Klein Wins Appeal in Delaware Supreme Court, Paving New Law in Reviewability of ADR Provisions

The State of Delaware respects the language in a parties’ contract as much as, or more than, any other state in the country. Barket Epstein obtained a rare decision in Delaware that sees the highest Delaware court draw a limit on parties’ power of contract. In particular, a company tried to shelter itself from judicial review by giving a committee of its own directors the authority to make “final and binding” decisions about the legal propriety of its internal operations, and the Delaware Supreme Court held that it can’t do that. When it comes to legal decision-making, committee or “expert” decisions remain subject to judicial review.

For the first time in the State of Delaware, the court held that such decisions are not just subject to judicial review, but that they are subject to de novo review.

This is important because it means that powerful parties to a contract can’t insulate themselves from wrongdoing by giving their internal operators the power to make legal decisions entitled to deference. That is, they can give their internal operators a first crack on a decision, but ultimately the victims of this behavior can get a fair shake in court.

Read the full decision here.