# kaal:claim:617681-042

**Claim.** Unless the Member State of incorporation specifically provides in its corporate statute that arbitration is permissible when allowed in the charter or a shareholders agreement, investors run the risk that courts refuse to enforce the arbitration provision.

**Type.** condition  **Support.** argued

**Holds when.**

- closely held corporations may rely on a shareholders agreement instead of the charter

**Source quote.**

> specifically provide in its corporate statute that arbitration is permissible if allowed in either the corporate charter or (for a closely held corporation) in a shareholders' agreement. Otherwise, investors run the risk that courts refuse to enforce the arbitration provision.

**From.** Christian Kirchner, Richard W. Painter, Wulf A. Kaal, *Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro* (2004), E.III.3 The Legal Standing of Arbitration in Europe, page 50

**Cite as.** Christian Kirchner, Richard W. Painter, Wulf A. Kaal, Regulatory Competition in EU Corporate Law after Inspire Art Unbundling Delaware's Product for Euro (2004). SSRN: https://ssrn.com/abstract=617681

**Verify.** sha256 of source PDF `e142130507ea2f5b025fd97b3f762d44ee3a7aaa82b155aab63434b85e8fd834` at https://raw.githubusercontent.com/wulfkaal/Academic-Papers/main/papers/pdf/Kirchner%20et%20al.%20-%202004%20-%20Regulatory%20Competition%20in%20EU%20Corporate%20Law%20after%20Inspire%20Art%20Unbundling%20Delaware%27s%20Product%20for%20Euro.pdf

**Failure mode.** unenforceable-charter-arbitration-clause  (family: enforcement-gap)

**Topics.** law-and-legal-systems, governance-design

**Keywords.** arbitration, enforceability, statutory-design, corporate-charters

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