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Sep 4, 2014

DELAWARE COURT RULES ON FORUM SELECTION CLAUSE IN BYLAWS

The Delaware Court of Chancery ruled in City of Providence v. First Citizens BankShares, Inc. (Del. Ch. September 8, 2014) that a board of a Delaware corporation may adopt bylaws that designate a forum other than Delaware for internal disputes.

In this case, the plaintiff City of Providence challenged a forum selection clause that was adopted by defendant First Citizens BancShares, Inc., a Delaware corporation headquartered in Raleigh, North Carolina and selected the United States District Court for the Eastern District of North Carolina instead of the state or federal courts of Delaware.

The Court ruled that enforcing the forum selection clause is no unreasonable or unjust and therefore granted the defendantís motion to dismiss.

 

 

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