The Delaware Rapid Arbitration Act

The Delaware Rapid Arbitration Act (DRAA) was enacted in 2015 to provide a streamlined and confidential arbitration process for sophisticated commercial parties. The DRAA targets widespread concerns and frustrations regarding the pace, expense, and exposure associated with resolving business disputes through litigation or traditional arbitration processes.  DRAA is available when at least one party is a Delaware entity or has its principal place in business in Delaware.  Parties may invoke the DRAA by including DRAA as the dispute resolution mechanism in an operative contract or by standalone agreement after a dispute arises.  The DRAA’s advantages include a highly expedited timeline, strict limits on the availability of pre-award judicial review to avoid unwanted delays and expense, and myriad options, including to maintain confidentiality over both the proceeding and award.  Delaware ADR, LLC has as a well-established process for administration of arbitration proceedings pursuant to the DRAA, offering efficient and effective administration of arbitration proceedings at no additional cost. 

DRAA Advantage and Options

  • In addition to its outstanding Professional Neutrals, Delaware ADR, LLC offers efficient and effective administration of arbitration proceedings at no additional cost.  Delaware ADR’s strong operations team is especially well-positioned for case management and arbitration administration.  Our team’s extensive command of procedures as well as outstanding organizational skills and administrative management expertise ensure an efficient process.

    • Expedition – With Parties Controlling Pace and Statutory Consequences

    • Efficiency

    • Thoughtful Default Rules + Room to Customize

    • Confidentiality

    • Appellate Options

    • Business disputes: At least 1 party must be a Delaware entity or have its principal place of business in Delaware

      • Individual parties (e.g., officers) not excluded if this criteria is met

    • Agreement to arbitrate or arbitration provision must be governed by Delaware law

      • Other portions of agreement or deal is not limited to Delaware law

    • All parties must agree in writing to proceed, with explicit and specific reference to “the Delaware Rapid Arbitration Act”

    Exclusions from the DRAA

    • No party may be a consumer

    • No party may be a civic association/HOA/similar residential community organization

    • Cannot bind non-signers

      • Limits availability for some governance disputes – no disputes arising under bylaws or certificate of incorporation unless shareholders signed

  • The Agreement to Arbitrate

    • Provision or standalone agreement

    • Timing

    • Deal documents

    • Post-dispute agreements

    • Sole Arbitrator or panel of three Arbitrators

    • Through their agreement or consent, parties may select specific Arbitrator/panel or establish a selection process

    • If parties cannot agree, Court of Chancery appoints on petition

    • Categories of Acceptable Arbitrators:

      • Person specifically named in agreement to arbitrate or selected by parties

      • Expert (non-legal) in a discipline specified in agreement to arbitrate

      • 10+-year Delaware-barred attorney

  • DRAA Default

    Maximum 180 days: Arbitrator must issue final award within 120 days of accepting appointment, with parties able to extend by no more than 60 days upon unanimous agreement.

    Permissible Options Under Arbitration Agreement

    Parties may modify the 120-day default period in the arbitration agreement.

    • Timing requirement enforced through penalties on Arbitrator for late awards, ranging from 25% reduction in fee up to 100% forfeiture if award is > 60 days overdue

    • Penalties are non-modifiable by the Arbitrator or the parties

    • Speed is possible in part because DRAA disallows pre-arbitration court challenges to jurisdiction, venue, scope and intra-arbitration litigation of Arbitrator’s interim rulings

  • DRAA Default

    Subject to Arbitrator parameters and limitations, parties may collect documents and testimony

    Permissible Options Under Arbitration Agreement

    • Minimal Discovery: no discovery but exchange of documents and other information from each other party 

    • Party Discovery: each party is entitled to collect documents and testimony from each other party subject to Arbitrator limitations; Arbitrator can administer oaths and compel production of documents and witnesses

    • Full Discovery: each party is entitled to collect documents and testimony from each other party subject to Arbitrator limitations; Arbitrator can administer oaths and compel production of documents and witnesses; Arbitrator can issue subpoenas and commissions for the taking of documents and testimony from third parties

  • DRAA Default

    Each party may present evidence and witnesses and cross-examine witnesses presented by opposing party

    Permissible Options Under Arbitration Agreement

    • Limited Presentation: each party may present evidence and witnesses and to cross-examine witnesses presented by opposing party; only agreed upon witnesses may be called to testify

    • Full Presentation: each party may present evidence and witnesses and to cross- examine witnesses presented by opposing party

  • DRAA Default

    Arbitrator has power to make any award, legal or equitable

    Perissible Options Under Arbitration Agreement

    Arbitrator’s final award can be limited to specific contract term(s)

  • DRAA Default

    Appeal to the Delaware Supreme Court within 15 days of issuance of final award

    Permissible Options Under Arbitration Agreement

    • Parties waive right to appeal final award

      • Parties appeal to the Delaware Supreme Court in accordance with DRAA

      • Parties agree to private arbitral appeal process in accordance with arbitration agreement

    • If appeal is to Delaware Supreme Court, final award may be vacated, modified, or corrected on the bases available under the Federal Arbitration Act (e.g., fraud, arbitral misconduct, exceedance of Arbitrator’s power, etc.)

    • Parties may alter bases for vacatur or modification by agreement if electing private arbitral option, and may retain control over confidentiality of the award and record

Delaware ADR administration of arbitration proceedings

Delaware ADR, LLC has as a well-established process for administration of arbitration proceedings pursuant to the DRAA, offering efficient and effective administration of arbitration proceedings AT NO ADDITIONAL COST. Delaware ADR’s strong operations team is especially well-positioned for case management and arbitration administration.  Our team’s extensive command of procedures as well as outstanding organizational skills and administrative management expertise ensure an efficient and cost-effective process.