Delaware Law Does Bar Mandatory Arbitration of Federal Securities Claims

In an earlier post for the Harvard Forum on Corporate Governance, Freshfields lawyers Doru Gavril and Mia Tsui argue that, “contrary to conventional wisdom,” Delaware law permits public companies to adopt mandatory arbitration clauses for federal securities claims in their charters and bylaws. But their hyper-textual reading of DGCL § 115(c) is wrong. It conflicts with the statute’s own legislative synopsis, the parallel architecture between DGCL § 115(a) and (c), and the unanimous reading of the corporate bar. The Federal Arbitration Act preemption argument they advance is not new, and it is not the slam dunk it claims to be.

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