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15 May 2017

Arbitration, also an option for settling a company’s internal disputes?

Lutgarde attended the ICC Young Arbitrators Forum about arbitrating intra-corporate disputes.

Intra-corporate disputes are disputes about a company’s internal affairs between e.g. shareholders, between shareholders and the company or between shareholders and third parties like investors.

The advantages of arbitration over court litigation remain when intra-corporate disputes are at stake. However issues can arise e.g. in respect of the arbitrability of (all) intra-corporate disputes and third parties’ rights. Third parties’ rights can jeopardize the confidentiality of intra-corporate disputes.

At the forum the different aspects of the above mentioned advantages and challenges for arbitrating intra-corporate disputes were discussed.

In an intra-corporate context, the well-known advantages of arbitration like its speed and flexibility are of great importance as a merger and acquisition process often calls for a fast track solution. The ability to appoint one or several arbitrators moreover allows to take into account the nationality and often different (cultural) backgrounds of the parties.

However, not all intra-corporate disputes can be arbitrated. Some jurisdictions prohibit arbitration for matters relating to the public order or public policy or claims that effect third parties like claims relating to the liquidation of a company. For the same reason absolute confidentiality cannot always be guaranteed. Publicly listed companies are under a duty to disclose certain types of information.

Introducing an arbitration clause in e.g. the Articles of Association, shareholders agreements or share purchase agreements therefore requires careful consideration.

Please contact Lutgarde Eraly for more information about arbitrating intra-corporate disputes.

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