2024 reflections and 2025 forecasts
Aabar v Glencore: a game-changer for shareholder disputes?
In late 2024, a High Court ruling in Aabar Holdings v Glencore held that the ‘Shareholder Rule’ – which previously prevented companies from asserting privilege against their shareholders – did not exist in English Law. The ruling will have wide-ranging impacts on shareholder litigation – and although the appeal is set to heard by the Supreme Court in 2025, indications are that the decision is likely to be upheld, so parties should be conscious of its implications.
In the short-term, we expect the Shareholder Rule to remain a “hot topic” as appeals from related cases reach the Supreme Court, and parties generally challenge and explore the boundaries of the decision. Longer-term, where there is a serious issue between shareholders, the Aabar decision is unlikely to affect whether litigants choose to substantive claims (although it does remove a strategic advantage for claimants). However, we would expect a decline in those disputes where the purpose of the claim is to obtain access to company documents, perhaps in the hope of using these for publicity, or as a foothold to strengthen an otherwise uncertain claim. Similarly, if Aabar is upheld on appeal, we anticipate that there will be less satellite litigation over the disclosure of privileged company documents.
"In the short-term, we expect the Shareholder Rule to remain a “hot topic” as appeals from related cases reach the Supreme Court, and parties generally challenge and explore the boundaries of the decision. The longer-term impact of the ruling will vary depending on the nature of the claim."
A smoother path for ex-shareholders?
A claim for unfair prejudice is only available to current shareholders of a company. Those who have had their shareholding forcibly removed (for example, because they have been designated as a “Bad Leaver”) are instantly at a disadvantage. Traditionally, they must first litigate separately to restore their shareholding before proceeding with a petition—adding cost, time, and complexity.
The judge in the recent case of Re Contingent & Future Technologies Limited took a different approach, using his general case management powers to allow a petitioner to run a claim for rectification of the shareholders register simultaneously with the unfair prejudice petition.
This was a first instance decision, but we predict further developments in this area as ex-shareholder petitioners seize on the judge’s pragmatic approach with a view to establishing an easier path to unfair prejudice remedies.
Shareholder activism evolves: a smarter, sharper approach
Following ClientEarth’s failed litigation against Shell in 2023, shareholder activists are refining their approach. Future claims, particularly ESG and climate-related disputes, are expected to be more evidence-backed and targeted at specific policies, rather than broad critiques of corporate strategy.
Funding remains a challenge, as ESG claims lack the clear financial upside that attracts litigation funders. Until successful ESG cases emerge, expect slow growth in funder interest. However, activism is far from over—expect more strategic, well-supported challenges ahead.
Economic uncertainty fuels a surge in shareholder disputes
The current economic backdrop has seen many private companies and investments under-performing. Following an M&A boom in 2021, several investments from that period will now have under-performed, and this in turn is generating litigation.
As is the nature with challenging economic times, we have and will continue to see an up-tick in founder exits, disputes, calling in of warranties, and price re-negotiations in the year ahead.
Governance issues
Governance disputes remain front of mind for many directors and shareholders, and in the year ahead we expect three core themes to emerge:
1. Liability for global subsidiaries and suppliers
Increasingly, victims of overseas incidents involving the subsidiaries and suppliers of English companies are bringing claims against the parent company in the English courts, seeking to establish liability at the highest level of the group or supply chain.
2. Greenwashing
Greenwashing is another active area, particularly in the context of environmental credentials claimed in order to attract investment.
3. The new corporate governance code
The new corporate governance code, rolled out last year, will bring increased focus on the board’s management of “material controls” within the business.
"The Merricks v MasterCard settlement fallout could reshape litigation funding"
Merricks vs MasterCard: a spotlight on litigation funding
The Merricks v MasterCard settlement fallout could reshape litigation funding, raising key questions over who controls funded cases and how much influence funders should have.
This comes as the Civil Justice Council reviews litigation funding, with growing calls for stricter regulation. The case’s outcome could have significant implications for shareholder disputes and beyond—one to watch in 2025.
Shareholder disputes
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