To reopen the lines of communication, both sides must be willing to reach a conclusion. There are a variety of negotiation routes that can be explored to diffuse director disputes. This is largely determined by factors including:

• Is an informal or formal agreement required?
• Is litigation necessary?
• Does the shareholder/director agreement or Articles of Association provide any direction relating to resolving the dispute or the future of the business?

Often, the first path to negotiations is mediation.

Mediation involves a neutral third-party mediator to hold negotiations between the parties in dispute, encouraging both parties to find common ground. Mediation provides a confidential space for commercial negotiations, offering flexibility and full control to both parties as no judge is involved. Negotiations are held by a qualified mediator with formal mediation training.

Arbitration vs Litigation

Other forms of alternative dispute resolution include arbitration which is similar to mediation, and is legally binding. An arbitrator is a neutral third-party that may specialise in commercial disputes, including director disputes and deadlocks. Arbitration is a cheaper alternative to litigation and provides more flexibility and control. The arbitrator considers statements from both parties and makes a binding decision, known as the ‘award’.