The Delaware Rapid Arbitration Act: Considerations for Commercial Real Estate Finance

Fall 2017

Publication| Real Estate Services

On April 2, 2015, Delaware Governor Jack Markell signed into law the Delaware Rapid Arbitration Act (“Act”).This Act allows for alternative dispute resolution consistent with arbitration’s origins as a rapid and efficient means of resolving disputes. The Act responds to growing complaints by Delaware’s companies about the incrustation of costs and delays onto non-judicial dispute resolution. The Act is the product of the collaboration of practitioners in Delaware, including members of this firm, led by Delaware’s Chief Justice, Leo E. Strine Jr., Delaware’s Chancellor, Andre G. Bouchard, and the Secretary of State, Jeffrey W. Bullock.

The Act makes the process of starting an arbitration quick and inexpensive, accelerates the arbitration itself to ensure a swift resolution, and does away with confirmation proceedings altogether. It also provides for either private, contractual appeals or challenges directly to the Delaware Supreme Court. The Act attempts to strike a balance between the contractual decisions of the parties while innovating to make commencing an arbitration a speedy and inexpensive process

The Act is not designed to preempt more traditional arbitration proceedings. Rather, it is a response to the clear need for a modern and efficient arbitration process, specially designed for disputes where the parties need swift resolution, such as in the case of ongoing business relationships that would suffer from drawn-out litigation—for example, between the parties to a joint venture.

Under the Act, the arbitration does not have to occur in Delaware and does not have to use Delaware attorneys. The only criteria are that the parties elect by contract to resolve their disputes under the Act and that one of those parties is a Delaware business entity.

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