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

Fall 2017

Publication| Real Estate Services

On April 2, 2015, Delaware GovernorJack Markell signed into law theDelaware Rapid Arbitration Act (“Act”).This Act allows for alternative disputeresolution consistent with arbitration’sorigins as a rapid and efficient meansof resolving disputes. The Act respondsto growing complaints by Delaware’scompanies about the incrustation ofcosts and delays onto non-judicialdispute resolution. The Act is theproduct of the collaboration ofpractitioners in Delaware, includingmembers of this firm, led byDelaware’s Chief Justice, Leo E. StrineJr., Delaware’s Chancellor, Andre G.Bouchard, and the Secretary of State,Jeffrey W. Bullock.

The Act makes the process of startingan arbitration quick and inexpensive,accelerates the arbitration itself toensure a swift resolution, and doesaway with confirmation proceedingsaltogether. It also provides for eitherprivate, contractual appeals orchallenges directly to the DelawareSupreme Court. The Act attemptsto strike a balance between thecontractual decisions of the partieswhile innovating to make commencingan arbitration a speedy and inexpensive process

The Act is not designed to preemptmore tradit iona l arbit rat ionproceedings. Rather, it is a responseto the clear need for a modern andefficient arbitration process, speciallydesigned for disputes where the partiesneed swift resolution, such as in thecase of ongoing business relationshipsthat would suffer from drawn-outlitigation—for example, between theparties to a joint venture.

Under the Act, the arbitration does nothave to occur in Delaware and does nothave to use Delaware attorneys. Theonly criteria are that the parties elect bycontract to resolve their disputes underthe Act and that one of those parties isa Delaware business entity.

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