Shareholder disputes are far too common and are often caused by a desire for one or more shareholders who want to terminate the shareholder relationship.  However, they can also arise because shareholders disagree how a business is being run or because shareholders fear liability on the part of other shareholders that they believe is illegal or fraudulent.  Shareholders may allege misconduct such as misappropriation, breach of fiduciary duty or breach of the shareholder agreement.

Shareholders may consider mediation to help resolve disputes of this nature.  Mediation uses an impartial third party to help resolve the case.  This avoids the publicity of a trial and the dissemination of private information to the public.  Parties can choose their mediator, so they may select someone who is experienced in the same industry that the shareholders are a part of.  Mediation allows both sides to communicate their perspective and to express their interests. The mediator attempts to bridge the communication gaps between the parties while offering valuable feedback regarding the merits of different claims or defenses.  The mediator may provide suggestions on ways to potentially settle the claim and will encourage both parties to come up with their own creative solutions.  This form of ADR is particularly well-suited to shareholder disputes because it is non-adversarial in nature, allowing the parties to reach an amicable solution and maintain their relationship.

For other cases, shareholders may consider arbitration as a way to resolve the dispute.  Arbitration is an abbreviated form of litigation.  However, the parties choose the decision maker instead of having a judge or jury.  Arbitration can be binding by nature and can only be appealed on limited grounds.  The arbitrator can issue a binding decision that all parties must adhere to.  At the same time, arbitration offers a less expensive and faster resolution than would likely be available through litigation