Should Sitting Judges Be Empowered to Conduct Private Arbitrations?

By Jerry Carter.  One of the missions of Nevada’s Business Courts is to provide aggressive case management and speedy resolution of business disputes.  A recent decision out of Delaware discusses an important issue that must be considered in formulating innovative dispute resolution procedures–public access to the courts.  The case is Delaware Coalition for Open Government v. Strine, Civil Action No. 1:11-1015 (D. Del. Aug. 30, 2012).

Delaware’s legislature authorized, and the Delaware Court of Chancery implemented, a procedure permitting sitting Chancery Court judges to conduct non-public arbitrations of certain disputes.  According to the legislation, the arbitration procedure “is intended to preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology matters.”  However, the United States District Court for the District of Delaware concluded that the private arbitration procedure violates “a qualified right of access to criminal and civil trials,” under the First Amendment to the United States Constitution.

The Court concluded that “[t]he Delaware proceeding, although bearing the label arbitration, is essentially a civil trial.”  Moreover, “[t]he parties’ consent cannot alter the judge’s obligation in his public role as a judicial officer.”  Because the private arbitrations were equated to a civil trial, the Court held that a qualified right of public access to the proceedings exists.  The Court further stated:

“The public benefits of openness are not outweighed by the defendants’ speculation that such openness will drive parties to use alternative non-public fora to resolve their disputes.  Even if the procedure fell into disuse, the judiciary as a whole is strengthened by the public knowledge that its courthouses are open and judicial officers are not adjudicating in secret.”

The Court was careful to note that its ruling does not deal with public access to settlement conferences conducted by sitting judges.  Settlement conferences are different from arbitration and civil trials because, in mediation and settlement negotiations, the parties come to a mutually agreed upon resolution of their dispute and the mediator’s recommendation is not binding.