Delaware business arbitration: a sitting judge is the arbitrator, and the award becomes a judgment

Delaware's business arbitration is not private arbitration held somewhere else. The arbitrator is the Court.

Rule 137(d)(2): "'Arbitrator' means a judge or commissioner sitting permanently in the Court."

And Rule 139(f)(3): "Upon the granting of a final award, a final judgment or decree shall be entered in conformity therewith and be enforced as any other judgment or decree."

A judge decides it, the result is a judgment, and none of it appears on the public docket unless somebody appeals.

Who qualifies

Rule 137(a) ties the whole regime to statute — it governs "arbitration proceedings for business disputes pursuant to 10 Del. C. § 546".

Rule 137(b):

In the case of business disputes involving solely a claim for monetary damages, a matter will be eligible for arbitration only if the amount in controversy exceeds one-hundred thousand dollars.

Rule 138(a)(3) requires the petition to state the same qualifying facts as a mediation petition: that all parties consented, that the Superior Court would have subject matter jurisdiction, that at least one party is a business entity, that at least one is a Delaware entity or Delaware-headquartered or the dispute is governed by Delaware law, and that no party is a consumer. Plus the nature of the dispute, the parties' names and addresses, the claims and the remedy sought.

The petition must be signed by Delaware counsel under Rule 90.1.

Rule 137(d)(7) even supplies the clause to put in a contract:

"The parties agree that any dispute arising under this agreement shall be arbitrated in the Superior Court of the State of Delaware, pursuant to 10 Del. C. § 546."

A "Consent to Arbitrate" may be written or oral, and "shall constitute consent to these rules."

Confidential, until an appeal

Rule 138(a)(4):

Confidentiality. The Prothonotary will not include the petition as part of the public docketing system. The petition and any supporting documents are considered confidential and not of public record until such time, if any, as the proceedings are the subject of an appeal. In the case of an appeal, the record shall be filed by the parties with the Supreme Court in accordance with its Rules, and to the extent applicable, the Rules of this Court.

Confidentiality holds "until such time, if any, as the proceedings are the subject of an appeal". An appeal puts the record before the Supreme Court under its rules — so confidentiality is a feature of the arbitration, not a permanent seal.

Rule 139(b) protects the proceeding itself: hearings are private, attended only by parties and their representatives unless all agree; an Arbitrator "may not be compelled to testify" about the service; and communications made in or in connection with the arbitration are confidential — with the same two exceptions as mediation, a written waiver by all parties, or material "otherwise subject to discovery, which [was] not prepared specifically for the arbitration hearing."

The early timetable

Rule 138 moves quickly at the start.

Rule 137(d)(3) defines the preliminary conference as a telephonic conference to obtain information about the dispute and the anticipated hearing length, to obtain conflicts statements, and to consider "whether mediation or other non-adjudicative methods of dispute resolution might be appropriate".

Rule 137(d)(4) then defines a Preliminary Hearing, also telephonic, covering — without limitation — statements of claims, damages and defenses with legal authorities; stipulations of fact; the scope of discovery; exchanging and pre-marking exhibits; identification and availability of witnesses including experts; whether sworn statements or depositions may be introduced; the length of hearing; and whether a stenographic or other official record will be kept.

Whether there is a transcript is therefore a decision made at the preliminary hearing, not a default.

Discovery does apply

Rule 137(c):

The parties with the consent of the Arbitrator may change any of these arbitration rules by agreement and/or adopt additional rules. Except to the extent inconsistent with these rules, or as modified by the Arbitrator or the parties, Superior Court Rules 26 through 37 shall apply to the Arbitration proceeding.

This is the sharpest difference from the mediation track, where there is no formal discovery at all. Here the full discovery apparatus — Rules 26 through 37 — applies by default, subject to the scope set at the preliminary hearing.

The same subdivision makes almost everything adjustable: the parties, with the Arbitrator's consent, may change any of these rules or add new ones.

Rule 137(d)(5) provides for a scheduling order from the Arbitrator setting the pre-hearing activities and hearing procedures.

The hearing

Rule 137(d)(6) describes it as a proceeding that "may take place over a number of days", in which each side presents evidence and "witnesses for each party shall submit to questions from the Arbitrator and the adverse party" — subject to the Arbitrator's discretion to vary the procedure "so long as parties are treated equally and each party has the right to be heard and is given a fair opportunity to present its case."

Rule 139(a) requires, as in mediation, at least one representative of each party with authority to resolve the matter, plus Delaware counsel for each party.

Two off-ramps

Rule 139(d) — Mediation Option. The parties may agree "at any stage of the arbitration process" to submit the dispute to the Court for mediation. The judge or commissioner who mediates "may not be the Arbitrator unless the parties agree."

Rule 139(e) — Settlement Option. The parties may agree, at any stage, to seek the Arbitrator's own assistance in reaching a settlement before a final decision. Any settlement is reduced to writing and signed by the parties and the Arbitrator.

The second is worth noting carefully. Asking your decision-maker to help you settle is available here by rule — but it means the person who would otherwise decide the case has heard your settlement position.

The award

Rule 139(f):

Limb (1) is broad — "any remedy or relief" — but bounded twice: by what is just and equitable, and by "the scope of any applicable agreement of the parties". An arbitration clause that limits remedies limits the Arbitrator.

Rule 139(g): filing and per-day (or partial day) fees are assessed on a schedule kept by the Prothonotary.

Rule 139(c) gives Arbitrators the same civil immunity as mediators, except for acts "in bad faith, with malicious intent, or in a manner exhibiting a willful, wanton disregard of the rights, safety, or property of another."

Where this connects

The non-binding counterpart, with no discovery and nothing on the record, is Delaware business dispute mediation.

This is a different regime from Rule 16.1 mandatory non-binding arbitration, which is elective, capped at $50,000, decided by a private arbitrator, and reviewable by a demand for a trial de novo. See Delaware mandatory non-binding arbitration.

For the discovery rules that apply here by default, see Delaware discovery deadlines, Delaware depositions and the Delaware motion to compel.

Once the award becomes a judgment, enforcement runs on the ordinary rules — see enforcing a Delaware money judgment.

How Delaware compares

A short checklist

1. Check the money threshold. For a claim solely for damages, it must exceed $100,000.
2. Confirm no party is a consumer and the Delaware connection is satisfied.
3. Use the rule's own clause if you are drafting an agreement to arbitrate here.
4. Diary ten days from commencement for the preliminary conference.
5. Settle the scope of discovery at the preliminary hearing — Rules 26 to 37 otherwise apply in full.
6. Decide there whether you want a transcript. It is not automatic.
7. Send someone with authority to resolve, and have Delaware counsel attend.
8. Think before asking the Arbitrator to help settle — the same person decides the case.
9. Remember confidentiality ends at an appeal.

Where these rules live

• Del. Super. Ct. Civ. R. 137 — Arbitration
• Del. Super. Ct. Civ. R. 138 — Commencement of Arbitration
• Del. Super. Ct. Civ. R. 139 — Arbitration Hearing
• Del. Super. Ct. Civ. R. 135 — Commencement of Mediation
• Del. Super. Ct. Civ. R. 90.1 — Admission pro hac vice

This page explains what the rules say. It isn't legal advice, and 10 Del. C. § 546 carries eligibility requirements this site doesn't cover.