August 16, 2012 Articles

Chancery Arbitrations after Year One: Annotated New Form

After a year of hands-on experience with binding private arbitration in the Court of Chancery, a second-generation dispute resolution form has evolved

by Greg Varallo, Rich Rollo, and John Mark Zeberkiewic

On January 5, 2010, the Delaware Court of Chancery adopted a set of rules providing for arbitration in the court, giving life to a recently adopted statute permitting Delaware's Chancery judges to act as private arbitrators. See 10 Del. Code § 349 (adopted Apr. 2, 2009); Del. Ch. Ct. Rules 96–98 (adopted Jan. 5, 2010). See also Gregory P. Williams, Gregory V. Varallo, Jillian Remming & A. Jacob Werrett, "Arbitration in the Delaware Court of Chancery," Insights, July 2011, at 1. Practitioners in the court now have the benefit of having worked through some of the initial "growing pains" associated with this new forum. With at least five arbitrations having moved through the court's arbitration docket since the first such proceeding was filed in March 2011, we are privileged to have been involved in each one, serving as lead counsel in most. Having tried or argued most of these early matters, we have attempted to refine our firm's form arbitration provision to reflect our direct experiences. While the specifics of any arbitration in Chancery are confidential, the updated form [PDF] with annotations reflects our experiences and flags issues that may arise in any arbitration proceeding and that, accordingly, parties should consider addressing when negotiating the specific terms of any agreement to arbitrate in Chancery.

Although the form is designed to be included in a merger agreement or other significant transaction agreement between sophisticated commercial parties, its principal terms may be modified and included in a stand-alone agreement that commercial parties enter into after a dispute has arisen over a preexisting agreement or other instrument.

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