Deadlock Provisions in Shareholders' Agreements: Corporate and Litigation Perspectives

Joint ventures are frequently used as an alternative to traditional Merger & Acquisition transactions, as each joint venture partner brings his financial, technological or local expertise to a common project. In such context, shareholders’ agreements are an important tool to organize a governance procedure that will prevent or help solve strategic disagreements. However, despite the parties’ best intentions, diverging interests and cultural differences may result in deadlocks. Like weddings between individuals where prenuptial agreements can help deal with the consequences of a divorce, shareholders’ agreements need to adequately address potential disagreements and their consequences.