Case of the Day: Narayanan v. Sutherland Global Holdings, 2016 Del. Ch. LEXIS 100 (Del. Ch. Ct. July 5, 2016)

Summary:

Plaintiff was an officer and director of Defendant Sutherland, which made certain investments in lands located in India. The land transaction engendered a bribery scandal in India, which in turn created a criminal investigation against the plaintiff in India and a civil lawsuit against the plaintiff in the United States. By then, the plaintiff had retired from working. The plaintiff demanded the defendant corporation to advance the funds for his legal defense pursuant to an indemnification agreement with the defendant. The defendant refused, claiming that the plaintiff violated the corporate bylaws and was not entitled to indemnification.

The court found that, under Delaware's objective theory of contracts (which requires the court to interpret a contract to mean what a reasonable person in the position of the parties would have thought it meant,) the indemnification agreement and corporate bylaws are not conjunctive. 

Takeaway:

My next forthcoming academic paper is concerning equity jurisprudence, so it is nice to see the Delaware Chancery Court--one of the last remaining standalone equity courts in America--in a case involving an Asian litigant.

The thesis of my forthcoming paper is that equity courts can reach very far beyond its territorial jurisdiction compared to law courts. This case is a good example: a Delaware action that is certain to have consequences in India.