Mediation is a recognised form of ADR and is used where parties wish to preserve commercial relationships, reduce costs, and save time. It is a voluntary process in which an independent third-party mediator assists the parties in trying to reach a mutual settlement.

On the whole, mediation is quicker than litigation as the process can be completed in one or two days, depending on whether parties are cooperative in reaching a mutual agreement. Litigation often takes significantly longer, ranging from 3 to 36 months, depending on the size of the claim and complexity of the dispute.

In addition, the cost of mediation is generally less than the cost of litigation. Not only is it quicker to arrange, it also reduces costs. That said, in cases where mediation is pursued alongside litigation, there will be costs incurred for both processes for a short period. If the mediation was not successful and the matter proceeds to trial, the overall costs may increase.

Confidentiality is a further advantage of mediation. Discussions that take place during the process are private and cannot usually be referred to in later proceedings. Litigation, by contrast, is generally public, meaning that case details may be accessible to the media and third parties.

The aim of mediation is to achieve the most suitable outcome for all parties involved by providing a flexible process where they can agree how discussions should be conducted and retain control over the final resolution. Participation is voluntary, allowing the parties to negotiate openly and work towards a mutually acceptable agreement. If a settlement is reached, the parties may choose to formalise the outcome through a mediation agreement, which can make the terms legally binding.

Litigation, in contrast, is a more formal and structured process where the court manages the proceedings and determines the outcome. A judge will consider the evidence presented by both sides, assess the legal arguments and issue a decision that is binding on the parties, requiring them to comply with the terms of the judgment.

Litigation may become necessary if the dispute is particularly serious, urgent relief such as an injunction is required, one party refuses to cooperate, or significant sums of money are involved. Court judgments are legally enforceable, providing finality and certainty that the matter has been resolved.

Seeking legal advice at an early stage can help you choose the most effective course of action and avoid unnecessary cost and conflict. Whether mediation or litigation is the right choice for you depends on what you want to achieve from the dispute. If you are looking for a faster and more cost-effective way to resolve matters, while also preserving the relationship between the parties, mediation is often the better choice. On the other hand, if you need a final and binding decision from the court and want a clear legal outcome, litigation is likely to be the more appropriate route.

At Nath Solicitors we provide expert advice on litigation. If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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Although there is no statutory definition of “dissolution” within a partnership, it is generally the term used to signify the end of an enterprise. Because of a lack of separate legal entities, liabilities are personal and not limited to company shareholding; this can result in a variety of outcomes when one or all partners decide to exit or end a partnership.

Technical dissolution vs general dissolution

When the composition of a partnership changes due to the retirement of a partner or the addition of a new one, the changes do not carry over into the same partnership. Instead, the partnership is dissolved, and a new one immediately takes its place. This process is called a technical dissolution, but in practice, the partnership remains intact.

General dissolution is when the partnership’s legal existence is concluded in its entirety; there is no replacement of partners nor a new version that follows the dissolution.

Voluntary dissolution

In the event of voluntary dissolution, if partners unanimously agree to dissolve the partnership with either express or inferred intention, a partnership can be concluded regardless of the terms of the partnership agreement. Written agreements usually set out the winding up of trading obligations and assets.

Automatic dissolution

There are several triggers for automatic dissolution as provided by the Partnership Act 1980.

Fixed-term partnerships are dissolved upon the expiration of the term; partnerships created for specific purposes or undertakings also dissolve upon the termination of its intended purpose. Where a partnership is established as a partnership at will, any partner may bring the partnership to an end by serving notice on the other partners pursuant to Sections 32 and 26 of the Partnership Act 1890. In addition, the death or bankruptcy of a partner may trigger dissolution of the partnership, subject to any contrary provisions contained within the partnership agreement. Partnerships are also to be dissolved in any event that renders the continuation of the business unlawful.

The risk of automatic dissolution is that it can significantly disrupt the partnership’s commercial activities, profitability and ongoing operations. As death and bankruptcy are largely unforeseen events outside the control of the partners, their occurrence may have substantial financial and commercial consequences for the remaining partners if the partnership is brought to an immediate end. For this reason, many partners choose to tailor their partnership agreements to exclude these automatic dissolution triggers and instead incorporate agreed exit mechanisms, succession arrangements and other provisions designed to provide greater stability and certainty.

Dissolution by court order

Where partners enter into a dispute and there are no triggers available for the dissolution of the partnership, they can apply to the court for a dissolution order under Section 35 of the Partnership Act. The court can order the dissolution of a partnership on the following grounds:

• When a partner deliberately or persistently breaches the partnership agreement
• When it is unreasonable and impractical to continue the operation of the partnership with a partner due to their conduct
• When there is no profit from the operation of the partnership
• If the court finds that it is fair for the partnership to be dissolved

Dissolution by court order is usually a general dissolution, where the partnership ends in entirety instead of being restructured through the replacement of partners like technical dissolution.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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Restrictive covenants are most commonly used in situations where a company seeks to prevent departing shareholders or employees from establishing competing businesses and diverting clients or commercial opportunities. They are also frequently used in business acquisitions, where a buyer may require sellers to agree not to immediately establish or become involved in a competing venture following the sale of the company.

Court decisions regarding restrictive covenants tend to be fact specific, and providing they are reasonable, are enforceable. However, the interpretation of reasonableness can be broader when the courts assess commercial contracts than some other areas of law because of the higher bargaining power and shareholders having direct stakes in the performance of the business.

Enforceability

For a restrictive covenant to be exercisable under UK law, there must be a valid interest that the company seeks to protect. In addition, the extent of the restraint must not be more than only what is necessary to protect that interest.

The enforceability of a restrictive covenant will depend not only on its scope but also on the period for which it operates. Where restrictions relating to competition, solicitation or the diversion of commercial opportunities extend beyond what is reasonably necessary to protect legitimate business interests, the courts may consider them excessive and refuse to enforce them. In determining the reasonable amount of time where the covenant is enforceable, the relationship between the parties is taken into account, and includes consideration as to whether the parties are individual employers and employees, or experienced commercial personalities.

Scope

The scope of a restrictive covenant is another key factor in determining its enforceability. It must strike an appropriate balance between protecting the company’s legitimate interests and ensuring that the shareholder is not subject to unnecessary or excessive restrictions. A covenant that is drafted too broadly may be considered unreasonable, while one that is too narrow may fail to provide adequate protection for the company. Factors such as the duration of the restriction, the activities being restricted and the category of individuals subject to the covenant will all influence the precise terms and enforceability of the provision.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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Benefits

Although an arbitral award already carries legal weight, winning parties have no direct access to the court’s enforcement mechanisms with the award alone. By converting an award into a judgment, it diversifies the winning party’s avenues of enforcement and recovery.

Common enforcement methods include writ of warrant or control over assets, third party debt orders, charging orders, and attachment of earnings orders. Depending on the circumstances of the case and the relationship between the parties, having access to these orders can greatly enhance a claimant’s ability to recover costs and indemnities arising from the arbitration award.

Procedure

Firstly, an arbitration claim form must be filed setting out the application for permission to enforce the award as if it were a judgment. Under Civil Procedure Rules (CPR) 62.18 (6a), the following documents and information should also be attached to the claim:

1. Two copies of the draft court order granting permission to enforce the award
2. A witness statement/affidavit verifying the award and providing evidence regarding the extent to which the award has not been complied
3. The original arbitration agreement (or a certified copy)
4. The original arbitration award (or a certified copy)

An application may be made ex parte without notifying the other party in advance. Nevertheless, the court has the discretion to direct that notice of the application be provided to the other party, depending on the circumstances of the case. The applicant will then need to serve the respondent personally or send a copy to their last known residential or business address, who must then acknowledge service. Under Section I, Part 62 of the CPR, the enforcement proceedings will continue as if they were an arbitration claim.

Once the order has been granted, it must be served on the defendant. The defendant will then have a limited period in which to apply for the order to be set aside. For domestic proceedings, this is generally 14 days from the date of service, although the court may determine a different timeframe where the defendant is located overseas. The arbitration award must not be enforced until this period has expired or any application to set aside the order has been resolved.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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However, there is a common misconception that without prejudice protection is absolute and applies in all circumstances. In reality, the protection has defined limits, and parties who misuse without prejudice communications or seek to rely on them outside their proper scope may face serious legal consequences.

The scope of without prejudice

When the without prejudice rule applies, all negotiations whether oral or in writing are excluded from being submitted in front of the court as evidence. This is only applicable to negotiations that are genuinely aimed at settlement. It is in the interest of public policy that parties are able to negotiate settlement without the worries of certain statements or offers being put before the court as admissions for decisions on liability or quantum (Cutts v Head [1984]).

In practice, offers such as buy-outs, concessions about the value of shares, and admissions about the position of the shareholders in a genuine attempt to resolve disputes are shielded from being used as trial in the event of negotiations breaking down.

Conditions of without prejudice

Two conditions must be satisfied for the protection to apply:

1. There must be an existing dispute between the parties
2. The communication must constitute a genuine attempt to settle that dispute

Communication is not without prejudice simply because it is marked to be so. For example, if a letter is not actually part of settlement negotiations, it will not fall under the protection of the rule. In addition, in order for the protection to apply, the communications must have occurred during the course of the dispute.

Exceptions to the rule

The court’s firm position is that the without prejudice rule must not be used to shield parties from wrongdoing under the guise of attempts to settle.

The court will not uphold without prejudice privilege where communications involve clear misconduct, such as blackmail, perjury or where the correspondence was not genuinely intended to facilitate settlement negotiations. However, the threshold for this exception is a high one and is generally reserved for the most obvious cases of abuse. The mere fact that a party seeks to rely on without prejudice privilege to prevent disclosure of inconsistencies or unfavourable statements will not, by itself, amount to the level of unambiguous impropriety required to remove the protection.

Another exception to without prejudice privilege is estoppel. This means that a party can be prevented from going back on a representation made during without prejudice negotiations. Where one party makes a clear and unambiguous statement (for example, regarding a settlement term) within privileged communications, and the other party relies on it to their detriment, the statement may be admitted before the court to establish an estoppel. However, this can only be used for statements made by the opposite party/parties.

Without prejudice communications is a powerful tool in aiding parties to reach more amicable agreements or even out-of-court settlement, but it must be used with care and not be abused. Just because a statement is labelled “without prejudice” does not automatically position it under privilege. However, if used right, it can be imperative to the outcome of disputes.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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Does removal mean loss of shares?

Even if a director is removed, it does not affect their status as a shareholder. Therefore, their rights to receive dividends and vote on company decisions remain unchanged. Nevertheless, certain company constitutional documents may contain provisions requiring a director-shareholder’s shares to be transferred or acquired following their resignation or removal as a director. The application and enforceability of such provisions will depend on the specific terms contained within the company’s articles of association or any relevant shareholder agreement. Directorship and share ownership are separate legal capacities, meaning an individual may cease to be a director while retaining their rights as a shareholder, unless specific contractual or constitutional provisions provide otherwise.

Quasi-partnership

Where a company operates as a “quasi-partnership”, internal relationships may give rise to particular legal complexities. These companies are often characterised by close personal relationships, mutual confidence and an understanding that each participant will contribute to the management of the business. When those expectations are disrupted, disputes may arise over the rights and interests of those involved. For example, family businesses, small businesses, and shops run by acquaintances or partnerships where directorship and shareholding is held by only two people. In these circumstances, the removal of a director is usually more than a simple company process; it affects the foundations of the company itself because every single member is imperative to the operation of the company.

Under these circumstances, it is reasonable for members to have their shares purchased from them once they resign or are dismissed from their directorial roles. It is not uncommon in quasi-partnerships for there to be specific clauses within the company’s Articles that are triggered upon the dismissal/retirement/removal of a director-shareholder where their shares will be acquired by the company or the individual shareholder.

In the absence of any contractual or constitutional provisions addressing such circumstances, a former director who continues to hold shares in the company may seek relief by bringing an unfair prejudice petition under Section 994 of the Companies Act 2006, where they believe the company’s affairs have been conducted in a manner that unfairly prejudices their interests as a shareholder. The court has wide-ranging powers when granting relief in unfair prejudice proceedings. Where a shareholder’s position as a director has ended and the parties’ relationship has become untenable, one potential remedy may be an order requiring one shareholder to acquire the other’s shares at a value determined to be fair and appropriate in the circumstances.

In circumstances where the breakdown of confidence and trust between partners is so thorough and severe that it is unlikely that continued operation of the company would be just or possible, a petition to wind up the company under the Insolvency Act 1986 would be available.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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Despite the procedure itself being legitimate, the power to allot shares can be susceptible to abuse. When the dilution of shares does not arise out of genuine commercial need but out of the intention to diminish certain shareholders’ voting power, or to consolidate the position of current directors, the power of allotment is likely to have been exercised improperly.

This article examines the legal protections afforded to shareholders in England and Wales in relation to share dilution and outlines the potential steps available to shareholders who consider that their interests have been adversely affected by the issue of new shares.

Procedural Safeguards: The Companies Act 2006

Under Section 549 of the Companies Act 2006, directors are only allowed to allot shares when they are either authorised by the company’s articles of association, or by an ordinary resolution of the shareholders. In these two circumstances, the maximum number of shares that may be allotted must also be specified to avoid excess.

Section 561 of the Companies Act 2006 provides existing shareholders with statutory pre-emption rights when a company proposes to allot new shares. Unless validly excluded or disapplied, new securities must first be offered to existing shareholders in proportion to their current holdings. This mechanism allows shareholders a fair opportunity to maintain their existing percentage ownership and avoid unwanted dilution of their interests in the company.

This represents one of the key statutory protections available to shareholders against unwanted or disproportionate dilution of their shareholdings. These pre-emption rights can only be excluded or disapplied where authorised by a special resolution of shareholders, requiring at least 75% approval, or where the company’s articles of association contain express provisions permitting such exclusion.

Directors’ Duties

Even if an allotment is authorised and pre-emption protocol has been complied with, allotment may still be susceptible to challenge if the directors exercising the allotment are in breach of their duties under the Act.

In particular, Section 171 details their duties to exercise powers only for conferred purposes. The power to allot shares must only be exercised in favour of the company’s commercial interests and success. Hence, allotments made with the interests of altering the balance between shareholder interests or to marginalise minority shareholders can all become the basis for actionable shareholder claims.

Unfair prejudice claims

When shareholders have reasonable suspicion or proof that a dilutive allotment is conducted in a manner that is unfairly prejudicial to the interests of shareholders, they may be eligible to raise an unfair prejudice petition under Section 994 of the Companies Act 2006. This avenue for redress is important especially for minority shareholders for addressing any unjust treatment or abuse of power within the company.

If you wish are a shareholder who needs advice regarding unfair or improper share dilution, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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There are a variety of enforcement methods available, such as a writ of control over the debtor’s assets, a third-party debt order, a charging order on the debtor’s property or an attachment of earnings order. These methods differ in effectiveness and appropriateness based on the assets possessed by the debtor and their sources of income.

The fragmented nature of these enforcement methods can present an additional challenge for claimants pursuing recovery. Selecting the wrong approach may result in significant expenditure of time and resources, with no guarantee that the costs incurred will be recovered. In some cases, claimants may ultimately be unable to recover any amount at all. Therefore, carrying out due diligence into the debtor’s financial circumstances before initiating recovery proceedings is essential. This enables claimants to evaluate the prospects of successful enforcement and determine whether pursuing recovery is proportionate in light of the debtor’s ability to satisfy any costs or liabilities.

Absence of assets, concealing assets and frustrating sale of property

A writ of control allows enforcement agents to seize and sell assets to repay costs. That said, certain assets are exempt from seizure, such as any essential household goods and any equipment necessary for the debtor’s business operations or employment. Therefore, if the debtor is already in financial straits, it is extremely unlikely that claimants will be unable to recover any monies.

In the event that property is seized and to be sold, debtors can also frustrate the cost orders through delaying the sale; less than 1% of orders result in a sale and usually take years to complete. Debtors can also conceal or restructure their assets so that on paper it appears that there is less for enforcers to seize than they actually possess. The numerous limitations of these methods can prove to be frustrating to claimants.

Limitation period

It is recommended that creditors act immediately after judgment is obtained in order to be able to choose from the most enforcement options possible. If enforcement action has been repeatedly or unreasonably delayed, the debtor will have had time to restructure their assets and may attempt to evade payment. Furthermore, permission from the courts will be required to enforce cost orders after a six-year period from the judgment. If the court deems that there had been an extended delay in enforcement, they may be reluctant to grant the creditor power to do so again.

To maximise the chances of obtaining costs from the other side, it is in the parties’ favour to consider enforcement and costs strategies before beginning legal proceedings. This includes understanding the financial situation and background of the defendant and the likelihood of them making payment voluntarily. These are also important factors to consider before deciding to pursue litigation to ensure that these efforts are worthwhile.

If you have secured a money judgment and want more advice on the best way of ensuring payment, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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The statutory basis for these rights is found in Section 561 of the Companies Act 2006, which generally requires new equity securities to be offered to existing shareholders in proportion to their current holdings, unless the rights have been validly excluded or disapplied.

In practice, pre-emption rights are commonly structured as either a right of first refusal (ROFR) or a right of first offer (ROFO), depending on the circumstances and the company’s constitutional documents or shareholders’ agreement. Both mechanisms are intended to give existing shareholders the opportunity to acquire new or transferred shares before they are offered to third parties, helping to preserve their proportional ownership and protect them against unwanted dilution.

Right of first refusal (ROFR)

The new shares allotted must be offered to existing shareholders within the company, allowing them to buy the shares in proportion to their current stakes to prevent the dilution of their interest. The price, amount, and terms of the purchase will be decided by the company. Any remaining shares can then be offered to external investors. Even if the shareholders have no interest in purchasing new shares, it is important to allow them to refuse the offer to demonstrate fairness in company administration.

Right of first offer (ROFO)

ROFO’s go one step further than ROFR’s. The company offers shareholders the opportunity to buy new shares, but negotiations are allowed for the number of shares, price, and terms of purchase between the parties.

Both mechanisms are simple in principle – when allotting new shares, they must first be offered to the shareholders for purchase; only when there are shares leftover can they be allotted to third parties.

Limits and exceptions of statutory pre-emption rights

It is important to note that statutory pre-emption rights only apply to the allotment of ordinary shares. The statutory pre-emption rights provided by the Companies Act 2006 are limited in scope and do not generally apply to the allotment of non-equity securities, the transfer of existing shares, or the transmission of shares as a result of death or bankruptcy. These situations are instead governed by the company’s articles of association, any shareholders’ agreement, or the relevant provisions of law.

Pre-emption rights may also be excluded, disapplied or modified by the company’s articles of association or in accordance with the Companies Act 2006. For example, shareholders may choose to waive their entitlement by signing a waiver, while a special resolution passed by at least 75% of the voting shareholders can authorise the directors to allot shares without complying with the statutory pre-emption requirements or to disapply those rights in relation to a particular allotment. In the event that some or all existing shareholders have no interest in purchasing the allotted shares, by removing the pre-emption procedures, the sale of newly allotted shares may be completed faster.

Strengthening the company’s pre-emption procedures

Companies, particularly larger organisations with multiple classes of shares, often adopt bespoke pre-emption provisions to reflect their specific commercial needs and provide enhanced protection for shareholders. These contractual rights can also extend to situations that fall outside the scope of the statutory protections contained in the Companies Act 2006. Specific clauses within the shareholders’ agreement can broaden the scope of protection from different angles, such as share transfers, allotment of non-ordinary class shares, and more; by closing the gaps in statutory protection shareholders will be afforded higher degrees of security.

If you need advice or assistance, please contact Nath Solicitors on 0203 983 8278 or get in touch with the firm online.

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A non-disclosure agreement (NDA) establishes a clear legal framework for protecting confidential information. It defines what information is considered confidential, identifies who may access it and sets out the circumstances in which it may be used or disclosed. By clearly establishing these obligations from the outset, an NDA provides certainty for the parties and helps foster confidence that sensitive business information will remain protected throughout the relationship.

Businesses generally engage in contracts and deals, and before this is finalised, they often disclose internal information. This underlines the importance and usefulness of NDAs in early stages of commercial negotiations. During this period, there is a risk that the other party could use such information for their own benefit or disclose it to competitors; an NDA allows parties to share necessary data while reducing the risk of misuse.

Employer and employee relationships

In addition, NDAs can also be valuable in employer and employee relationships. The nature of this relationship involves employees having access to confidential client lists, pricing structures, business strategies, or product development plans. By setting clear boundaries on how confidential information may be used and shared, an NDA helps safeguard sensitive business information throughout the employment relationship and after an employee leaves the organisation. This maintains a company’s commercial advantage and preserves client trust.

Another benefit of an NDA is its ability to strengthen professional relationships, by demonstrating that confidentiality is taken seriously and that responsible business practices are prioritised. This can encourage openness in negotiations and build trust between parties. When businesses know their information is protected, they are more willing to collaborate.

Correct drafting

That said, an NDA is only effective if it is well drafted. It should be tailored to specific circumstances, be reasonable in scope, and clearly explain the obligations of each party. Professional legal advice can help ensure that an agreement is carefully drafted, with clear and proportionate terms. Avoiding vague or overly broad provisions is important, as such clauses may be more vulnerable to challenge and less likely to be enforceable.

In conclusion, NDAs are effective for protecting confidential information, and help businesses manage risk, preserve competitive advantage, and build trust in commercial relationships.

Nath Solicitors are a leading boutique firm with over 30 years’ legal experience. We provide expert advice on NDAs. If you need assistance, please call us on 0203 983 8278 or get in touch with the firm online.

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