M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Tuesday, June 25, 2013

Forum selection bylaws and what's next

So, I'm already on record about what I think is next.  So, forum selection bylaws that restrict litigation to the state of incorporation are helpful for managing the issue of multiforum litigation, which in recent years has become a real waste of resources.  But, it's a very tricky - and perhaps impossible - balance.

The hard part of the balance involves arbitration.  I'm already on record with respect to my opinions on the Delaware arbitration procedure (here and here), which I think goes too far.  The forum selection bylaw, I think, may further open the door to widespread adoption of arbitration provisions in bylaws.  If widespread adoption of arbitration includes confidential resolution of disputes and a restriction on the ability of shareholders to bring class actions, then that may be the beginning of the end of Delaware's position as corporate law leader - the end of Delaware's franchise. Seem extreme?  Well certainly it won't happen overnight.  It will be a long-term degradation of Delaware's competitive position and lowering barriers to entry for other states.

We'll see in 10 years.  I've put down my marker.  

-bjmq

http://lawprofessors.typepad.com/mergers/2013/06/forum-selection-bylaws-and-whats-next.html

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