A powerful new tool has just been created for companies seeking quick, efficient, and private resolution of business disputes. The Delaware Rapid Arbitration Act (DRAA), enacted in April 2015, streamlines the process for initiating an arbitration, sets tight deadlines for concluding it, automatically confirms the arbitration award, and provides speedy resolution of any challenge directly to the Delaware Supreme Court. The DRAA cleverly ensures quick completion of the process by imposing financial penalties on the arbitrator if a final decision is not issued within 120 days of commencement. If this sounds appealing, consider including DRAA provisions in your future contracts.
The DRAA is available for almost any dispute involving at least one business organized under Delaware law or with its principal place of business in Delaware. To invoke the Act’s benefits, the parties must agree in writing that their arbitration will be governed by the DRAA, and true to its purpose as a business dispute resolution mechanism, it may not be used for consumer or homeowner disputes, nor is it available for most shareholder actions.
The DRAA eliminates many of the strategies parties use to halt arbitration proceedings or impose unnecessary expense and delay. For example, under the DRAA, the arbitrator has exclusive power to determine the scope of the arbitration, and courts are divested of jurisdiction to enjoin the process or to entertain interim challenges. Parties also are relieved of the obligation to initiate legal proceedings to confirm their arbitration awards, as they are automatically confirmed within twenty days. Also, any challenges to an award are limited either to a private, arbitral appellate body or to a narrow and final appeal directly to the Delaware Supreme Court.
Within this tight framework, however, the parties are given great freedom to structure the arbitration as they see fit: selecting attorney or lay arbitrators; locating the hearing anywhere in the world they choose; using any, or no, organization to administer the proceedings; limiting the scope of discovery and allowing or prohibiting third-party depositions; barring motion practice and defining the scope of available remedies.
Businesses have long complained that the benefits of arbitration are being lost to ever-expanding proceedings that can become indistinguishable from full-blown litigation. The DRAA solves many of these problems, restoring speed and efficiency to the private dispute resolution process.