From Bloomberg: Delaware’s Chancery Court, the country’s leading venue for securities litigation, can’t be used for secret arbitration proceedings in business disputes, a federal appeals court ruled.
The arbitration program set up by the state, which allowed publicly funded judges to make decisions behind closed doors on business cases, violates the public’s constitutional right to access to the courts, the U.S. Court of Appeals in Philadelphia said Wednesday in a 2-1 decision.
More than a year ago, U.S. District Judge Mary A. McLaughlin in Philadelphia ruled that Delaware’s secret arbitration proceedings were similar enough to conventional civil trials that the secret proceedings violated the public’s right of public access to the courts under the First Amendment of the U.S. Constitution.
The Delaware Coalition for Open Government, a citizen watchdog group, challenged the use of “state-empowered judges” to hear evidence and hand down decisions in secret. Media outlets including the New York Times (NYT), Associated Press and Bloomberg News filed court papers supporting the challenge.
The case is Delaware Coalition for Open Government Inc. v. Strine, 12-3859, U.S. Court of Appeals for the Third Circuit (Philadelphia). The lower court case is Delaware Coalition for Open Government Inc. v. Strine, 11-cv-01015, U.S. District Court, District of Delaware (Wilmington).
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