Disputes between shareholders and joint venture parties can be confrontational, time-consuming, distracting – and highly destructive of value. The parties are commercial actors, and in almost all cases they will be best served by using the legal framework to reach a commercial solution.
Advising on legal rights and obligations is only the starting point. A true understanding of the dispute’s commercial context is far more important in advising on a strategic approach, on the route to take, on dealing with the other side, and on resolution and exit strategies. From the outset, it is vital to have the outcome in mind.
Our clients gain from our firm’s experience in advising on corporate transactions, and the shared expertise of corporate and dispute resolution specialists.
Internationally, we act on the full range of shareholder, joint venture and M&A disputes, in situations where the parties wish to continue working together, where they cannot do so, and where they have terminated their relationship but still have unresolved issues.
Selected highlights of our recent experience include the following:
Venture capital firm
- unfair prejudice proceedings against a founder shareholder in whose business the client had invested. We obtained interim injunctions, followed by an order that the defendant immediately transfer all his shares to our client. We were able to expedite the proceedings, with the trial starting just four months after the action commenced. Judgment in our client’s favour was upheld in the Court of Appeal.
- both litigation and arbitration against a joint venture partner, including a dispute over the interpretation of the joint venture agreement, a claim for specific performance of buy-out provisions, and an unfair prejudice petition. The litigation included hearings in the High Court and Court of Appeal.
- successfully defending a multi-billion euro claim in the English High Court that a third party was entitled to receive either a one third stake in the clients’ telecoms company, or equivalent financial compensation.
Retail joint venture partner
- pursuing arbitration proceedings in London against a major retail company, seeking compensation for losses suffered on the termination of a joint venture in the Middle East.
- acting in an arbitration concerning a contractual put option exercised by our client to sell shares in the former operating company of a mobile telecoms business to a Russian operator.
- acting for the respondent in arbitration proceedings arising out of the termination of an agreement for the joint development of a product in Phase II clinical trials.
Financial joint venture partner
- acting in arbitration proceedings between shareholders over rights and obligations in relation to a credit card joint venture.
Directors of a joint venture company
- advising directors of a satellite services company, appointed by one party to the joint venture, on dealing with improper conduct by directors appointed by the other party.
Food retail company
- acting in relation to various completion accounts disputes arising from a programme of corporate disposals.
- acting for a city-owned holding company in an arbitration, under a joint venture agreement, over the buyback of an investment in a utility company.
Shareholder disputes can arise out of many types of disagreement - from the commercial direction of the business, to the accounting rules under which post-completion payments are to be quantified.
Our practice includes advising on:
- disputes in joint ventures and quasi-partnerships, such as often exist between venture capital or private equity houses and the businesses in which they invest
- claims of unfair prejudice, for instance where a minority shareholder is mistreated by the majority, or the majority shareholder is frustrated by the minority’s improper interference
- arguments over the interpretation of Shareholders’ Agreements and Articles of Association and the powers of shareholders, directors and other parties
- questions over the use of procedures such as drag-along clauses or compulsory transfer mechanisms
- misrepresentation claims where one party wishes to have the transaction set aside, or to recover compensation
- rectification claims where the contractual documents do not accurately record the agreement between the parties
- warranty and indemnity claims for the payment, or reimbursement, of money after a transaction has taken place
- actions under restrictive covenants, to enforce non-compete obligations against former partners
- disputes over completion accounts, where the amounts to be paid between the parties post-transaction cannot be agreed.
We use all the processes available for dispute resolution, including mediation, expert determination, arbitration and litigation.