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Courts Differ on Enforceability of Unilaterally Adopted Forum Selection Bylaws

While forum selection bylaws have become increasingly popular with US public companies, courts in Delaware and Oregon recently came to opposite conclusions on whether such bylaws, when unilaterally adopted by a board of directors concurrently with the approval of a merger transaction, should be enforced. In August, an Oregon court found such a bylaw unenforceable as against public policy. A few weeks later, in September, a Delaware court found a similar bylaw enforceable and dismissed the plaintiff's complaint. This split among the courts highlights that even though there is increasing consensus that unilaterally approved forum selection bylaws are facially valid, courts may scrutinize the particular circumstances under which such bylaws are adopted.

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