Corporate disputes settlement

Jan, 16 2020

Today legal entities while carrying out it’s business activities, often face not only conflict situations with contractors, partners and competitors but also disputes within one organization. Such disputes are one of the most widespread in the companies’ sphere of activity and is called corporate disputes.

Corporate disputes are usually the result of unilateral or mutual claims from some company members to others. Cases on corporate disputes are considered as he most complex category of cases when they are reviewed by the courts due to the need of a detailed study of the actual dispute circumstances. Moreover, such conflicts often go beyond the civil proceedings due to the possible criminal prosecution of the parties to the dispute.

1. Legal aspects of corporate disputes settlement

Corporate disputes are separated in a special category of cases in Russian legislation, which highlights its importance for business.

According to art. 225.1. of a Commercial Procedure Code of the Russian Federation, Arbitration courts consider cases concerning the creation of a legal entity, its management, or participation in a legal entity, which is a commercial organization, as well as in a non-commercial partnership, association (union) of commercial organizations, another non-commercial organization, uniting commercial organizations and (or) individual entrepreneurs. At the same time, the issue of determining of a case as a corporate one is complicate: the dispute can be complex and contain both elements of a corporate dispute (within the same organization) and non-corporate (between different organizations), which entails the ambiguity of its category interpretation .

According to Russian legislation, corporate disputes are subordinate to arbitration courts, but such disputes can also be considered by arbitration tribunals. However, this approach is used infrequently, and basically are considered in arbitration courts.

According to existing law enforcement practices with regard to chapter 28.1 of Arbitration Procedural Code of the Russian Federation, the dispute is recognized as a corporate one in the following cases:

  • company’s participants demand to pay damages incurred by the legal entity, invalidate the legal entity’s transaction or apply the consequences of such transaction’s invalidity.
  • a dispute between a corporation and its head, including a former one, related to the activities of a sole executive body
  • when establishing the encumbrance of a share in the charter capital of business entities and exercising the arising rights, if they are related to the ownership of such a share.
  • dispute related to issues of securities.
  • when the ownership and distribution of shares in the charter capital of business entities is disputed.
  • disputes related to the ownership of shares, establishment of their encumbrances and the exercise of the rights arising from these encumbrances.

So, in case of conflicting situations within a company, a person willing to carry out the protection of it’s rights in court, should ascertain if the dispute is a corporate one or not: it will allow to compile and file a statement of claim in a correct form.

2. Protecting the interests of parties to a corporate conflict in court

In most cases, the courts examine cases on corporate disputes based on documentation provided by parties to the conflict. This is due to the fact that such legal relations are always related to the workflow of the company or its bodies. Therefore, the tasks of lawyers representing the parties to the conflict include careful preparation and the formation of evidences based on company’s internal documentation.

Moreover, the disputes within corporations are usually accompanied by significant financial requirements, therefore, even at the stage of filing a statement of claim, an application for imposing interim measures – a ban on certain actions, seizure of property and other assets of the defendant may be also filed. Proper preparation of a statement of claim and a similar application are also an important task of a lawyer-representative of a party to a corporate dispute.

The trial itself in the framework of examination of such cases in arbitration courts is practically does no differ from the adjudicate of non-corporate disputes.

Representation of company’s interests or an individual’s interests as a party to a dispute are usually managed by in-house lawyer or by representatives of third legal firms on the basis of a power of attorney. All the procedural actions, including appeal against of decision and representation in the courts of appeal and court of cassation, are also within the competence of representatives in this category of cases.

VALEN offers the services in the field of litigation in corporate disputes, has significant experience in successful managing of such cases. Our lawyers will analyze your situation, help in developing a dispute resolution strategy, prepare a legal position, collect and submit the necessary set of documents to the court and carry out the protection of client interests in court. Contact us and we will help to protect your rights successfully in arbitration courts of all instances.

You can also contact our lawyers for resolution of labor disputes using any available method of communication and visit VALEN office by appointing a meeting via phone +7 (495) 7-888-096