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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
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Hi, this is part of my shareholders agreement that talks about

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Hi, this is part of my shareholders agreement that talks about dispute. What happens if the next step is to go through mediation but one side DOES NOT have money to pay for it? I need an extensive answer with all scenarios. Thanks.

9.7 Dispute Resolution. Any controversy, dispute, or claim arising out of, in connection with, or in relation to this Agreement (such controversies, disputes, and claims are hereinafter referred to as “Disputes”), shall initially be resolved, if possible (and each party shall use commercially reasonable efforts to achieve such resolution), in accordance with the following progressive dispute resolution provisions:

(a) In the event that any party has a Dispute, such party shall furnish written notice of such Dispute to each other party, specifying in reasonable detail the nature and basis of such Dispute and, in the event of a monetary dispute, the amount thereof (the “Dispute Notice”). Each party shall respond promptly to any reasonable request by any other party for additional information regarding any such Dispute.

(b) Upon receipt of the Dispute Notice, the parties shall immediately negotiate in good faith to resolve the Dispute. If the parties are unable to resolve the Dispute within thirty (30) days of the date of the Dispute Notice, then any party hereto involved in (or potentially affected by) such Dispute shall have the right to submit such Dispute to non-binding mediation before a mutually acceptable mediator (the “Mediator”), who shall be a retired judge or magistrate judge who served either in the Supreme Court of the State of New York, including the Appellate Division, or the United States District Court, Southern or Eastern Districts of New York, or the Second Circuit Court of Appeals. In the event of the inability or failure of the parties to agree on the identity of a Mediator within the foregoing thirty (30) day period, then any one of the parties shall be entitled to apply to a judge sitting in the Supreme Court of the State of New York, New York County, Commercial Division, who shall be authorized to appoint the Mediator, and whose appointment shall be final and binding upon the parties.

(c) Simultaneously with the submission of the Dispute to Mediation, the party submitting the Dispute to Mediation (the “Claimant”) shall submit to the Mediator and to the other party(ies) (the “Respondent”) any documentation or other material it may wish the Mediator to consider in mediating the Dispute. Within twenty (20) days after receiving notice that the matter has been submitted to the Mediator, the Respondent shall submit to the Mediator and the Claimant any documentation or other material it may wish the Mediator to consider. The Mediator shall call one or more meetings with the parties, which meetings may be joint meetings or ex parte meetings as the Mediator determines in the Mediator’s sole discretion. The fees of the Mediator shall be paid equally by Claimant and Respondent.
Thank you for your question. I look forward to working with you to provide you the information you are seeking.

I am afraid that in the event a mediator is needed because the parties cannot resolve their dispute without one through the previous dispute resolution steps, that party will have to come up with their share of the mediation fees if they want to pursue their complaint through to mediation. As this is a civil matter, the court has no authority or jurisdiction to appoint a free attorney or mediator in the case. The court can only order that if the party wants to continue to mediation rather than settle the dispute then they will need to pay their share of the mediation costs.

The courts have little power to intercede in these matters other than the power the written agreement gives them. As the agreement states both parties have to pay to mediate, the court's hands are tied to enforce that agreement as written. What normally happens in these cases is that if a party cannot afford a mediator, the court will instruct them to go back and settle the matter between them and if they want a mediator then they will have to come up with the money for one as they are bound to do by the agreement.

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Customer: replied 3 years ago.

Thanks for the prompt response.


So to clarify, lets say I'm requesting to go through a mediator from the other party but they say they can not afford to pay for one.


- What happens then?


- Is that an acceptable reason not to go through a mediator?


- Could it cause the other side a problem for not agreeing to pay?



Thank you for your response.

If you are requesting mediation, then the other party will either have to pay for their share pursuant to the agreement or give up and settle with you by giving you what you are asking for.

They cannot just refuse mediation because they cannot afford it, if they do then they would be in breach of the shareholder agreement.

It causes a problem for the other party in not paying because then they would be forced to give up and settle the matter giving you what you are asking for. The courts are not going to help him other than tell him the same thing, either pay or settle the matter by giving you what you are seeking.
Customer: replied 3 years ago.

My situation is this: My partner, which is my father in law, confiscated my salary from the company (I'm getting divorced from his daughter) and left me with no money to defend myself. He knows I can not afford lawyers so he pushes it as much as possible with legal threats. What do I do? I can not pay a mediator.. Frown

Thank you for your follow up.

If this is pay for actual work at the company, you can file a wage claim for non-payment of wages in violation of the Wage Act and the Fair Labor Standards Act with the US Department of Labor. Other than that, I am afraid that to settle any other disputes under the agreement you are going to have to find some way to pay for your share of the mediator to resolve this matter as that is what the shareholder agreement you signed agreeing to mandates and the law will not allow you to circumvent that contract.
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