In Tether Investments S.A. de C.V. v Electric Solidus, Inc [2026] EWHC 1652, the High Court (Commercial Court) considered the interaction between BVI statutory derivative actions and contractual veto rights in joint venture shareholders' agreements (SHAs).
The applicant sought to block a minority shareholder from pursuing a BVI statutory derivative claim in the name of a BVI joint venture vehicle, arguing that the SHA's "Reserved Matters" clause prohibited the company from "instituting" legal proceedings without majority consent.
- Individual Member Right: The Court held that a shareholder bringing a statutory derivative claim is exercising an individual statutory right rather than acting as the company's agent.
- Meaning of "Institute": Initiating a derivative claim in the name of the company does not amount to the company instituting proceedings. Standard SHA veto provisions restricting company-led litigation do not implicitly deprive minority members of their statutory right to bring derivative actions.
- Practice Takeaway: Drafters wishing to exclude or constrain derivative claims in joint ventures must insert express, unambiguous language to that effect in the constitutional documents or SHA.
- Source: Read the case update via Herbert Smith Freehills Kramer.
BVI & UK Commercial Court: Statutory Derivative Suits Bypass SHA Vetoes (Tether Investments v Electric Solidus)