The Market Value of Partisan Balance
What accounts for Delaware’s remarkable dominance in the market for corporate charters? For some influential observers, part of the answer lies in the state’s unique commitment to politically balanced courts. Alone among U.S. states, Delaware requires that only a bare majority of judges on nearly all its state courts hail from the same political party […]
Brian D. Feinstein is an Assistant Professor of Legal Studies at The Wharton School of the University of Pennsylvania, and Daniel J. Hemel is a Professor of Law at NYU School of Law. This post is based on their recent article forthcoming in the Northwestern University Law Review, and is part of the Delaware law series; links to other posts in the series are available here.
What accounts for Delaware’s remarkable dominance in the market for corporate charters? For some influential observers, part of the answer lies in the state’s unique commitment to politically balanced courts. Alone among U.S. states, Delaware requires that only a bare majority of judges on nearly all its state courts hail from the same political party (the “bare-majority limitation”). It also requires the remaining seats on several of its most important courts—including its supreme court and court of chancery—to be filled by members of the other major party (the “other-major-party reservation”). Both partisan balance requirements are enshrined in the Delaware Constitution (although since last year, the state has taken the position that the other-major-party reservation is unenforceable). In practice, these requirements ensure that a roughly equal number of Democratic and Republican judges sit on the state’s courts.
