Delaware loses bid to revive 'secret courts'

The U.S. Supreme Court on Monday declined to review a ruling that shut down Delaware's novel program to have judges hear private arbitration cases, which critics blasted as "secret courts."

The U.S. Court of Appeals in Philadelphia ruled last year that having state judges decide arbitration cases in secret violated the U.S. Constitution.

"We believe that our nation and Delaware have lost an important opportunity to provide cost-effective options to resolve business-to-business disputes to remain competitive with other countries around the world," said Andrew Pincus, a Mayer Brown attorney who was hired by the state.

The program was adopted by the state in 2009 as the first of its kind and was seen as a way for Delaware's courts to compete with increasingly popular private arbitration.

The state hoped that offering a binding decision from a judge on the Court of Chancery in a secret proceeding would be more appealing than traditional arbitration.

Unlike litigation, where one party drags the other into court, both parties in an arbitration case agree on a particular forum and the ground rules. Businesses that are leery of the unpredictable nature of litigation often see arbitration as a less risky way of resolving a dispute.

Delaware's arbitration cases were heard in Chancery courtrooms, in front of judges wearing their robes, but everything was secret, even the filing of cases. It has since been disclosed that the program was used about six times.