Delaware Adopts Rapid Arbitration Act

April 13, 2015

Publication| Corporate Transactions| Corporate & Chancery Litigation

On April 2, 2015, Delaware Governor Jack Markell signed a highly specialized arbitration statute into law: the Delaware Rapid Arbitration Act (the “DRAA”). The DRAA provides a quick and inexpensive process for starting an arbitration proceeding, accelerates the arbitration itself to ensure a swift resolution, eliminates confirmation proceedings, and allows for challenges directly to the Delaware Supreme Court.

Speed and efficiency are key features of the DRAA. Arbitrations brought under the new statute must be completed within 120 days of the arbitrator accepting appointment. With the unanimous consent of the parties and the arbitrator, that timeline can be extended to 180 days. Arbitrators who do not issue final awards within the prescribed timeframe face reductions in their fees corresponding to the length of the delay in the issuance of the final award.

The new legislation gives broad powers to expert arbitrators. Arbitrability is determined solely by the arbitrator, who also has the authority to grant a full array of injunctive and other remedies. The arbitrator’s final award is deemed confirmed simply by the passage of time. Challenges to the final award are made directly to the Delaware Supreme Court, skipping review by the trial court. Unless altered by contract, such challenges proceed under the narrow Federal Arbitration Act standard of review.

The DRAA was designed to address resolution of disputes where sophisticated parties most need no-nonsense, swift resolution. The DRAA may not be used to resolve disputes involving consumers, and it may only be invoked against parties who sign an express agreement to arbitrate under the DRAA. One of the parties must be a Delaware business entity, although it need not be located in Delaware.

The DRAA was developed by an interdisciplinary team of arbitration practitioners led by Delaware’s Chief Justice Leo E. Strine Jr., Delaware’s Chancellor Andre G. Bouchard, and Delaware’s Secretary of State Jeffrey Bullock. Richards, Layton & Finger lawyers also played key roles in developing the DRAA: Two of our partners were deeply involved in drafting the statute, and a third played a principal role in drafting the proposed model rules. For additional information on the DRAA and its practical application, please visit our DRAA practice page.

  • sign up for our newsletter

    To keep our clients and friends updated on the latest legal news, Richards Layton distributes practice area e-alerts and newsletters. If you are interested in receiving these publications, please subscribe below.