Dispute Resolution in Family Companies

Canterbury Law Review, 2013

31 Pages Posted: 24 Jul 2013

See all articles by John Hynes Farrar

John Hynes Farrar

Bond University Faculty of Law

Susan Watson

University of Auckland Faculty of Law; University of Auckland - Business School; European Corporate Governance Institute

Laurence Boulle

Australian Catholic University (ACU)

Date Written: July 23, 2013


The Bubble Act of 1720 made corporate charters relatively difficult to obtain. As a response to the Bubble Act and prior to the general right to incorporation by registration in the mid-Nineteenth Century, an early form of unincorporated company developed in the United Kingdom. The deeds of settlement creating the unincorporated companies almost always contained dispute resolution clauses. Once incorporation by registration became possible, the internal governance of companies was determined by articles of association. UK companies were permitted to draft their own articles or to adopt provisions found in the schedules to the Acts. Dispute resolution clauses were not included but arbitration clauses were nevertheless often included in articles of association for companies for a period from the late Nineteenth Century onwards in the articles of smaller private companies that developed at that time. The demise of the adoption of the provisions coincided with questions about their enforceability. Even though those enforceability issues probably no longer exist, dispute resolution clauses are rarely found in the constitutions of modern companies.

This article examines and critiques the legal framework around dispute resolution in family-owned companies and argues for the inclusion of dispute resolution clauses in some form in constitutions of companies. The article contains two simple empirical surveys that show that the failure to include dispute resolution clauses in constitutions and the absence of other dispute resolution mechanisms for family companies leaves the courts as the only recourse for resolution of disputes.

Keywords: corporate law, dispute resolution, family business

Suggested Citation

Farrar, John Hynes and Watson, Susan Mary and Boulle, Laurence, Dispute Resolution in Family Companies (July 23, 2013). Canterbury Law Review, 2013, Available at SSRN: https://ssrn.com/abstract=2297643

John Hynes Farrar

Bond University Faculty of Law ( email )

Gold Coast, QLD 4229

HOME PAGE: http://works.bepress.com/john_farrar/

Susan Mary Watson (Contact Author)

University of Auckland Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

University of Auckland - Business School ( email )

Auckland, 1010
New Zealand

European Corporate Governance Institute ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Laurence Boulle

Australian Catholic University (ACU) ( email )

Level 20, Tenison Woods House, 8-20 Napier St
North Sidney, NSW 2060

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