Clifford Chance

The Delaware Court of Chancery upholds the validity and enforceability of forum selection bylaws

27 June 2013

In the last three years, many Delaware corporations have adopted forum selection clauses – bylaw provisions that require that certain litigation implicating a corporation's internal affairs be litigated in Delaware – in an effort to address the costs of defending against multiple and duplicative litigation in different jurisdictions over a single transaction or board decision.

In early 2012, a dozen class action lawsuits were filed in Delaware Chancery Court against Delaware corporations and their directors challenging forum selection bylaws adopted without stockholder approval. A number of corporations voluntarily removed these provisions, however, two large-cap companies (Chevron and FedEx) defended their bylaws and their cases were consolidated before Chancellor Strine.

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