You Might Think Your Arbitration Is Confidential…But, In Delaware, The Court Will Decide

Practitioners rely on ostensibly ironclad provisions of protective orders to withhold documents or portions thereof from public view. And that is particularly so in arbitrations, which are generally private proceedings.  But a recent Delaware Court of Chancery opinion issued by Vice Chancellor Paul A. Fioravanti, Jr. serves as a reminder that practitioners should be mindful that rules of the court regarding confidentiality may differ from arbitration rules or even stipulated confidentiality agreements among arbitration parties.

In Soligenix, Inc. v. Emergent Prod. Dev. Gaithersburg, Inc.,[1] Soligenix moved to vacate a AAA arbitration award in favor of Emergent.  Soligenix’s filings include a petition and exhibits, all of which were filed as confidential filings. Soon after, Soligenix filed a public version of those materials, “which contained redactions proposed by Emergent. The redactions were substantial.”[2]  Soligenix objected to the redactions, and Emergent took the position that the materials remained protected by the parties’ stipulated agreement from the arbitration.  Following an impasse, Soligenix filed a notice of challenge with respect to confidential treatment.

Ultimately, the Chancery Court sided with Soligenix and held that the subject materials would need to be filed publicly.  In doing so, the court applied Rule 5.1 and discussed the tension between “the public policy that judicial proceedings are open to the public and the general expectation of privacy between litigants that chose alternative dispute resolution.”[3]

The Chancery Court also disagreed with Emergent’s arguments that arbitration is inherently confidential and that continued confidential treatment of the redacted documents in question was warranted under the terms of the stipulated protective order from the arbitration proceeding. The Vice Chancellor also reminded the parties of precedents reflecting that parties may not preclude public access based on a private agreement.

As the Chancery Court also reaffirmed, a party seeking confidential treatment must demonstrate good cause under Rule 5.1. It also noted that court proceedings and filings are generally public, absent an applicable exception. The Chancery Court concluded that Emergent did not attempt to establish good cause, let alone offer the requisite evidence of specific harm or damage that it would face if confidential treatment over the documents were denied.

Soligenix serves as a reminder that Rule 5.1 generally will be prioritized over protective orders agreed to in arbitration.  Accordingly, when seeking to confirm an arbitration award, practitioners should present good cause under Rule 5.1 to seek to ensure continued confidential treatments of public documents. Good cause includes proffering evidence of concrete, particularized harm that could ensue if the subject information were to become accessible to the public. As the Chancery Court made clear, pointing to a protective order as controlling is insufficient.

[1] 289 A.3d 667 (Del. Ch. 2023).

[2] Id. at 670.

[3] Id. at 671.

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