Court Rules Choice Of Law Provision Takes Precedence Over Internal Affairs Doctrine


To say that the Delaware courts and bar are very fond of the internal affairs doctrine is about as controversial as wearing white before Labor Day. If you have any doubts about the sacred status of the doctrine in Delaware, I refer you to the Delaware Supreme Court’s decision in Vantagepoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (2005).

While California does not go so far as to deny the existence or validity of the internal affairs doctrine, it is far less rigid in its devotion to it. For example, Corporations Code § 2115 imposes numerous provisions of the California General Corporation Law on foreign corporations to the exclusion of the law of the jurisdiction in which they are incorporated when more than half of the corporation’s voting stock is held by California residents, and the corporation conducts a majority of its business in the state (as measured by assets, payroll, and sales). A California Court of Appeal has held that § 2115 does not violate the full faith and credit clauses of the U.S. Constitution; the commerce clause of U.S. Constitution, due process, or the contract clause of either the U.S. or California Constitutions. Wilson v. Louisiana-Pacific Resources, Inc., 138 Cal. App. 3d 216 (1982). Independent of Section 2115, California courts have applied the following provisions of the California Corporations Code to foreign corporations...

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