How Does the Delaware Chancery Court Work?
The Delaware Court of Chancery is a trial court of exclusive jurisdiction tasked with hearing all equity-related matters. These matters consist mainly of internal matters, corporate matters, land disputes, real estate disputes, trusts, and other fiduciary matters. The court also handles all commercial and contractual disputes as well as any additional cases concerned to it by the General Assembly.
Essentially, the chancery court’s general equity jurisdiction is measured in par with the equity jurisdiction of the High Court of Chancery of Britain. This is because the court was established at a time before the separation of the American colonies. In old English law, the Chancellor handles cases that are not within the mandatory jurisdiction of the king.
The Delaware Court of Chancery also has jurisdiction over several other matters including;
- Cases involving guardianship for minors
- Matters pertaining to guardians for properties owned by mentally and physically challenged state residents
- Corporate divorce cases
Delaware Chancery Court is a non-jury trial court. As such, equity cases that require jury trials are transferred to the Superior Court (10 Del. C., 369). During a case hearing in the Chancery Court, a chancellor hears and decides the case. Appeals from the court go to the Supreme Court.
It is significant to note that the Delaware Chancery Court is directed by the Delaware Business Judgment Rule. Pursuant to the rule, the court respected the decisions of a company’s board of directors. On the other side, directors are tasked with making independent and informed decisions with the absence of self-dealing. The Chancery Court had the power to remove or penalize directors who engage in fraudulent activities or shirk their loyalty to the company.
The majority of high profile cases heard in the Chancery Court are derivative suits. Derivative suits are cases where shareholders sue the Board of Directors. Such suits are governed by the Chancery Court Rule 23.1 and Delaware General Corporation Law § 327.
The majority of the corporate litigation handled in the Delaware Chancery Court are trust, estate, and corporate matters. Typically, the interest of a company’s stakeholders is the money a company makes. On the other hand, the directors are charged with dictating how the money realized by the company will be spent as well as deciding how competitors will be legally handled. When the directors and shareholders have a conflict of interest, the case is brought before the Delaware Chancery Court.
The Delaware Court of Chancery consists of five justices; the head of the Court of Chancery is known as the Chancellor while the other four are called Vice Chancellors. While Chancellors must not be lawyers, they must be learned in corporate law. Other additional requirements include being state residents, of adult age, and being younger than the 70 years age of retirement.
Delaware Chancellors are nominated by the Governor and confirmed by the Delaware Senate. They serve 12-year terms after which they may be re-appointed. The chancery court is also composed of two Masters in Chancery chosen by the Chancellor. All Chancellors and Masters must be members of the Delaware Bar Association.
Chancery cases are required to be filed with a legal practitioner’s assistance. However, the Register in Chancery provides an alternative filing means for plaintiffs without attorneys.
Chancery court case files are public records that can be reviewed or copied by members of the public, provided that the requested documents are not exempted by law or sealed by court order. The court rules insist that individuals requesting access to view chancery court records must submit a written or oral request that provides the requesters’ names, addresses, phone numbers, and valid government-issued identification documents.
The Register of Chancery is the custodian responsible for keeping and disseminating Chancery Court records. Requesters may visit the court where the case of the request was filed to locate desired chancery records. If the requester is unsure or places a request for chancery records at the wrong court, the Register of Chancery has the responsibility to forward the request to the appropriate court or custodian. Below are the addresses and contact details of the three chancery courts in Delaware: