Delaware Court of Chancery Holds Forum Selection Bylaw Provisions Are Enforceable

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A decision issued yesterday by the Delaware Court of Chancery, Boilermakers Local 154 Retirement Fund v. Chevron Corp., No. 7220-CS (Del. Ch. June 25, 2013), may make it easier for Delaware corporations to minimize the risk of facing duplicative derivative lawsuits in multiple jurisdictions. As we wrote previously, there has been a significant rise in the filing of duplicative derivative actions brought in multiple courts against the same defendants for the same alleged wrongdoing.

To combat the inefficiencies of facing redundant suits in multiple jurisdictions, many Delaware corporations have adopted bylaws selecting a single, exclusive forum for bringing suits related to the internal affairs of the corporation. Usually, these provisions select the Delaware Court of Chancery (or the federal courts in Delaware) as the exclusive forum.

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