Corporate Law

Litigation in the Delaware Court of Chancery and the Delaware Supreme Court

Delaware is world-renowned for its efficient and professional court system, which is particularly prominent in the areas of corporate, business, and commercial law. For many experienced lawyers throughout the world, the principal reasons to recommend organizing in Delaware are the Delaware courts and the body of case law developed by those courts. They point, in particular, to the Court of Chancery.

Delaware’s Court of Chancery is the nation’s preeminent business court. As a court of equity, the Court of Chancery has jurisdiction to hear and determine cases involving equitable rights (such as trusts and fiduciary duties) and equitable remedies (such as injunctions and specific performance). The Court also has jurisdiction over suits involving Delaware’s General Corporation Law and other business entity statutes, as well as suits regarding corporate documents such as charters, bylaws, and merger agreements. The Court’s limited jurisdiction promotes specialization and expertise in its judges as well as the lawyers who practice before it.

The Court of Chancery consists of one Chancellor and six Vice Chancellors, each of whom are appointed by the Governor, subject to the advice and consent of the Delaware Senate, for 12-year terms. Those selected to serve on the Court historically have been experienced and sophisticated practitioners familiar with the corporate and commercial matters that routinely come before the Court. The Delaware Constitution mandates that Delaware courts maintain balance between the major political parties, and the members of the Court of Chancery strive to issue impartial decisions. Further, because most corporate litigation involves Delaware corporations headquartered outside of the State, the Court is not subject to any “hometown” bias. Delaware’s courts offer a level playing field, where corporate stockholders and managers both win and lose cases—on the merits, and not because of politics.

The Court of Chancery has no juries, so all cases are decided by the Chancellor or a Vice Chancellor, who explain their decisions in comprehensive and reasoned written opinions. The Court of Chancery’s tradition of written opinions stretches back more than a hundred years. The quantity and quality of the Court of Chancery’s opinions confer a substantive advantage on Delaware business entities by providing them with a thorough and predictable body of interpretive case law. Managers and lawyers of Delaware business entities can use this extensive case law to guide in planning their business and affairs.

Another advantage that the Court of Chancery has over most other courts is its flexibility. When a new case is filed with the Court, it is assigned by the Chancellor to one of the judges. The assigned judge oversees the litigation and manages the schedule until the case’s conclusion. The Court of Chancery was an early adopter of electronic filing, allowing the parties ease in accessing and filing Court documents. The Court of Chancery’s procedural rules do not impose formalistic schedules or procedures and instead allow the Court and the parties to tailor litigation as necessary. The Court also has the discretion to issue equitable remedies customized for the circumstances of a particular case.

The Court’s limited jurisdiction allows it to consider and dispose of complex matters in an expedited fashion when the circumstances require it, without sacrificing quality and careful attention. As a court of equity, the Court of Chancery does not hear criminal cases and rarely hears routine civil cases seeking only money damages (such as products liability or automobile negligence cases). This keeps Chancery free to decide major corporate law disputes and business-to-business contract disputes, such as disputes between joint venture partners, with the speed that modern commerce requires. Unlike in many other courts, therefore, litigants can seek (and obtain) an expert ruling from the Court within days or weeks, if necessary.

Rulings of the Court of Chancery may be appealed directly to the Delaware Supreme Court, which is the highest court in the State. The Delaware Supreme Court is the ultimate authority on issues of Delaware corporate, business, and commercial law.

Five Justices sit on the Delaware Supreme Court; each one is appointed (in the same merits-based, bipartisan manner as the members of the Court of Chancery) by the Governor, with advice and consent from the Senate, for 12-year terms. The Court may sit in three-member panels, or it may hear cases “en banc”; i.e., with all five members, as it does in most corporate cases. Appeals generally involve briefing and an oral argument before the Court, which then usually issues a written opinion resolving the matter.

Like the Court of Chancery, the Delaware Supreme Court is willing to expedite matters when the need arises. Although appeals to the Supreme Court are often resolved within 180 days from the date of filing, the Court can and will resolve appeals within a few days if necessary, especially in corporate disputes demanding a rapid, real-time answer.

Delaware’s courts provide business entities with a long history of written opinions on Delaware law as well as expert and impartial decision-makers who are able and willing to tailor litigation to meet the circumstances, allowing entities to obtain timely and authoritative rulings on Delaware law.

For information on the law firms and corporate service providers that authored these articles, please visit our acknowledgements page. The State of Delaware is grateful for their assistance.

Legal Disclaimer: The materials contained herein are intended to provide information in regard to the subject matter covered. The Delaware Department of State is not engaged in rendering legal, accounting, or other professional services. If legal advice or other professional assistance is required, the services of a qualified professional should be sought.

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