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Boston College Law School

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Wednesday, June 12, 2013

Fight over mandatory shareholder arbitration

Allison Frankel reports on developments in the fight over the mandatory shareholder arbitration bylaw adopted by the board of Commonwealth.   She points to a law professor filing in opposition to the bylaw.  The 11 law professors argue that access to public courts is critical to the development and maintenance of good corporate governance:

Absent the transparency and visibility provided by legal proceedings in an open courtroom, and the possibility of a rebuke by a judge, fiduciaries would be much less deterred from violating their duties to shareholders...

That's all true.  I think the widespread adoption of mandatory shareholder arbitration would lead to the long term dismantling of corporate governance.  I've argued as much with respect to Delaware's Chancery sponsored arbitration procedure in a paper now appearing in the Cardozo Journal of Conflict Resolution

-bjmq

http://lawprofessors.typepad.com/mergers/2013/06/fight-over-mandatory-shareholder-arbitration.html

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Comments

From an Indian perspective, I would recommend a glance at: http://www.financialexpress.com/news/arbitration-of-oppression-and-mismanagement-disputes/1126996/0

There is a body of case-law in India that suggests that specialized tribunals set up for company law disputes are more competent fora for resolution of shareholder disputes.

There is also an argument that there are certain kinds of rights (rights in rem) that cannot be adjudicated by private arbitral tribunals.

Posted by: Aditya | Jun 12, 2013 9:37:39 PM

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