The Mechanism Of Non-judicial Solution For Company Deadlock

Company deadlock makes it difficult to continue the operation of the company, which has notonly led to shareholder loses its intention to getting a decent return from his original investment,but also to consume the company’s capital, resulting to the barrier of further accumulation ofwealth of society. Therefore, company deadlock caused widespread concern of all legislative,judicial and scholars.At present, the definition of the corporate deadlock have two mainly meanings: one isfocusing on the company’s failure to form the effective management decision, which may results indamage, the other focus on the definition of” corporate deadlock” from the angle of "personal lost”,thinking of any factors do harm to company’s personal features, as long as to the result of companyabnormal operation, will cases a deadlock. The former definition is relatively specific, but the otheris abstract.This paper thinks, the definition of corporate deadlock, if the provisions are too specific, willlose its elasticity, lacking of response to the complex realities, if the provisions are too abstract, willcause the risk of judicial discretion. Therefore, the interpretation of the meaning of corporatedeadlock depends on the the credibility of the authority and the judicial authorities of a country. If acountry’s judicial authority is higher: legislators, people have more trust in the discretion in judicial,it will more likely to accept the more abstract and flexible definition. On the other hand, is not.China’s "company law" is including the general provisions of company deadlock, and judicialinterpretation of “company law” uses the explicit method to list the forms of company deadlock aswell. It is more preferable, because it not only limits the discretion of judges, also reserves thefuture space for the practice of new legal situation.The surface reason of the corporation deadlock occurs, is the contradiction betweencompany’s shareholders or between board stage, causing the company’s failure of make decisionand normal operation, but, it is a surface reason, the deep cause lies in the capital system of thecompany. At the same time, seal character of a company, intensifies the centralization of companyshares, and hinder the free circulation of shares, which further exacerbates the continuous state ofcorporate deadlock. Finally, the company deadlock behinds the essential conflicts of investors ormanagers’ interests, and it is often presenting as a shareholders stress to other shareholders in unfair treatment.Through legal channels to resolve the company deadlock is important, but there also existsome disadvantages, including judicial remedy in the high cost and too stiff judicial results. Thebackward of judicial remedy is not only reflects in the party should bear the cost of litigation costs,but also in the adverse effects on the company, shareholders, creditors, employees and society etcin the dissolution of the company.Provided China’s "company law" provides the only legalchannel to resolve the company deadlock, that is the dissolution of the company, so the judicialrelief decline to too single and rigid results, which is not conducive to deal with the practice of thecomplex of corporate deadlock.Based on problems of judicial remedies, it is necessary and considerable realistic to solve thenon-judicial means for corporation deadlock. Non-judicial means for the company deadlocksolution can effectively compensate for the judicial way, it will help to reduce the cost burden ofstakeholders, to avoid the disadvantages of China’s judicial resolution, and also to enhance theability to complex with the practice of dispute. At the same time, the system of non-judicialsolution fits the root of deadlock, get the legislative support as well, so this method is more feasiblein practice.Non-judicial mechanism for company deadlock can be divided into ways of internal self-resolve mechanism and of intervention of third party. The former includes constitution agreedrelief and shareholders equity transfer agreement; the latter mainly manifests for the mediation andarbitration of these two kinds of dispute resolution. All kinds of different disputes solutionhave their own advantages, but backwards as well. Therefore, in specific a case, which is suitablefor dispute solution cannot lump together, it should be according to the specific circumstances ofthe case to judge. In fact, both judicial remedies for corporate deadlock, and non-judicial reliefway, each plays a certain function, for the parties to choose, thus.This paper emphasis on the non-judicial settlement of company deadlock, do not to denythe judicial solution, but to provide the other way to choose, excepting the judicial relief way, theparties finally how to choose, depends on its own will and judgment. In fact, judicial ways andnon-judicial ways have their own good points and weak ones, respectively, can play acertain function. Therefore, in the event of the company deadlock, the parties deserve seriousconsideration to decide what way to choose, and to achieve a ice crack and protect their rights atthe same time.