On November 5, 2013, the Delaware Court of Chancery in Edgen Group Inc. v. Genoud denied a motion for a temporary restraining order to enjoin a stockholder from pursuing a claim in Louisiana against a Delaware corporation that had a forum-selection clause in its certificate of incorporation. The court recognized the validity of the forum-selection clause, but advised that the proper procedure for the corporation is to move to dismiss in the foreign forum.

The case arose out of the proposed merger between Edgen Group Inc. (Edgen) and Sumitomo Corporation. For a summary of the merger agreement, see What's Market, Sumitomo Corporation/Edgen Group Inc. Merger Agreement Summary. The defendant, Jason Genoud, a Canadian resident and stockholder of Edgen, had brought a claim for breach of fiduciary duty against Edgen's board in Louisiana, where Edgen is headquartered, rather than in Delaware, where Edgen is incorporated. In addition to its Delaware incorporation, Edgen's certificate of incorporation included a forum-selection clause selecting Delaware as the exclusive forum for breach of fiduciary duty claims against its directors. In response to the Louisiana action, Edgen filed suit in the Court of Chancery seeking a temporary restraining order to enjoin Genoud from pursuing his claim in Louisiana. It also filed a motion to dismiss in the Louisiana proceeding.

The Court of Chancery, in a bench ruling, denied the motion to enjoin, despite finding that Genoud clearly had facially breached the forum-selection clause. However, the court decided that issues of inter-forum comity would be implicated if it were to grant a motion that purports to be binding on a court in another jurisdiction. In reaching that decision, the court relied on its recent decision in Boilermakers Local 154 Retirement Fund v. Chevron Corporation, which upheld the validity of forum-selection clauses in a corporation's by-laws (see Legal Update, Delaware Court of Chancery Upholds Boards' Unilaterally Adopted Forum Selection By-laws). The Edgen court noted that under Chevron, the forum-selection clause is to be enforced in the first instance by the non-contractually selected forum, which here would be the Louisiana court, and not by the contractually specified court through an anti-suit injunction.

The Court of Chancery also expressed reluctance over issuing an anti-suit injunction because the enforcement of forum-selection clauses in by-laws and charters is an evolving issue that the Delaware Supreme Court has yet to weigh in on. The court here noted that the appeal in Chevron had been voluntarily dismissed, a development discussed in Legal Update, Technicalities and Consequences in Delaware By-laws. The Court of Chancery therefore hesitated to apply the anti-suit injunction as the "initial tool of judicial first resort" for forum-selection clauses appearing in by-laws and charters when this approach only became common for enforcing forum clauses in other types of bilateral agreements after three decades of interpretation by the Delaware courts.

In balancing the equities of a decision to issue an injunction, the court also noted that the potential harm to Edgen as a result of a denial of the injunction was small, given that a status conference was scheduled in Louisiana for the next day.

The Edgen decision sheds light on an important procedural question, which is precisely what a corporation with a forum-selection clause is to do when a stockholder blatantly ignores it and files suit in a nonselected forum. The view of the Delaware Court of Chancery is that, until the Delaware Supreme Court provides further guidance, the proper approach is to move to dismiss in the nonselected forum. The more aggressive step of filing an anti-suit injunction in Delaware will, as of now, be met with reticence.