In a notable decision issued in June 2026, the Delaware Court of Chancery provided significant guidance on how conflicting forum selection clauses should be reconciled across related agreements.
The case, Kelly Roofing Holdings, LLC v. Flores, arose from the sale of a business and involved competing forum provisions in an Asset Purchase Agreement and a separate employment agreement for the president of the surviving company.
The court ultimately denied a motion to dismiss the Delaware proceedings, finding that the Asset Purchase Agreement contained a mandatory Delaware forum clause that governed the dispute.
At the same time, the court recognised that the employment agreement for the company president included a permissive forum selection clause that allowed lawsuits to be filed in Florida, creating the apparent tension at the heart of the dispute.
A key question before the court was whether language in the Asset Purchase Agreement stating that suits “may be instituted” in Delaware courts was permissive rather than mandatory in nature.
The court rejected that reading, pointing to subsequent language in the same paragraph stating that “each party irrevocably submits to the exclusive jurisdiction of such courts in any such action.”
The court reasoned that treating the provision as anything other than mandatory would render phrases about unconditional waiver of venue objections and inconvenient forum arguments entirely superfluous.
An important procedural point addressed in the ruling concerns Court of Chancery Rule 12(b)(3), with the court noting that when addressing a motion to dismiss, “the court is not shackled to the plaintiff’s complaint and is permitted to consider extrinsic evidence from the outset.”
On the question of the first-filed McWane rule, the court delivered clear instruction, stating that a court should “honor the parties’ contract and enforce the clause, even if, absent any forum selection clause, the McWane principle might otherwise require a different result.”
The president of the surviving company had been terminated shortly after the sale closed and subsequently filed suit in Florida under the employment agreement, while the buyers also filed proceedings in Florida.
The defendants argued that the Delaware forum clause was either permissive or had been waived by their own decision to file first in Florida under a separate agreement.
The court dismissed that waiver argument, finding that because the employment agreement expressly authorised Florida filings, pursuing that agreement in Florida did not constitute a waiver of the mandatory Delaware forum provision in the Asset Purchase Agreement.
The court drew a clear distinction between permissive and mandatory forum clauses, explaining that a permissive clause does not prohibit litigation elsewhere, while a mandatory clause containing clear language requires that “litigation will proceed exclusively in the designated forum.”
This decision should be read alongside other recent Chancery rulings, including Masimo Corp. v. Kiani, in which the court in April 2026 enforced a California forum selection clause contained in an employment agreement, overriding arguments rooted in Delaware entity governance.
A further comparison can be made with Mawson Infrastructure Grp., Inc. v. Mewawalla, in which the court granted a motion to dismiss fiduciary duty claims in favour of a Washington State forum clause, though that case involved no competing mandatory Delaware forum provision in a separate agreement.
The Kelly Roofing decision offers practitioners a concise but thorough analytical framework for navigating disputes where related agreements pull toward different jurisdictions simultaneously.