DOVER, Del. (AP) — A Delaware law allowing Court of Chancery judges to preside over secret arbitration in business disputes is unconstitutional, a federal judge ruled Thursday.
The ruling came in a lawsuit filed by the Delaware Coalition for Open Government, which argued that the secret proceedings violated the rights of citizens to attend judicial proceedings and access court records.
In a 26-page ruling, U.S. District Court Judge Mary McLaughlin agreed that the Chancery Court, which often presides over high-profile business disputes involving some of the world's largest corporations, cannot conduct secret arbitration.
McLaughlin noted that under the arbitration process, a sitting judge hears evidence, finds facts and issues enforceable orders.
"The court concludes that the Delaware proceeding functions essentially as a non-jury trial before a Chancery Court judge," wrote McLaughlin, who heard oral arguments in February. "Because it is a civil trial, there is a qualified right of access and this proceeding must be open to the public."
David Finger, an attorney representing the open-government coalition, said the ruling was a reminder of the importance of transparency in all branches of government.
Gov. Jack Markell and Chancellor Leo Strine Jr. referred requests for comment to Lawrence Hamermesh, a Delaware law professor who assisted in representing the state. Hamermesh said in a prepared statement that state planned to appeal because of the economic importance of providing businesses with "cost-effective ways to resolve disputes."