Delaware recently enacted 10 Del. C. § 349 to give the Court of Chancery the power to arbitrate business disputes.

Who May Participate In Arbitration Proceedings? The dispute must satisfy the eligibility requirements of 10 Del. C. § 347(a) and (b) in order for the Court of Chancery to arbitrate the dispute. The parties must have agreed to arbitration by the Court of Chancery, at least one party must be a business entity (as defined in 10 Del. C. § 346), at least one party must be a business entity formed or organized under Delaware law or having its principal place of business in Delaware, no party is a consumer, as that term is defined in 6 Del. C. § 2731, with respect to the matter in dispute and the amount in controversy in cases involving solely claims for monetary damages must exceed $1 million.

Who Will Serve As The Arbitrator? A judge or master in the Court of Chancery will act as the arbitrator. Rule 96(d)(2).

What Types of Business Disputes Qualify for Arbitration in the Court of Chancery? Only business disputes where one of the parties is a business entity formed in Delaware or having its principal place of business in Delaware, and no party is a consumer with respect to the dispute are eligible for arbitration in the Court of Chancery. In the case of business disputes involving solely a claim for money damages, the amount in controversy must exceed $1 million.

Will I Need Delaware Counsel? Yes, Delaware counsel must be present and prepared to participate in a meaningful way.

Is There a Filing or Other Fee? Yes, there is a filing fee of $12,000, to be divided by the parties. For each day or partial day that the Vice Chancellor or Master engages in arbitration after the first day of arbitration, there is a $6,000 fee, to be divided by the parties.

Are Arbitration Proceedings Confidential? Yes. The Register in Chancery will not include a petition for arbitration in the public docketing system. The petition and supporting documents are considered confidential and not of public record unless the proceedings are the subject of an appeal.

Any communication made in or in connection with the arbitration that relates to a controversy being arbitrated, whether made to the arbitrator or a party or to any person if made at an arbitration, is confidential. Confidential materials and communications are not disclosed in any judicial or administrative proceedings unless all parties to the arbitration waive confidentiality or the materials are otherwise subject to discovery and were prepared specifically for the arbitration hearing.

Is There Discovery? The parties will exchange information necessary for preparation for the arbitration hearing and for the arbitrator to understand the dispute, unless the parties agree, with the approval of the arbitrator, to forego a prehearing exchange of information. Rule 97(f). The parties must first attempt to agree on prehearing exchange of information, which may include depositions, and present their agreement to the arbitrator. Id. The arbitrator may require additional information. Id. If the parties are unable to agree, the arbitrator will resolve their dispute. Id.

Except to the extent inconsistent with these rules or as modified by the arbitrator or the parties, Court of Chancery Rules 26-37 apply to an arbitration proceeding. Rule 96(c).

Who Must Attend? Rule 98(a) provides that at least one representative with an interest in the issue or issues to be arbitrated and with authority to resolve the matter must participate in the arbitration. Delaware counsel must also attend the arbitration.

What Documents Must The Parties Prepare? First, the parties must have agreed to arbitration in the Court of Chancery. Rule 96(d)(7). Second, a party must submit a petition for arbitration, signed by Delaware counsel, to the Register in Chancery. Rule 97(a)(1). The petition must set forth the nature of the dispute, the names and addresses of all other parties, the claims and the remedy sought. Rule 97(a)(3). The petition must also include a statement that all parties have consented to arbitration and that the jurisdictional requirements have been met. Rule 97(a)(3).

What Happens After The Arbitration Petition Is Submitted? The Chancellor will appoint an arbitrator and the arbitrator will contact the parties to schedule a preliminary conference within ten days of commencement of the arbitration, unless the parties agree to extend the date. Rules 97(b) and (c). At the telephonic preliminary conference, the arbitrator will obtain additional information about the dispute and the expected length of the hearing, obtain conflict statements from the parties and considered whether mediation may be appropriate. Rule 96(d)(3).

The arbitrator will schedule a preliminary hearing as soon as practicable after the preliminary conference. Rule 97(d). At the preliminary conference, the parties may consider: (i) service of statements of claims, damages and defenses, a statement of the issues asserted by each party and positions with respect thereto, and any legal authorities upon which the parties rely, (ii) stipulations of fact, (iii) the scope of discovery, (iv) exchanging and premarking of exhibits for the hearing, (v) the identification and availability of witnesses, including experts, and such matters with respect to witnesses, including their qualifications and expected testimony as may be appropriate, (vi) whether, and to what extent, any sworn statements and/or depositions may be introduced, (vii) the length of hearing, (viii) whether a stenographic or other official record of the proceedings shall be maintained, (ix) the possibility of mediation or other non-adjudicative methods of dispute resolution, and (x) the procedure for the issuance of subpoenas. Rule 96(d)(4). The arbitrator must issue a scheduling order promptly after the preliminary hearing. Rule 97(d).

The arbitrator will schedule the arbitration hearing at the preliminary hearing. Rule 97(e). Generally, the arbitration hearing will take place within 90 days of the petition for arbitration. Id.

What Remedies Can The Arbitrator Award? The arbitrator may grant any remedy or relief they deem just and equitable and within the scope of the partie's arbitration agreement. Rule 98(f). The arbitrator may award interim or interlocutory relief. Id. Upon the granting of a final award, a final judgment or decree must be entered and may be enforced as any other judgment or decree. Id.