Disputes within and concerning foundations are characterized by their own special features. This is largely due to the fact that such disputes are often related to family conflicts and therefore involve a cross-section of legal matters. At the same time, however, emotional and personal issues increasingly play a decisive role.
In the past, it has often been the case that such disputes have been brought before state courts with a high public profile. This not only affects the interest in a discreet handling of sensitive conflicts, but even more so the cooperation of all parties involved within a foundation after a conflict. After all, a legal dispute usually ends with one party being defeated. If this happens in public and if sensitive issues are involved, the loss of face is all the more severe.
One of the main areas of focus of our law firm is representation in such disputes.
One of the main areas of focus of our law firm is representation in such disputes. Our experience shows that the various conflict situations can be roughly divided as follows:
- Beneficiaries against the foundation board
- Beneficiaries among themselves
- Beneficiaries against the founder
- Beneficiaries against the foundation
- (Former) foundation councilor against the foundation
In practice, the incorporation of a multi-level dispute resolution clause in the foundation documents has been established.
In practice, the incorporation of a multi-level dispute resolution clause in the foundation documents has been established. Such a clause attempts to minimize the escalation spiral as much as possible in order to ensure cooperation within the foundation structure even after the dispute.
As a rule, binding negotiations are therefore scheduled first and possibly even an optional body of the foundation is authorized to make recommendations for the settlement of the dispute. If this fails, the next step is to appoint a mediator who is to lead the dispute to an agreement within a predefined period. If this attempt also fails, the final instance of a court of arbitration is usually responsible for making a final decision on the dispute within one instance. In this context, the selection of the arbitrators plays an important role, which is why experienced arbitration lawyers should be involved at this stage.
Caution is advised in this context only in the case of regulatory proceedings, which, as in Austria, are not subject to arbitration. Thus, in Liechtenstein, the dismissal of foundation council members can only be sought in the competent state court. In part 2 of this series we examine the sensitive topic of inheritance law.
