Section 1. Amend Chapter 3, Title 10 to add new §§ 349-351 to read as follows:

“§ 349. Arbitration proceedings for business disputes.

(a) The Court of Chancery shall have the power to arbitrate business disputes when the parties request a member of the Court of Chancery, or such other person as may be authorized under rules of the Court, to arbitrate a dispute. For a dispute to be eligible for arbitration under this section, the eligibility criteria set forth in subsections (a) and (b) of § 347 of this chapter must be satisfied, except that the parties must have consented to arbitration rather than mediation.

(b) Arbitration proceedings shall be 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.

(c) Any application to vacate, stay, or enforce an order of the Court of Chancery issued in an arbitration proceeding under this section shall be filed with the Supreme Court of this State, which shall exercise its authority in conformity with the Federal Arbitration Act, and such general principles of law and equity as are not inconsistent with that Act.

§ 350. Voluntary final adjudications before a Master in Chancery.

The parties in any matter may stipulate to a final adjudication of the matter by a Master of the Court of Chancery. In such a stipulation, the parties shall consent that the decision of the Master shall have the same effect as a decision of a member of the Court of Chancery. Appeals from decisions of the Master in a matter governed by such a stipulation shall be determined in all respects by the same procedural and substantive standards as are applicable to appeals from decisions of members of the Court of Chancery.

§ 351. Voluntary waiver of appeal by parties

The parties in any matter may stipulate that the decision of the Court of Chancery, or a Master of the Court of Chancery if they so choose, shall be final and binding and not subject to appeal.”

Section 2. Amend § 5702(a) of Title 10 to strike the words “providing for arbitration in this State” and to substitute in their place the words “specifically referencing the Delaware Uniform Arbitration Act and the parties’ desire to have it apply to their agreement.”

Section 3. Amend § 5702(c) of Title 10 to strike it in its entirety and to substitute in its place a new subsection (c) to read as follows:

“(c) Court of Chancery jurisdiction over arbitration-related disputes in cases not governed by the Delaware Uniform Arbitration Act -- Unless an arbitration agreement complies with the standard set forth in subsection (a) for the applicability of the Delaware Uniform Arbitration Act, any application to the Court of Chancery to enjoin or stay an arbitration, obtain an order requiring arbitration, or to vacate or enforce an arbitrator’s award shall be decided by the Court of Chancery in conformity with the Federal Arbitration Act, and such general principles of law and equity as are not inconsistent with that Act. In such cases, the other provisions of this Delaware Uniform Arbitration Act are without standing and cases shall be adjudicated in accordance with the Court of Chancery’s Rules of Procedure.”

Section 4. Amend § 5703(a) of Title 10 to strike a comma “,” after the words “complied with” in the second sentence and to strike the words “and the claims sought to be arbitrated is not barred by limitation under § 5702(c)” and to strike a comma “,” after the words “under § 5702(c).”

Section 5. Amend § 5703(b) of Title 10 to insert a period “.” after the words “complied with” in the first sentence and to strike the words “or that the claim sought to be arbitrated is barred by limitation of § 5702(c).”

Section 6. Amend § 5703(c) of Title 10 to insert a period “.” after the words “complied with” in the first sentence and to strike the words “and from asserting in Court the bar of a limitation of time.”

Section 7. Amend § 5714(a)(5) of Title 10 to strike the words “under § 5702(c), and the issue was not adversely determined in proceedings under § 5703.”

Section 8. Amend § 5721 of Title 10 to insert the word “Delaware” after the words “as the.”

Section 9. Sections 2 - 8 of this bill shall become effective three months after enactment into law; the rest of the bill shall become effective upon enactment.

SYNOPSIS

This bill is intended to preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology matters.

This bill advances that goal by several means.

First, the bill authorizes parties voluntarily to agree to have a member of the Court of Chancery arbitrate a dispute, if the parties do so by a contract that meets the pre-existing requirements for using the mediation-only provisions that the General Assembly recently enacted, which set forth definitions for the types of disputes eligible for resolution. In general, this class of cases involve business-to-business disputes about major contracts, joint ventures, or technology. Specifically excluded are cases involving consumers. Use of this new option, like the option for mediation, is entirely voluntary. By this means, the Court of Chancery can remain at the cutting-edge in dispute resolution. Many federal and international statutes specifically identify instances when tribunals will stay or defer to the parties’ decision to have their dispute resolved by way of arbitration. These statutes often deal with issues, such as intellectual property disputes, that are of importance to Delaware entities. Thus, this bill, if enacted, will permit Delaware entities to have disputes of this kind arbitrated by a member of the Court of Chancery by voluntary agreement. Because a member of the Court of Chancery would be handling the arbitration, the bill also vests the Supreme Court with authority to hear any action to enforce or vacate an order issued by a member of the Court of Chancery as an arbitrator. And, because arbitration is traditionally private, the bill maintains proceedings in the Court of Chancery as confidential but makes clear that the record will be filed with the Supreme Court, in accordance with its Rules and the Rules of the Court of Chancery in the event of appeal.

Second, the bill authorizes parties voluntarily to agree to have a matter adjudicated before a Master of the Court of Chancery and to have the Master’s decision have the same force and effect as a decision of a member of the Court of Chancery. This will permit parties to make a voluntary election to have their matter adjudicated in a more streamlined fashion by agreeing in advance to avoiding the potential for a de novo trial before a member of the Court of Chancery.

Third, the bill would authorize parties to agree that any adjudication before a member of the Court of Chancery, or a Master of the Court, would be final and non-appealable. In many matters, parties desire an answer and their dispute is narrow enough that even if they cannot settle, they are willing to agree in advance to live with the outcome rendered by the trial court. This section would give parties that voluntary option.

Finally, the bill updates the Delaware Uniform Arbitration Act to conform to evolving standards and to address inconsistencies with prevailing best practices. The bill does so by eliminating the option to seek an injunction in the Court of Chancery on the grounds that the claim sought to be arbitrated would be time-barred. A party believing that the other side’s arbitrable claim was time-barred would be required to present that defense to the arbitrator, along with its other defenses. If the arbitrator rejects that defense and enters an adverse award, the party arguing that the claim was time-barred could seek to avoid enforcement of the order by arguing that defense to the Court of Chancery in a post-arbitration proceeding. By this means, the Delaware Uniform Arbitration Act would come into conformity with prevailing practice in the nation and eliminate an inefficient and cumbersome approach to addressing limitations defenses.

Relatedly, the bill clarifies that the Delaware Uniform Arbitration Act only applies to agreements when the parties specifically choose to have their agreement governed by its terms. In other situations, any consideration by the Court of Chancery of an application to enjoin or stay an arbitration, require arbitration, or enforce or vacate an arbitration order, shall be governed by the Federal Arbitration Act, and such principles of law, equity, and procedure as are consistent with the FAA. By doing so, the bill makes clearer the reality that arbitration contracts in interstate commerce are subject to the principles in the FAA and that the Delaware Uniform Arbitration Act is only applicable when parties make an express election to use it. This will simplify procedure for practitioners and the Court of Chancery. The effectiveness of the amendments to the Delaware Uniform Arbitration Act is delayed for three months after enactment to give practitioners a period of prior notice.

SPONSOR:	Rep. M. Marshall & Rep. Oberle & Rep. Kovach & Sen. Adams & Sen. DeLuca
	Rep. Wilson