California Is Ground Zero For Forum Selection

In a forthcoming paper to be published in the Delaware Journal of Corporate Law, former SEC Commissioner Joseph A. Grundfest concludes that the forum selection is a peculiarly California-Delaware pas de deux:

The largest percentage of publicly traded entities with intra-corporate forum selection provisions, 31.6% of the sample (42 of 133), are headquartered in California, and all of these entities designate Delaware as the forum for the resolution of intra-corporate disputes.

Professor Grundfest many factors will affect whether this trend continues, including shareholder resistance and the outcome of court challenges.  The complete paper may be downloaded here.

Choice of forum rules are not new.  Antiphon, the fifth century B.C.E. Greek writer, described a series of forum selection decrees that were extant more than 2,400 years ago:

Decrees regulating the relation between Athens and certain members of her confederacy have survived, from which it would seem that while the σύμμαχοι [those fighting alongside, i.e., allies] were left with a limited civil jurisdiction of their own, criminal cases were transferred to the Athenian courts.  Thus the Erythraean Decrees(I.G. i2. 10 ff.)  enacts that all cases of treason involving capital punishment shall be tried at Athens, the Chalcidian Decree (I.G. i2. 39) that cases arising from the εὔθυναι [examination] of a magistrate  and involving exile, death, or ἀτιμία [deprivation of civic rights], shall likewise be tried at Athens, while the Milesian Decree (I.G. i2. 22) allows the local courts a jurisdiction extending only to cases which do not involve a penalty of more than 100 drachmas.

Antiphon, On the Murder of Herodes (K. J. Maidment, Ed.) 5:47.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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