The United States Court of Appeals for the Third Circuit recently held as unconstitutional the Delaware Court of Chancery’s private arbitration program in the case of Delaware Coalition for Open Government v. Strine. The ruling affirmed the decision of the U.S. District Court for the Eastern District of Pennsylvania, and found the Delaware Court of Chancery’s confidential arbitration program to be unconstitutional because it violates the public’s right to access civil trials under the First Amendment.
The ruling was a divided 2-1 split decision among a three-judge panel, whereby the Third Circuit found that the Court of Chancery’s program shares similarities with private arbitration. However, the Court viewed such arbitrations as civil trails because they occurred before active judges in a public courthouse. Judges Dolores K. Sloviter and Julio M. Fuentes ruled against the arbitration program, while Judge Jane Richards Roth dissented.
In the opinion, Judge Sloviter stated the importance of public proceedings:
“Allowing public access to state-sponsored arbitrations would give stockholders and the public a better understanding of how Delaware resolves major business disputes,” Sloviter said. “Opening the proceedings would also allay the public’s concern about a process only accessible to litigants in business disputes who are able to afford the expense of litigation. In addition, public access would expose litigants, lawyers and the Chancery Court judge alike to scrutiny from peers and the press.”
This blog will continue to provide updates in the event that this decision is appealed to the United States Supreme Court.