How to prepare for arbitration in the case of a shareholders’ dispute?

A corporate shareholder in a joint venture is prevented from managing the joint venture in breach of the shareholders’ agreement which contains an arbitration clause.

A shareholder of a joint venture anticipates a dispute with its shareholders concerning the governance of the joint venture.

A minority corporate shareholder in a joint venture is being removed from the company’s board of directors and is refused payment of dividends. The company wishes to protect its interests and thus prepare for possible arbitration proceedings.

Our client's challenge

Protecting the commercial interests of a company in the context of a shareholders’ dispute and preparing for potential arbitration proceedings

Three companies in the hydrocarbons sector have set up a joint venture to operate an oil concession. Following a conflict between these shareholders, the minority shareholder was removed from the board of directors and refused payment of dividends.

In order to defend its interests, it plans to initiate arbitration proceedings in accordance with the arbitration clause contained in the shareholders’ agreement between the partners. The minority stakeholder would like advice on the preparation of this procedure and, in the meantime, on the implementation of preventive measures to protect its interests.

Our way

Advising and supporting our client in protecting its business interests and preparing for arbitration

In this type of conflict, it is essential for the parties involved to act in accordance with the rules of corporate governance, in order to preserve their rights.

To this end, the minority company being excluded from the joint venture should continue to participate in the life of the joint venture and to document its various stages. This means collecting the minutes of these meetings and the invitations to attend them whenever possible, and taking part in all board meetings and shareholders’ meetings.

All irregularities in the management and governance of the joint venture, as well as breaches of the articles of association or by-laws, must be brought to light as soon as they occur, so as not to be accused of failing to challenge them in due time during the arbitration proceedings. The joint venture’s accounts should also be examined to identify any financial irregularities.

All these steps will protect the company’s interests throughout the life of the joint venture, prior to any arbitration proceedings, and allow the company to obtain the necessary evidence in the event of a dispute.

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