Arbitration in the Delaware Court of Chancery

July 2011

Publication| Corporate Transactions| Corporate & Chancery Litigation

On January 5, 2010, the Court of Chancery adopted new rules providing for Chancery arbitration pursuant to a Delaware statute permitting Delaware’s Chancery judges to act as private arbitrators. At the highest level, the new alternate dispute resolution (ADR) regime created by these rules allows for consensual, prompt, nonpublic arbitration of disputes before a sitting Chancery judge. The regime also contemplates virtually unlimited contractual flexibility to the parties to design their ADR, including the ability to waive appeals. While any regime built upon consent of the parties often takes some time to implement, as corporate planners contract for the new ADR platform and as disputes mature over time, the new Delaware regime is meeting with acceptance on a highly accelerated basis. To date, at least two publicly filed merger agreements have adopted a Chancery arbitration provision for dispute resolution with several others in various stages of negotiation.  And, recently, a Court of Chancery case was dismissed and then re-filed as the first actual Chancery arbitration.

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