Corporate and bylaw-based arbitration

An internal conflict within a company (challenges to shareholder meetings, removal of officers, exclusion of a shareholder or disputes over the value of an equity interest) can be resolved through arbitration when the bylaws or a later agreement so provide, avoiding the exposure and delays of court litigation.

Which corporate matters are arbitrable

The arbitration agreement is governed by articles 1649 to 1665 of the Civil and Commercial Code. Available proprietary matters may be submitted to arbitration, which covers a large part of corporate disputes: valuation of equity interests, compliance with shareholder agreements, exclusion and withdrawal, and many disputes over corporate resolutions.

Article 1651 excludes certain matters from arbitration (including those not subject to free disposal). For that reason, the arbitrability analysis is a prior and essential step: we define which part of the conflict may go to arbitration and which aspects remain under court jurisdiction.

The bylaw clause as the basis of the process

Corporate arbitration normally relies on an arbitration clause included in the bylaws or articles of association, which binds current and future shareholders. Its wording determines the seat, the applicable rules, the number of arbitrators and the scope of the matters submitted.

When the bylaws contain no clause, the parties may still enter into a submission agreement once the conflict has arisen. We assess both options and the advisability of institutional or ad hoc arbitration depending on the complexity and amount at stake.

Common mistakes

• Assuming every corporate conflict is arbitrable without analyzing article 1651 of the Civil and Commercial Code
• Drafting a generic bylaw clause that later generates disputes over its scope
• Bringing parallel court actions that weaken the arbitral position
• Failing to specify the seat or the applicable rules in the clause
• Leaving the arbitrator-appointment mechanism undefined

Frequently asked questions