Ido Baum is an Associate Professor at the Haim Striks Faculty of Law at the College of Management-Academic Studies (Colman); and Dov Solomon is an Associate Professor of Law at Ramat Gan Law School. This post is based on their recent paper, and is part of the Delaware law series; links to other posts in the series are available here.
Delaware’s famous corporate law and its highly respected specialized Court of Chancery attract entrepreneurs from all over the world, who choose the state as their locus of incorporation and litigation forum, and global investors who choose Delaware law as the law governing their corporate investments and mergers and acquisitions (M&A). The accepted wisdom is that the superiority of Delaware’s corporate law is the result of an interstate competition between corporate laws in the United States and that the Court of Chancery’s contribution to Delaware’s advantage in the competition for the hearts, minds, and pockets of incorporation decision-makers is paramount.
Corporate law scholars argue that competition exists not only within the United States but also on the global playing field, with jurisdictions vying to attract entrepreneurs to incorporate domestically and global investors to adopt domestic corporate laws as the laws governing investment agreements. Other scholars argue that this phenomenon is not a result of competition but rather a process of global convergence of laws. This interjurisdictional process makes Delaware a significant global norm-exporter in the field of corporate law because jurisdictions emulate some of its corporate law. The nature of this competition, or convergence, and whether it generates better or worse corporate laws is a matter of continual debate.
