THE BRIEF IN S TITUTE F O R LAW AN D ECONOMICS
A Birds-Eye View of Tiny Delaware’s Huge Role in Corporate Law The shaping of corporate law is like the formation of the Grand Canyon, the Honorable William B. Chandler III said during Penn Law’s Distinguished Jurist Lecture in October. It’s slow and incremental, with a river of issues and players carving out the doctrine. Chandler, who stepped down as Chancellor of the Delaware Court of Chancery last summer, played a pivotal role in that gradual development (of the law, not the canyon). He spent 22 years on the Chancery Court bench, as vice chancellor and then chancellor, and issued more than a thousand opinions. The Chancery Court is America’s business trial court, Penn Law professor and co-director of the school’s Institute for Law and Economics Michael Wachter noted in his opening remarks, adding that Delaware corporate law is a model for the rest of the world and Chandler had far-reaching influence.
Chandler outlined the history of corporate
law in Delaware, including the state’s rise to
Honorable William B. Chandler III explains the prominence of Delaware courts.
prominence thanks to favorable laws. The rise of Delaware corporations was “much like the uplift
effectively blocking a $5.9 billion hostile bid from Air Products.
of the Colorado plateau,” he said. “It put Delaware directly in
Throughout the lecture, sponsored by the Institute for Law
the path of the river of corporate law issues.
and Economics, Chandler came back to the changeable, un-
“The river may cut through and shape the rock, but the rock
predictable nature of financial markets and the influence of the
contains and holds the river. So too with Delaware corporate
academic community in judicial decision-making, while stress-
law — the doctrine contains and holds issues and participants,
ing that the role of the court is to answer the specific question
even as they cut and form the doctrine.”
before it.
Citing specific doctrine, Chandler talked about the creation
of the shareholder rights plan dubbed the “poison pill,” a strat-
satisfying. But trying to construct broad doctrine in the abstract
egy used by companies to protect themselves from hostile take-
is dangerous.”
overs, and the derivative “pills” that stemmed from it over the
The Delaware Court of Chancery is now led by Penn Law
years as the law evolved bit by bit. In a closely watched decision
adjunct professor Leo Strine L’88.
“A narrow ruling is preferable,” he said, “though maybe less
in last year’s Air Products & Chemicals, Inc. v. Airgas, Inc., for example, Chandler addressed the question of who gets to decide if a corporation is for sale by upholding Airgas’ poison pill and
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