What is the Delaware Court of Chancery? Twitter to battle Elon Musk in 230-year-old court

The court will have no jury or cameras during the trial in October and the judge will reportedly not be bound by the law, either


                            What is the Delaware Court of Chancery? Twitter to battle Elon Musk in 230-year-old court
Elon Musk is heading to Delaware Court of Chancery in October (Dimitrios Kambouris/Getty Images for The Met Museum/Vogue and Delaware Court of Chancery website)
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Twitter’s battle with Elon Musk is officially heading to court in October after Musk tried to walk away from a $44 billion agreement to buy the company, stating that there is a “breach of multiple provisions of that Agreement,” as Twitter failed to provide this information about fake accounts. And that’s where a 230-year-old court, Delawares Court of Chancery, which saw some of the world’s biggest business battles, comes into the picture. The court will have no jury or cameras. Moreover, the judge will not be bound by the law, either, as per reports.

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As quoted by NY Post, Phil Shawe, CEO and co-founder of TransPerfect, who has had matters heard before this court, said, “Cases in the Delaware Chancery are really heavily based on your attorney’s relationship with the given chancellor that’s handling your case. The people you’re arguing with in court, you’re also having dinner parties with.” Shawe also pointed out Hunter Biden's 2018 email to Chinese energy company CEFC, which was found on his abandoned laptop, where he wrote, "I will bring suit in the Chancery Court in Delaware — which as you know is my home state and I am privileged to have worked with and know every judge in the chancery court." He said Biden’s email sums up the reputaion of the court, that might rule against Musk and enforce “specific performance.” NY reports suggest that there can be legalese for requiring him to consummate his original agreement to buy the site for $54.20 per share instead of just paying a fine and walking away, as it is going to be judged by Delaware Court of Chancery judge Kathaleen McCormick. Reports by Reuters stated that she "has a no-nonsense reputation as well as the distinction of being one of the few jurists who has ever ordered a reluctant buyer to close a US corporate merger."

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What is the Delaware Court of Chancery?

According to the official website of the court, that came into existence in 1792, Delaware Court of Chancery is one of three courts established by the State Constitution, alongside the Supreme and Superior Courts. It is known as a court of equity, rather than a court of law, because it allows for more flexible resolutions than the law formally provides.

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The court, that consists of one chancellor and six vice-chancellors and often hear cases related to wills, adoptions, divorces, among others, was chosen by Twitter which lodged the 62-page lawsuit against Musk, as the social media company was incorporated here in the year 2007 and because the court has deep experience in business disputes.

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According to the Delaware Division of Corporations, "There are more than 1.8 million companies registered in Delaware, with the First State adding more than 336,000 businesses entities to its ranks in 2021 alone."

Musk's relationship with Court of Chancery

This is not the first time Musk will be facing a business battle at this court. Earlier this year, he won a shareholder lawsuit, claiming he engineered a deal by forcing Tesla Inc to buy SolarCity for $3 billion, in which Musk was the largest shareholder and also served as board chairman.

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The October Trial

As per revious reports, Musk wanted th trial to start in February 2023. However, Twitter, that asked for shorter time frame, got granted. Now, the trial, which will be for five days, will begin in October fo this year. The exact dates have not been revealed yet.