{"id":45108,"date":"2024-10-08T08:04:09","date_gmt":"2024-10-08T08:04:09","guid":{"rendered":"https:\/\/my.legal500.com\/developments\/?post_type=press_releases&p=45108"},"modified":"2024-10-30T08:05:17","modified_gmt":"2024-10-30T08:05:17","slug":"agplaw-secures-landmark-victory-in-complex-shareholder-dispute-arbitration-in-london","status":"publish","type":"press_releases","link":"https:\/\/my.legal500.com\/developments\/press-releases\/agplaw-secures-landmark-victory-in-complex-shareholder-dispute-arbitration-in-london\/","title":{"rendered":"AGPLAW Secures Landmark Victory in Complex Shareholder Dispute Arbitration in London"},"content":{"rendered":"

A Landmark Win for Majority Shareholders<\/strong><\/p>\n

AGPLAW is proud to announce a significant legal victory for our clients, Respondents 1 and 2, in a high-profile arbitration case before the London Court of International Arbitration (LCIA).<\/strong> This complex shareholder dispute involved allegations of minority oppression and breaches of a Shareholders\u2019 Agreement (SHA) under Cyprus law. AGPLAW\u2019s Cyprus and UK legal teams, led by Managing Partner Angelos Paphitis<\/strong><\/a>,<\/strong> Partner Maria Constantinou<\/strong><\/a>,<\/strong> and UK Senior Counsel Timothy Frith, successfully represented our clients and achieved a decisive outcome that protects the rights of majority shareholders in Cyprus.<\/p>\n

The Arbitration Overview<\/strong><\/p>\n

The LCIA arbitration centered on claims brought by a minority shareholder (the Claimant, being a group company of a well-known Russian Group related to a Russian oligarch) against our clients, who are majority shareholders in Cyprus Company (the Company). The Claimant alleged that our clients had conducted the affairs of the Company in an oppressive manner, in violation of their obligations under the SHA and principles of good faith. The Claimant sought remedies, including a winding-up order of the Company or an order requiring our clients to be bought out by the Claimant.<\/p>\n

Throughout the arbitration witness examinations and submission stages, our team at AGPLAW vigorously argued, amongst other arguments raised, that there is no legal precedent under Cyprus Companies Law (Cap. 113) for a minority shareholder to buy out a majority shareholder but only the other way around. This argument has ultimately formed the cornerstone of our defense strategy, and we are pleased to announce that the Arbitration Tribunal, comprising of a Sole Arbitrator (a KC), accepted our submissions and ruled in favor of our clients.<\/p>\n

Key Findings of the Tribunal<\/strong><\/p>\n

The Tribunal\u2019s Partial Final Award, issued on 5 September 2024, represents a significant legal precedent in shareholder disputes under Cyprus law although tried under English law before LCIA.<\/p>\n

Key findings from the award include:<\/strong><\/p>\n

Jurisdiction Confirmed<\/strong><\/p>\n

The Tribunal confirmed its jurisdiction over the Claimant\u2019s minority oppression claims under section 202 of the Cyprus Companies Law. This affirmation allowed the arbitration to proceed under the LCIA Rules, with London as the seat and English as the language.<\/p>\n

No Winding-Up Order Issued<\/strong><\/p>\n

Our team successfully argued against the issuance of a winding-up order for the Company. The Tribunal found that while there was evidence of oppressive conduct by the majority shareholders, the facts did not justify the drastic remedy of winding up the Company. This outcome was crucial in safeguarding our clients\u2019 interests and maintaining their control over the Company.<\/p>\n

Buyout Remedy Ordered in Our Clients\u2019 Favor<\/strong><\/p>\n

The Tribunal, deciding on our favor and against the Claimant\u2019s requests to the alternative, ordered a buyout of the Claimant\u2019s shares by our clients, the majority shareholders. This decision aligns with the strategic argument advanced by AGPLAW that under Cyprus law, there is no basis for a minority shareholder to compel a buyout of majority shareholders. The Tribunal\u2019s decision to order the buyout of the Claimant\u2019s shares by our clients validates our legal strategy and underscores the strength of our arguments in defending our clients\u2019 rights.<\/p>\n

Breach of Shareholders\u2019 Agreement<\/strong><\/p>\n

While the Tribunal found that our clients were in breach of certain provisions of the SHA, these breaches were deemed insufficient to justify the Claimant\u2019s radical demand for a buyout of our clients. Instead, the Tribunal focused on establishing a fair buyout price for the Claimant\u2019s shares, ensuring that our clients retained control of the Company.<\/p>\n

Valuation and Mechanism for Buyout<\/strong><\/p>\n

The Tribunal carefully considered the appropriate mechanism for determining the buyout price, including adjustments for loss of profits and other relevant financial considerations. This aspect of the award ensures that our clients will not only retain control of the Company but also achieve a fair and equitable resolution to the dispute.<\/p>\n

Legal Implications and Significance<\/strong><\/p>\n

The Tribunal\u2019s decision in this case sets a significant legal aspect in Cyprus regarding shareholder rights, the interpretation of shareholder agreements, and the remedies available in cases of minority oppression. The award confirms the principle that, under Cyprus law, there is no established legal basis for a minority shareholder to buy out a majority shareholder, reinforcing the protection of majority shareholders\u2019 rights.<\/p>\n

This outcome highlights AGPLAW\u2019s expertise in dealing with complex cross-border legal disputes and our deep understanding of Cyprus corporate law. Our success in this case showcases our ability to provide strategic and effective representation in high-stakes arbitrations, ensuring the best possible outcomes for our clients.<\/p>\n

A Strategic Victory for AGPLAW and Our Clients<\/strong><\/p>\n

This arbitration award marks a significant victory for our clients and a testament to the legal acumen and advocacy of AGPLAW. Our team\u2019s diligent efforts, extensive knowledge of Cyprus law, and strategic approach in this case were decisive in achieving a favorable outcome for our Clients, Respondents 1 and 2.<\/p>\n

The Tribunal\u2019s decision to order the buyout of the Claimant\u2019s shares by our clients \u2014 despite finding them in breach of certain provisions of the SHA \u2014 proves the effectiveness of our argument that there is no precedent for a minority shareholder buying out a majority shareholder under Cyprus law. By securing this outcome, we have successfully protected our clients\u2019 rights as majority shareholders and preserved their control over the Company.<\/p>\n

Conclusion<\/strong><\/p>\n

AGPLAW is dedicated to providing our clients with top-tier legal representation in even the most complex disputes. Our success in this LCIA arbitration is a clear demonstration of our commitment to excellence and our ability to achieve strategic legal victories.<\/p>\n

If you are facing a shareholder dispute or require expert legal advice on corporate matters, our team at AGPLAW is ready to assist you. Contact us today to learn more about how we can help protect your interests and achieve your desired outcomes.<\/p>\n

Feel free to contact us directly at\u00a0agp@agplaw.com\u00a0<\/a>\u00a0to discuss this case or any other legal issues you may face. Our team is here to support and represent you with the highest standards of legal excellence.<\/p>\n

AGPLAW \u2013 Your Trusted Legal Partner in Cyprus and Beyond.<\/strong><\/p>\n

Quotes:<\/strong><\/p>\n

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    1. \u201cThe Tribunal\u2019s decision to order a buyout of the Claimant\u2019s shares by our clients validates our legal strategy and features our firm\u2019s expertise.\u201d<\/em><\/li>\n
    2. \u201cOur diligent efforts and strategic advocacy have resulted in a favourable outcome that upholds the rights of our clients.\u201d<\/em><\/li>\n
    3. \u201cAGPLAW remains committed to delivering top-tier legal representation and achieving the best possible results for our clients.\u201d<\/em>
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