Disputes between shareholders are frequent in the business world, and often have a significant impact on the development and smooth running of companies. It is therefore crucial to resolve them through appropriate and effective means, focused on the needs and interests of both shareholders and the company.
You've undoubtedly heard of family mediation, a widely used method of resolving family disputes in Quebec, but what about commercial mediation?
Commercial mediation is a private, voluntary, confidential and amicable method of resolving disputes. The mediator is an impartial third party chosen by mutual agreement of the parties to help them re-establish their commercial relations and find an appropriate solution to their dispute. Unlike a judge or arbitrator, the mediator does not have decision-making powers. His or her role is to facilitate exchanges between the parties and encourage them to reach a mutual agreement.
Why use commercial mediation to resolve shareholder disputes?
- Communication. In order to preserve business relations, active communication between shareholders is a key element. Mediation is a process that focuses on good communication between the parties involved. Indeed, the mediator's role is to facilitate communications between the parties, while guiding exchanges and encouraging the parties to share their needs, interests and values. In the case of a shareholder dispute, by participating in mediation, the shareholders will be confronted with other, deeper issues beyond the ones raised. They will therefore have the opportunity to address personal and social issues that have been set aside in the past, but still have an impact on relations between them. This protected communication framework will strengthen the relationship between shareholders and prevent future misunderstandings and conflicts.
- Confidentiality. The confidentiality of business information is a key issue in disputes between shareholders. Although the general tendency is to resort to the courts to settle such disputes, the parties call into question the confidentiality of information and trade secrets, essential elements in ensuring the smooth running and long-term survival of the company. However, confidentiality is a fundamental aspect of mediation (communications and exchanges in mediation are confidential), and shareholders who need to address trade secrets to settle the dispute will do so in complete confidentiality by resorting to mediation.
However, it should be noted that confidentiality is not absolute, and it is important to be cautious and include a clear, broad confidentiality clause in the mediation agreement. Although confidentiality is one of the hallmarks of mediation, case law has held that, in the absence of an explicit clause, the parties may file communications arising during mediation to prove the existence or scope of a settlement. - Active shareholder participation in the settlement process. When a dispute arises between shareholders, they are more aware of the challenges involved, as well as the possible solutions adapted to their business structure. For this reason, commercial mediation is highly recommended for resolving such disputes. The mediator does not have decision-making powers; it is the parties who actively participate in resolving their conflicts. The mediator's role is to facilitate exchanges between the parties and help them find creative solutions that focus on the company's needs. It is important to note that shareholders must cooperate during mediation sessions in order to resolve the dispute.
- Deadlines and costs. In order to preserve the continuity of commercial affairs within the company, shareholders must interact on a regular or even daily basis. So, any delay in resolving disputes, even a few days at a time, poses multiple constraints on the smooth running of the business. Commercial mediation is a more economical and faster alternative to recourse to the courts. This alternative means of dispute resolution requires fewer resources and offers a relatively short resolution time. Indeed, the parties can agree on a timetable for resolving the dispute in due course.
As you can see, commercial mediation offers considerable advantages. In fact, it enables conflicts to be resolved by choosing solutions tailored to the interests and needs of the shareholders and the company, rather than simply applying legislative provisions.
When you take part in mediation and come to an agreement, it is essential to put it down in writing in the form of a transaction. As a result, you put an end to any legal proceedings, and can apply to the court for homologation and enforceability.
Please note that if you are unable to reach an agreement, you retain your right to take your case to court. What's more, if you submit a certificate from an accredited mediator stating that you have used this amicable settlement method, your court case will be given priority over other cases. This is in line with the current trend among Quebec legislators to encourage litigants to choose dispute prevention and resolution methods, including mediation.
In conclusion, if you want to re-establish a climate of trust within your company and preserve your commercial relations, commercial mediation is an appropriate method for resolving your disputes with your shareholders.
Our team at BLP Avocats has extensive experience in shareholder disputes and is therefore familiar with the various issues and difficulties encountered in the course of such litigation.
Our team is well qualified to assist you in the amicable settlement of your disputes, in order to preserve good business relations and the smooth running of your company.