L-R: Sukhandeep Kaur, Cliff C. Gardner, and Peyton Carper of Skadden, Arps, Slate, Meagher & Flom. Courtesy photos Calif. Appellate Court Declares Delaware Exclusive Forum Provision Unenforceable
Publicly traded corporations increasingly adopted exclusive forum provisions to reduce the risk of burdensome and costly multijurisdictional stockholder litigation. State and federal courts around the country regularly enforced the provisions, dismissing cases not brought in the specified jurisdiction.
December 20, 2023 at 09:00 AM
5 minute read
Contributors
A decade ago, in Boilermakers Local 154 Retirement Fund v. Chevron, then-Vice Chancellor Leo Strine upheld bylaws designating Delaware as the exclusive forum for disputes related to "internal affairs"—those "matters peculiar to the relationships among or between the corporation and its current officers, directors, and shareholders." Shortly thereafter, the Delaware General Assembly codified the holding of Boilermakers in 8 Del. C. Section 115. The statute provides that a company's certificate of incorporation or bylaws "may require, consistent with applicable jurisdictional requirements, that any or all internal corporate claims shall be brought solely and exclusively in any or all of the courts in this State." In other words, a corporation may adopt an exclusive forum provision for "internal corporate claims," provided that Delaware is, or is among, the designated forum(s).
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