This chapter takes a comparative approach to private ordering of shareholder litigation. To what extent can the players in shareholder litigation—companies, management, shareholders, and other investors—set the rules for litigation through private agreement? The chapter begins with the US example, in which dispute resolution provisions emerged in the constituent documents of US companies as a response to pressures from litigation. The contours of permissible provisions have not been exhaustively drawn, but dispute resolution bylaws have been tested in US state courts and were the subject of subnational legislation. The chapter then examines how private ordering of shareholder litigation—both intracorporate and securities suits—might function (or not) in the context of the EU and some of its constituent countries. This comparison highlights many of the similarities, as well as important differences, in how the United States and the EU approach private ordering in shareholder litigation.
Matteo Gargantini and Verity Winship
Edited by Sean Griffith, Jessica Erickson, David H. Webber and Verity Winship
Shareholder litigation—primarily representative litigation on behalf of all stockholders of a corporation—has proliferated globally. Shareholder litigation has long been part of the corporate landscape in the United States, where shareholders can challenge nearly any corporate decision. The scope of shareholder suits, however, has been kept largely in check by a set of substantive and procedural rules. But in recent years these suits have proliferated as shareholders have taken advantage of innovative tactics and new doctrines. Moreover, shareholder litigation has begun to spread to jurisdictions other than the US, where it has taken on new forms. This research handbook provides a modernday survey of the state of shareholder litigation and offers empirical evidence of how these suits have developed. Its chapters provide indepth analyses of the forms of shareholder litigation, including securities class actions, merger litigation, derivative suits, and appraisal litigation. Through its examination of these different types of litigation, the book details some of the advantages and disadvantages of shareholder litigation. It explores such issues as the agency costs inherent in representative litigation, the challenges of multijurisdictional litigation and disclosureonly settlements, and the rise of institutional investors. It also surveys how related issues are addressed across the globe, with examinations of shareholder litigation in the United States, Canada, the United Kingdom, the European Union, Israel, and China.