Case of the Week: Federal Supreme Court on Arbitrability of Shareholder Disputes – “Arbitrability III”

von Peter Bert

In a recent decision, the Federal Supreme Court (Bundesgerichtshof) has held that shareholder disputes, and in particular challenges to shareholder resolutions (Beschlußmängelstreitigkeiten) in a limited partnership (Kommanditgesellschaft) are arbitrable in principle. The standards governing the arbitrability of disputes of that nature in the limited liability company (GmbH) apply to partnerships as well. The Federal Supreme Court refers to this decision as “Arbitrability III” (“Schiedsfähigkeit III”), so let’s briefly look at “Arbitrability I” and “Arbitrability II” to put this this decision into context:

“Arbitrability I” and “Arbitrability II”

Back in 1996, the Federal Supreme Court had decided an issue that was hotly debated at the time and held that challenges to shareholder resolutions in a GmbH were not arbitrable (“Arbitrability I” / “Schiedsfähigkeit I”). The Court’s main argument was that decisions potentially declaring a shareholder resolution null and avoid would affect all shareholders (erga omnes effect) and therefore, all shareholders must have had an opportunity to participate in an arbitral process. Back in 1996, however, the court felt that the arbitral process was not able to guarantee the procedural rights of shareholders and decided that these disputes were not arbitrable.

In 2009, the Federal Supreme Court adopted a new approach and held that these disputes were capable of being arbitrated, provided that the aribtral process was designed in such a way as to protect the rights of shareholders. In particular, all shareholders must have an equal say in selecting the arbitrator, and must be kept informed of the process, with a right to intervene. The leading German arbitral institution, Deutsche Institution für Schiedsgerichtsbarkeit (German Institution of Arbitration, DIS), responded to the Court’s new approach by implementing the DIS Supplementary Rules for Corporate Law Disputes 09 (SRCoLD) ...

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