Court System Boosts Delaware’s Legal Standing
Published Apr 16, 2006
Delaware’s Court of Chancery, the site of many major trials, is housed in the New Castle County Courthouse.
Delaware is lauded for its tax-free shopping, user-friendly incorporation process and diverse economy. But corporate lawyers also praise Delaware for its legal climate.
In 2006, the state’s legal system ranked first in the nation for the fifth consecutive year, according to an annual survey by the Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce.
In large part, credit Delaware’s Court of Chancery, established in 1792. “It is the premier court in the country for the resolution of corporate litigation,” says Michael Bonkowski, an attorney with Saul Ewing in Wilmington.
One of three in the nation, the Court of Chancery is an equity court with five judges who can tailor remedies to particular circumstances. There is no jury.
Judges are experts in corporate law. “The judges are incredibly smart and aware of the business world,” says Bonkowski, whose litigation practice focuses on corporate, partnership and non-competition disputes in the Court of Chancery.
With no criminal or tort cases to create backlogs, the Court of Chancery can respond promptly. When the son of William Hewlett sought to block Hewlett-Packard’s Co.’s purchase of Compaq Computer Corp., the court ruled in HP’s favor after a three-day trial.
The Court of Chancery has served as the setting for other high-profile trials, including cases involving the merger of Time Inc. with Warner Communications and Viacom’s purchase of Paramount Communications.
In 2005, the court determined that The Walt Disney Co. board of directors did not act in bad faith in the hiring or termination of former president Michael Ovitz. The $140 million severance package, however, fell “significantly short” of exemplary corporate governance, judges noted.
It’s easy to see why corporations seek to take their case to Delaware. “From a business perspective,” Bonkowski says, “Delaware is considered topnotch.”
Story by Pam George
Photo by Antony Boshier
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