Making Business Our Business
Much has been written about Elon Musk—eccentric billionaire, CEO of some of the most innovative companies in the world and… future owner of Twitter?
While the nuances of this deal are daily fodder for folks on social media, in reality, there is a specialized court where legal issues and challenges related to Musk’s acquisition of the social media giant will be hashed out: the Delaware Court of Chancery.
But first, some background. Delaware’s Chancery Court has existed since 1792, although the principles and concepts upon which the court is based date back to 16th century England. By its own description, the court is “widely recognized as the nation’s preeminent forum for the determination of disputes involving the internal affairs of the thousands upon thousands of Delaware corporations and other business entities through which a vast amount of the world’s commercial affairs is conducted. Its unique competence in and exposure to issues of business law are unmatched.”
If you’ve ever wondered why so many companies are incorporated in Delaware, there’s a good chance it has to do with the Chancery Court. The state has developed an international reputation for the quality of its corporate governance laws and business dispute resolution system. These attributes, along with offering certain tax benefits to corporations, make incorporating in Delaware attractive.
Companies incorporated in Delaware include everything from DuPont and Nassau Valley Vineyards to—you guessed it—Twitter.
Already, litigation has been filed in the Delaware Court of Chancery by a Florida pension fund seeking to block Musk’s acquisition of the social media platform. We can expect other legal actions to make their way through this court as well.
Specialized business courts—like the Delaware Court of Chancery—can be an important addition to a state’s economic foundation. These courts quickly and expertly handle complex business litigation, freeing up other courts to handle other types of cases.
So, what’s stopping business-friendly Texas from adopting a similar specialized court to bolster our position as the best place to live, work and run a business? Not much, other than action by the Legislature.
HB 1875 (Landgraf) was filed in the 2021 legislative session, creating a specialized business court in the Lone Star State. That bill, however, did not make it through the process. Additionally, last year, the TLR Foundation conducted research and published a paper on the makeup and characteristics of various specialized business courts across the country.
TLR has advocated for the creation of this type of specialized business court in Texas, including supporting Rep. Landgraf’s bill last session. We will be discussing this issue with lawmakers ahead of the 2023 legislative session because it is clear to us that a court of this caliber can have a significant impact on Texas’ national economic reputation.