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Research from the Business Accountability and Responsibility Centre (BARC)
As part of the increasing popularity of arbitration as a method of dispute resolution, recent years have seen the increased inclusion of some form of arbitration clause in corporate governance documents. The recent decision of the Court of Appeal in Fulham Football Club [1987] Ltd v. Richards and Others [1] has confirmed the possibility of arbitration as a method of resolving intra-company disputes in England and Wales, and has been hailed as demonstrating the pro-arbitration stance of the English courts.
How representative, then, is that approach to the resolution of shareholders' claims? The present contribution seeks to set arbitration of shareholder disputes in a broader international context and comparative context. Company structures and legal tools for dealing with shareholder disputes vary considerably between legal systems, with a consequent impact on the appropriateness of arbitration. Arguments about the utility of arbitration thus take on a somewhat different shape in each jurisdiction.
The first part of this contribution (I) examines the structural differences between jurisdictions as to their corporate governance mechanisms, with a view to identifying the extent to which litigation and arbitration are potentially significant governance instruments. It examines the situation with reference to both public and private companies, since debates about the utility of arbitration are present in both contexts. A second part (II) then investigates more closely the alternatives to litigation and arbitration that can have a prominent role in some jurisdictions. In particular it highlights the part played by public bodies in ensuring good corporate governance. It also highlights the fact that, although this issue is concerned in particular with the liability of directors, in some jurisdictions conflict is shifted to relationships between shareholders inter se . In Part III the focus is on the choice between litigation and arbitration, examining:
- the extent to which various legal systems consider intra-corporate disputes to be arbitrable ratione materiae ; and
- the enforceability of arbitration agreements.
Part IV then puts the findings of the previous sections into perspective and highlights the circumstances in which arbitration is most likely to be used, while Part V relates that information back to the Fulham case and considers the implications for the future development of the law.
I. Contrasting...