Delaware Court of Chancery
The
Delaware Court of Chancery is a
court of
equity in the
United States state of
Delaware.
The history of the Court of Chancery stems back to the English
common law system, in which separate courts were established to hear
law and
equity matters. English law courts included the
Court of King's Bench (or Queen's Bench when the monarch was female), the
Court of Common Pleas, and the
Court of the Exchequer. The sole English court of equity was the
High Court of Chancery.
Delaware, along with the remainder of the original
Thirteen Colonies, imported the English concept of
common law. This included establishing a separate Court of Chancery. As the legal system evolved in England, the English High Court of Chancery was eventually abolished and its powers merged into the law courts. Most American jurisdictions followed suit. However, Delaware did not, and the Court of Chancery continued to develop a substantial body of decisions in equity.
The Court's jurisdiction is a hybrid of constitutional provisions, statutes, and caselaw. As an initial matter, it should be noted that it is one of Delaware's five constitutional courts, along with the
Supreme Court, Superior Court, Family Court, and Court of Common Pleas.
Article IV, Section 10 of the Delaware Constitution establishes the Court and provides that it "shall have all the jurisdiction and powers vested by the laws of this State in the Court of Chancery."[
1] The Court has one Chancellor, who is the chief judicial officer of the Court, and four Vice Chancellors. It also has one Master in Chancery, who is assigned by the Chancellor and Vice Chancellors to assist in matters as needed.
Equitable jurisdiction
Title 10, Section 341 of the Delaware Code states that the Court "shall have jurisdiction to hear and determine all matters and causes in equity." [
2] Subsequent decisions have held that the Court's equitable jurisdiction is the same as that held by the English High Court of Chancery at the time of American independence in
1776.
The Court's most significant power is its ability to issue preliminary and permanent
injunctions and
temporary restraining orders. This is frequently exercised in the context of disputes involving
mergers and acquisitions or sales of corporations, wherein a corporate suitor or a shareholder will attempt to enjoin the sale or merger of a corporation, claiming that their stock value has been diluted or that they have superior rights to purchase the corporation. In a typical sale or merger dispute, a plaintiff will seek a temporary restraining order, sometimes on an
ex parte basis, to prevent the transaction from taking place and preserve the
status quo. If the Court grants that relief, the plaintiff will then seek a preliminary injuncton to maintain the current state of affairs until a trial can take place.
Title 10, Section 342 of the Delaware Code provides that the Court shall not hear any matters for which an adequate remedy exists at law or which can be heard by any other Delaware court.[
3] As a practical matter, this means that the Court cannot grant relief in the form of money damages or where another court has coterminous jurisdiction. One might fairly ask why anyone would bother enjoining a corporate transaction if the Court cannot award damages. However, to corporations, time is money, and if a merger, sale, or acquisition is pending, every day it is prevented by the Court from going forward with the transaction is a day that money is lost. Consequently, many such suits are settled with money payments, particularly in the context of shareholder suits, with the Court's only involvement being to approve the settlement.
Special jurisdiction
Apart from its equitable jurisdiction, the Court has jurisdiction over a number of other matters. First, the Court has sole power to appoint guardians of the property and person for mentally or physically disabled Delaware residents. Similarly, the Court may also appoint guardians for minors, although the Family Court has coterminous jurisdiction over such matters.
Will contests and disputes over interpretations of
trusts are also heard by the Court.
Trials
The Court sits without a jury. All issues of fact are determined by the presiding Chancellor or Vice Chancellor. The Court has the discretion to appoint an advisory jury if it so desires, but this power is practically never exercised.
*William B. Chandler, III, Chancellor
*John W. Noble, Vice Chancellor
*Stephen P. Lamb, Vice Chancellor
*Leo W. Strine, Jr., Vice Chancellor
*Donald F. Parsons, Jr., Vice Chancellor
*Sam Glasscock, III, Master in Chancery
*
Delaware Court of Chancery*
shareholder litigation in Delaware courts
