Since corporate law usually involves monetary rights in the wider sense, conflicts in this area are quite common. These are often resolved before arbitration tribunals rather than state courts. Disputes in this area may concern the existing corporate relationship or former shareholders. The best-known case of the latter disputes is the so-called ‘post M&A disputes’. Arbitration clauses in articles of association are therefore the rule rather than the exception.
Since a company usually consists of several shareholders, questions often arise regarding the binding effect of an arbitration clause in articles of association.
As a rule of thumb, all shareholders should at least be duly notified of the arbitration proceedings and have the opportunity to participate in the appointment of the arbitrators.
The problem in this context is twofold:
On the one hand, an arbitral award should be able to achieve a binding effect on all shareholders in order to have a formative effect on the corporate relationship. As a rule of thumb, all shareholders should at least be duly notified of the arbitration proceedings and have the opportunity to participate in the appointment of the arbitrators. In this regard, particular care is required to avoid the risk of an arbitral award being set aside due to serious procedural defects. For example, the Austrian Supreme Court has recently ruled that in the case of partnerships, the arbitration clause itself must provide for the mandatory involvement of all partners in the constitution of the arbitral tribunal.
On the other hand, the question arises as to whether shareholders who join the company at a later date are automatically covered by the arbitration clause in the articles of association or whether a separate declaration of submission is required. The binding of all shareholders to the arbitration clause contained in the articles of association is crucial to prevent a fragmentation of the corporate relationship in the event of a dispute.
Overall, arbitration offers many advantages for resolving disputes in corporate relationships due to its speed and the expertise of the arbitrators. However, the outline of the previous topics shows that these advantages can only be leveraged with sufficient knowledge of the subject matter. A careful approach based on expertise is therefore essential.
The fourth and final part of our series is dedicated to the important topic of the family constitution.
