The Delaware Rapid Arbitration Act became effective – May 4, 2015

The Delaware Rapid Arbitration Act (“DRAA”) was signed into law on April 2, 2015 and became effective on May 4, 2015. The DRAA is available as an alternative to litigation, providing for a quicker and cheaper way to solve a dispute among business entities.

The DRAA might be a viable alternative to companies seeking to solve a dispute in a cost-effective way, avoiding the lengthy process of litigation discovery.

How is DRAA triggered?

The parties must explicitely choose to submit to the DRAA by agreement, and at least one of the disputants must be a company formed in Delaware, or having its place of business in Delaware. The law governing the agreement, or a separate agreement in which the parties submit to the DRAA must be Delaware law. If the parties were not able to select on or more arbitrators, or if at the time of the agreement failed to indicate the procedure to appoint one or more arbitrators, the Delaware Court of Chancery shall appoint one or more arbitrators.

The Arbitration proceeding 

The arbitration can be held anywhere in the world, and the arbitration is vested with powers to solve all issues related to the arbitrability of the dispute and scope of the arbitration, although it must be noted that the parties can decide in advance what issues can be submitted to arbitration, the scope of the arbitration, and the kind of evidence to be produced, the scope of relief and the possibility to appeal.

The arbitration award must be issued within 120 days from the date of the arbitrator’s acceptance of its appointment, although the parties can consent to a one time extension, up to 60 days. Reductions of the arbitrator’s fees apply in the event the award is being delayed.

The award can be appealed to the Delaware Supreme Court, provided that the scope of the appeal is consistent with the grounds under which an arbitrator’s decision can be challenged pursuant to the Federal Arbitration Act.