Shareholder oppression takes many forms. Also, oppression can be difficult to address especially when co-shareholders are foreign entities who are not easily sued in the American courts. Recently, I led a team who secured a substantial award from the American Arbitration Association affiliate, the International Centre for Dispute Resolution (“ICDR”). Consequently, this award was a full vindication of shareholder rights of New Jersey residents in a petroleum refining technology company. As a result, the client regained control of the companies and can get the companies moving again.
As detailed in the ICDR Award, the claimants were and are full owners of Innovative Crude Technologies (“ICT”). ICT owned half of the issued shares in two entities doing business as Pristec America, Inc. (“PAI”), one formed in New Jersey and the other in Nevada. PAI owned the exclusive license rights to patented technology developed and owned by Pristec AG (“PAG”). PAG owned the balance (50%) of issued PAI shares.
PAI and ICT claimed fraud by PAG and other parties by being induced to cede control through a share acquisition agreement. These other parties were not part of the ICDR arbitration. This agreement would have allowed PAG to own all of the stock in PAI and ICT. In exchange, Claimants were to receive shares in PAG as well as other valuable rights.
Our clients prevailed – just over one year after the beginning of the ICDR arbitration. The award fully vindicated their share rights. Secondly, PAG clients must pay substantial legal damages to our clients. Thirdly, our clients received board control of the U.S. companies’ board of directors. Lastly, a permanent injunction was awarded. This injunction prohibits PAG from carrying out its secret plans for a new company, or from terminating PAI’s license rights again in the future. And, the ICDR rescinded the share acquisition agreement due to fraud.
This was a complex and interesting case. Please contact me if you are a victim of shareholder oppression.