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June 27, 2013

Litigation and Corporate Governance Alert: Delaware Chancery Court Upholds Validity of “Forum Selection Bylaws”

Faced with burdensome and duplicative multi-forum litigation, the boards of many corporations have recently adopted bylaws requiring that lawsuits relating to the corporation's internal affairs be brought only in designated courts. Lifting the "cloud" cast by shareholder lawsuits challenging these "forum selection bylaws," Chancellor Leo E. Strine of the Delaware Chancery Court issued a decision on June 25, 2013 holding that forum selection bylaws are facially and presumptively valid under Delaware law and that the Delaware Court of Chancery will enforce these bylaws in the same way it enforces contractual forum selection clauses.

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