ideally suited to a broad range of business disputes, and is a welcome contribution to rational, reasonable and responsive arbitration law.

Among its features, the Act requires that the entire proceeding be completed within 120 days of the appointment of the arbitrator (upon pain of a reduction of the arbitrator’s fee) and limitations on judicial appeal both prior to and after issuance of an award.  It applies only to disputes in which at least one party is a business formed in Delaware, and specifically excludes from its provisions disputes involving consumers.

A threshold feature of the law is its delegation of questions of arbitrability to the arbitrator and away from the courts.  Parties agreeing to the Rapid Arbitration Act are deemed to have waived objection and consented to “the submission exclusively to an arbitrator of issues of substantive and procedural arbitrability,” as well as the arbitrator’s power and authority to determine the scope of his own authority and to grant appropriate relief.  Even more specifically, parties are deemed to have waived the right to seek to enjoin the arbitration; to remove any action to a federal court; to appeal any interim ruling of the arbitrator; or to challenge any final award, except pursuant to the provisions of the Act.

In the absence of party agreement, the Court of Chancery appoints the arbitrator, who must issue a final award within the time fixed by the parties or, if not so fixed, within 120 days of appointment.  No extension, even consensual, may exceed 60 additional days.   Irrespective of the location of hearings, the seat of any arbitration is the State of Delaware.  Challenges to the final award must be taken within 15 days of issuance directly to the Supreme Court of Delaware, which “may only vacate, modify, or correct the final award in conformity with the Federal Arbitration Act.”  Other appellate review may occur pursuant to agreement.  Unless objected to, an award is deemed confirmed by the Court of Chancery 5 days after the 15-day challenge period.

In AT&T v. Concepcion, the Supreme Court grafted on to the purposes of the Federal Arbitration Act not only the stated language that arbitration agreements be enforced, but also that the Act be interpreted to facilitate arbitrations as “informal, streamlined proceedings,” and struck down a California law that was applicable to contracts generally, but that, in the view of the Court, rendered arbitration cumbersome.  Delaware’s state law seems to be consistent with those objectives, and it would be curious to see whether it will be challenged as its predecessor was.

 

F. Peter Phillips is an arbitrator and mediator practicing through Business Conflict Management in Montclair, New Jersey. He is also the Director of the Alternative Dispute Resolution Skills Program at New York Law School where, as Adjunct Professor, he teaches Alternative Dispute Resolution, Negotiation, and International Commercial Dispute Resolution.