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DE Court Rejects Argument That Exclusive Forum Selection Clause Is Unenforceable

By Robert S. Reder
July 29, 2010

In Baker v. Impact Holding (C.A. No. 4960-VCP (Del. Ch. May 13, 2010)), the Delaware Court of Chancery recently validated a forum selection clause in which stockholders of a Delaware corporation agreed to the exclusive jurisdiction of state and federal courts located in Texas to adjudicate disputes over the terms of their stockholders agreement. In so ruling, the court rejected a public policy argument that parties to a stockholders agreement may not contract away the right of Delaware courts to oversee disputes between stockholders of a Delaware corporation. The court also found the clause applicable to an individual who controlled entities that were parties to the stockholders agreement, even though that individual did not sign the agreement in his individual capacity.

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