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Federal appeals court rules Delaware 'secret' arbitration rule unconstitutional

The US Court of Appeals for the Third Circuit [official website] on Wednesday ruled [opinion, PDF] that restriction of public access to Delaware's government-sponsored arbitration hearings is unconstitutional. The Court, in affirming the district court's ruling, held that the provision that allows confidential judge-run arbitration hearings violates the First Amendment [Cornell LII materials], but stated that the decision does not invalidate the entire statute. It noted that the decision is based solely on the fact that the proceedings "are conducted outside the public view, not because of any problem otherwise inherent in a Judge-run arbitration scheme." The court rejected the state's argument that the provision allows more efficient proceedings and generates state revenue. The constitutional challenge was filed [complaint, PDF] by the Delaware Coalition for Open Government (DCOG) [advocacy website] in 2011 in response to the 2009 dispute resolution amendment [HB 49, PDF], which was adopted by the state in an effort to promote Delaware's reputation as a preferable state in which to resolve business disputes.

Arbitration is becoming an increasingly popular form of dispute resolution around the world, leading to various legal opinions and controversies surrounding its use. Last year, Shafiq Jamoos, co-owner of the Jamoos Law Office, reviewed the costs and benefits of international arbitration [JURIST comment] compared to traditional litigation, writing that there is no definitive answer as to which is an inherently "better" process. A month earlier Russia's Federal Arbitration Court ordered British Petroleum (BP) to pay 100 billion rubles (US$3.1 billion) in damages [JURIST report] to TNK-BP, BP's 50-50 joint venture with Alfa Access Renova (AAR) [corporate websites], a consortium representing four Russian billionaire tycoons. Earlier in that year Dmytro Vorobey, an LL.M. Candidate at the University of Pittsburgh School of Law [official website] and intern at the district prosecutor's office and the district court in Novomoskovk, Ukraine, provided a critique of Ukraine's progress towards implementing consistent international arbitration practices [JURIST comment].

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