New Law Expands Chancery Court's Role

Senate Bill 58, reportedly signed by Governor Minner yesterday and now named Title 10 Sections 346 and 347 of the Delaware Code, greatly increases Chancery Court's jurisdiction to include technology disputes worth more than one million dollars and, allows private pre-litigation mediation to be handled by the Court.

This is HUGE.

§346. Technology Disputes.

(a) Notwithstanding any other provision in this Code, and without limiting the jurisdiction vested in any court in this State, the Court of Chancery shall have power to mediate and jurisdiction to hear and determine technology disputes as defined herein when

1. the parties have consented to the jurisdiction of or mediation by the Court of Chancery by agreement or by stipulation,
2. at least one party is a business entity as defined herein,
3. at least one party is a business entity formed or organized under the laws of this State or having its principal place of business in this State,
4. no party is a consumer, as that term is defined in § 2731 of Title 6, with respect to the technology dispute, and
5. in the case of technology disputes involving solely a claim for monetary damages, the amount in controversy is no less than one million dollars or such greater amount as the Court of Chancery determines by rule.

Neither punitive damages nor a jury trial shall be available for a technology dispute heard and determined by the Court of Chancery pursuant to this Section. Mediation proceedings shall be considered confidential and not of public record.

(b) A ‘business entity’ means a corporation, statutory trust, business trust or association, a real estate investment trust, a common-law trust, or any other unincorporated business, including a partnership (whether general (including a limited liability partnership) or limited (including a limited liability limited partnership)) or a limited liability company.

(c) A ‘technology dispute’ means a dispute arising out of an agreement and relating primarily to: the purchase or lease of computer hardware; the development, use, licensing or transfer of computer software; information, biological, pharmaceutical, agricultural or other technology of a complex or scientific nature that has commercial value, or the intellectual property rights pertaining thereto; the creation or operation of Internet web sites; rights or electronic access to electronic, digital or similar information; or support or maintenance of the above. The term does not include a dispute arising out of an agreement

1. that is primarily a financing transaction, or
2. merely because the parties’ agreement is formed by, or contemplates that communications about the transaction will be by, the transmission of electronic, digital or similar information.

(d) The Court shall interpret the term ‘technology dispute’ liberally so as to effectuate the intent of this section to provide an expeditious and expert forum for the handling of technology disputes involving parties who have agreed to resolve their disputes in the Court of Chancery, whether the parties are seeking to have the Court of Chancery

1. mediate the dispute only,
2. mediate the dispute initially, and if that fails, adjudicate the dispute; or
3. adjudicate the dispute.

The Court shall adopt rules to facilitate the efficient processing of technology disputes, including rules to govern the filing of mediation only technology disputes, and to set filing fees and other cost schedules for the processing of technology disputes.”

§347. Mediation Proceedings For Business Disputes

Without limiting the jurisdiction of any court of this State, the Court of Chancery shall have the power to mediate business disputes when

1. the parties have consented to the mediation by the Court of Chancery by agreement or by stipulation,
2. at least one party is a business entity as defined in § 346 of this Title,
3. at least one party is a business entity formed or organized under the laws of this State or having its principal place of business in this State,
4. no party is a consumer, as that term is defined in § 2731 of Title 6, with respect to the business dispute, and
5. in the case of disputes involving solely a claim for monetary damages, the amount in controversy is no less than one million dollars or such greater amount as the Court of Chancery determines by rule.

A mediation pursuant to this section shall involve a request by parties to have a member of the Court of Chancery, or such other person as may be authorized under rules of the Court, act as a mediator to assist the parties in reaching a mutually satisfactory resolution of their dispute. Mediation proceedings shall be considered confidential and not of public record. By rule, the Court of Chancery may define those types of cases that are eligible for submission as a business dispute mediation. This section is intended to encourage the Court of Chancery to include complex corporate and commercial disputes, including technology disputes, within the ambit of the business dispute mediation rules. The Court of Chancery should interpret its rule-making authority broadly to effectuate that intention.