In an unpublished recent decision of July 2023 the Princely Supreme Court dealt with the question whether persons who had been validly removed under the law of the seat of a foreign company would be authorised to represent the foreign company in Liechtenstein. The decision of the Supreme Court highlights particular risks and hurdles, especially in corporate cross-border disputes.

In the underlying case, persons A and B had been effectively removed as managing directors of a foreign company by shareholder resolutions. As persons A and B continued to act on behalf of the company in the home country of the company and also abroad (including Liechtenstein) despite their removal, interim injunctions were ordered at the seat of the company according to which persons A and B were prohibited them from acting as representatives of the company in the home country and abroad. Further the injunction ordered with third-party effect, that persons A and B must not be regarded as directors of the company. For justification of the injunction also arbitration proceedings were initiated.

At the same time, however, there were still conflicting entries in the foreign commercial register for some time, according to which A and B were still entered as managing directors. A and B referred to this entry in the commercial register.

A and B subsequently took actions on behalf of the company in disregard of the interim injunctions issued against them at the seat of the company, which led to irreparable harm and damage. In particular, they withdrew claims and appeals the company had filed in proceedings in Liechtenstein. For their status A and B referred to the foreign commercial register. The true representatives of the foreign company subsequently took various actions on behalf of the company to have the actions taken by A and B cancelled or declared invalid.

The Princely Court of Appeal granted the applications and declared the actions of A and B invalid. The Princely Court of Appeal agreed with the foreign company that the interim injunctions issued at the seat of the foreign company had set relevant facts and therefore also had to be regarded as relevant in Liechtenstein.

However, the Supreme Court came to a completely contrary conclusion. The Supreme Court stated that in the absence of existing conventions on the recognition and enforcement of interim injunctions, foreign interim injunctions cannot have effect in Liechtenstein. Accordingly, the interim injunctions issued by the foreign courts against A and B had no effect in Liechtenstein. Only the arbitral award of the arbitral tribunal, in which the question of the dismissal of persons A and B is decided in the main proceedings, is also to be recognised and enforceable in Liechtenstein on the basis of the New York Convention.

Until then, the court had to base its decision relying on who is registered in the foreign commercial register. This also is irrespective of the fact that the entries in the commercial register are only declarative in nature.

Furthermore, the Supreme Court also considered it irrelevant that, according to the law at the seat of the company, the resolution of the shareholders meeting already led to an effective dismissal of persons A and B and that a contradictory commercial register would be irrelevant at the seat of the company.

The decision of the Supreme Court clearly shows that particular caution is required in cross-border corporate law disputes, especially in case the dispute relates to an exchange of board members. Even if persons are effectively removed under the law of the seat of the company and can no longer take effective and valid legal action for the company there, this does not apply to Liechtenstein. According to current case law, persons who have already been effectively removed from office according to the law of the seat of the company could nonetheless take effective legal action on behalf of the company in Liechtenstein, which could lead to irreparable harm and damage for the company.

Accordingly in cross-border corporate disputes that have a connection to Liechtenstein, it is advisable to take additional precautionary measures in Liechtenstein to ensure the effectiveness of foreign decisions.

The litigation team of Niedermüller Attorneys at Law, led by Dr Matthias Niedermüller, regularly deals with cross-border corporate disputes and can assist in taking the necessary measures in Liechtenstein.

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