In ordinary commercial litigation there is a plaintiff making a claim and a defendant resisting the claim made by the plaintiff. There is a well-established set of standard directions which will be made leading to a trial of the action. This will involve mutual discovery, exchange of witness statements and, in some cases, directions for expert evidence. There is little scope for disagreement about the directions which are made, other than questions of timing.

In an appraisal action, commenced by petition under section 238 of the Cayman Islands Companies Law, the sole purpose of the action is for the Court to determine the fair value of the shares of the shareholders who have dissented to the merger of two companies, together with a fair rate of interest to be paid by the company to the dissenting shareholders. The proceedings are quite unique in that respect because there is no plaintiff and no defendant and there is no burden of proof on one party or the other to prove particular allegations. Instead each party bears the burden of proving the value for which it contends, but ultimately the Court will decide upon the fair value.

Such a process ought to be straightforward and non contentious as it simply involves a valuation exercise which necessarily requires the assistance of valuation experts who require access to the necessary financial and business information upon which to base their opinions.

This article was first published in International Corporate Rescue.

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