Vanuatu Corporate Disputes: Courts, Arbitration & Remedies

Corporate and Shareholder Disputes in Vanuatu: What Foreign Owners Need to KnowCopy link to section

Corporate and shareholder disputes in Vanuatu are resolved through the Supreme Court of Vanuatu, which exercises general civil jurisdiction over every company matter, whether the entity is a domestic company or an International Company registered with the Vanuatu Financial Services Commission. There is no dedicated commercial court and no local arbitral institution, so the framework rests on a mix of statute and inherited English common law. This article explains where the rules come from, the kinds of conflicts that arise between owners and directors, the routes for relief, and the practical limits a non-resident faces when enforcing the result.

It matters most to foreign investors holding shares in a Vanuatu entity, joint-venture partners, and advisers structuring ownership before a dispute ever surfaces.

The Governing Legal Framework: Companies Act and International Companies ActCopy link to section

Two statutes do most of the work. The Companies Act No. 25 of 2012 governs the formation, management, and dissolution of domestic companies, while the International Companies Act [Cap. 222], enacted in 1992, sits beneath the offshore sector that most non-resident owners use.

Older domestic entities still answer to the Companies Act [Cap. 191], modelled on the UK Uniform Companies Act 1948. Its oppression and winding-up provisions continue to be cited in litigation, so legacy companies cannot be treated as governed only by the newer statute.

International companies carry a light regulatory load. They are exempt from local taxation, free to design share structures and governance as the constitution directs, and not bound by mandatory filing or audit unless they trade inside the country.

That freedom comes with boundaries. An IC may not conduct business locally, hold real estate other than leased premises for its international operations, offer shares to the public, or take a banking, trust, or insurance licence.

A company formed under Cap. 222 can re-domicile into the 2012 Act regime through articles of continuation, a useful option where ownership plans change.

One feature shapes everything that follows: the legal system blends English common law, French civil law, and customary law. English common law as it stood at independence in 1980 applies wherever Parliament has not displaced it, and the Constitution preserves equity and pre-1980 statutes. Much of the dispute machinery below is therefore judge-made rather than codified.

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Common Types of Disputes: Oppression, Deadlock, and Breach of Director DutiesCopy link to section

Oppression is the classic shareholder grievance. Under the older domestic Act, section 216 provides an "alternative remedy to winding-up in cases of oppression," letting a shareholder ask the court for relief short of dissolving the company when its affairs are run unfairly.

The 2012 Act introduced express director duties for domestic companies, including duties of care and loyalty drawn from modern Commonwealth practice, with reform support from the Asian Development Bank. The precise section numbering of those duty provisions should be confirmed by direct statutory review before any claim is framed.

For International Companies, the primary director-duty trigger is narrower. Directors must ensure any distribution leaves the company able to meet its liabilities, and they can be held personally liable for the shortfall if it does not.

Deadlock between equal owners has no dedicated statutory cure. Resolution falls back on the company's own constitution or, failing that, the court's just-and-equitable winding-up power inherited through common law.

Cap. 191 also arms the court to assess damages against delinquent directors and provides for the prosecution of officers and members who default. These remedies remain live for entities still under the old Act.

Derivative Actions and Protecting Minority ShareholdersCopy link to section

No codified statutory derivative action of the kind found in the Australian Corporations Act has been identified in Vanuatu law. The practical position is that the common law rule in Foss v Harbottle, and its fraud-on-the-minority exception, applies by virtue of the country's English law heritage, allowing a minority to sue in limited circumstances where wrongdoers control the company.

Statutory minority protection under the old Act runs through two sections: section 215 permits a majority to acquire dissenting shares in an approved scheme, while section 216 supplies the oppression remedy. For modern domestic companies, the 2012 Act points to the Companies (Insolvency and Receiverships) Act 2012 for compromises and liquidations but does not appear to contain a standalone derivative action chapter.

For International Companies, minority protection is largely a contractual matter. Because the statute imposes little mandatory governance, the IC's constitution and any separate shareholder agreement are the real safeguards.

Transparency offers a further check. Companies must register and maintain a shareholder register, and ownership and identity information, including for nominee-held shares, is required to be kept.

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The Vanuatu Courts and the Supreme Court's Commercial JurisdictionCopy link to section

Every corporate and shareholder dispute is heard in one forum. The Supreme Court of Vanuatu, based in Port Vila, exercises unlimited civil and criminal jurisdiction and comprises the Chief Justice and three puisne judges.

There is no separate commercial court or company division. Corporate matters are listed alongside other civil claims, whether they arise under Cap. 191, the 2012 Act, or the International Companies Act, and no published case-processing timelines for commercial work were located.

Appeals run to the Court of Appeal, which holds the same power and jurisdiction as the Supreme Court when reviewing its decisions. The Supreme Court also hears appeals from the magistrates' courts and from island courts on customary land ownership.

Decisions are publicly available, which helps a foreign owner gauge how judges treat company disputes.

Arbitration and Alternative Dispute Resolution OptionsCopy link to section

The single most important fact for a non-resident is that Vanuatu has not signed or ratified the New York Convention. Foreign arbitral awards therefore have no treaty route to enforcement, a gap that should shape any dispute clause drafted into a shareholder agreement.

No arbitral institutions operate locally, and the law governing arbitration is found mainly in pre-1980 English common law preserved by the Constitution. According to the Chambers arbitration guide, there have been no significant changes to that regime in the period it reviewed.

There is a real risk a clause making arbitration "final and binding" will be read as improperly ousting the courts' jurisdiction and refused effect. Where an award does stand, the route to enforcement is an application to the Supreme Court under section 42F of the Judicial Services and Courts Act, after which the resulting order is enforceable as if made in an ordinary action.

The country acceded to the 1907 Hague Convention for the Pacific Settlement of International Disputes on 11 August 2024, becoming the 123rd contracting party to the Permanent Court of Arbitration. Mediation remains available and is often preferred for the savings in cost and time, though reliable data on how often international arbitration is actually used is scarce.

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Interim Remedies: Injunctions, Asset Freezing, and ReceivershipCopy link to section

Court-appointed receivership is a confirmed interim tool. A receiver may be installed by the Court under its inherent jurisdiction to take possession of assets, manage or sell them, and distribute the proceeds by order of priority, which makes it useful where assets are at risk during a dispute.

Receivership also arises in the security context. A secured creditor may appoint a receiver to seize a company's assets on default, exercising similar powers of control and realisation.

Freezing relief is less certain. No Vanuatu statute codifying Mareva-style freezing orders was identified, and although the Supreme Court's inherited common law jurisdiction would likely support such orders, no confirming local case law was retrieved.

That uncertainty is a reason to take local advice early rather than assume a freezing injunction will issue on the same terms as in a larger common law jurisdiction. No court-prescribed fees, procedures, or timescales for obtaining interim injunctions were found in the available sources.

Winding-Up and Insolvency as a Dispute Resolution RouteCopy link to section

Insolvency can itself end a deadlock or break an oppressive stalemate. The framework rests on the Companies (Insolvency and Receivership) Act No. 3 of 2013, the Insolvency (Cross Border) Act, and the 2012 Companies Act, supplemented by Regulation Order No. 111 of 2015 and drafted with Asian Development Bank support.

Two liquidation paths exist. Voluntary liquidation is begun by directors or shareholders of a solvent company that elects to wind up; compulsory liquidation follows a court order, usually on a creditor's petition or where the company cannot pay its debts.

For shareholder conflict specifically, the just-and-equitable winding-up power is the relevant route, available through the Supreme Court under both the old and new domestic Acts in line with common law principle. Where dissolution is too blunt, section 216 of Cap. 191 offers oppression relief that stops short of winding the company up.

The mechanics are conventional. A liquidator manages the process, directors furnish a statement of affairs, and a final report and distribution to shareholders close it out. The framework also recognises and assists foreign insolvency proceedings, and a court application may be made to liquidate the Vanuatu assets of an overseas company.

Enforcement of Judgments and Awards for a Non-Resident OwnerCopy link to section

Winning is only half the task; collecting is the other. Because there is no New York Convention membership, a foreign arbitral award cannot be enforced on a treaty basis and must instead come before the Supreme Court under section 42F, a step one court described as potentially expensive given the costs already spent on the foreign arbitration.

Foreign court judgments fare no better on treaties. No bilateral or multilateral enforcement convention was identified, so the common law route applies: a non-resident sues on the foreign judgment as a debt in the Supreme Court.

There is also a notable silence in the law. No Vanuatu provisions address the recognition standards for awards, the public policy ground, or the effect of an award being set aside or challenged, and no local judgments on those points were found, leaving such questions to be argued from first principles.

The practical sequence for a foreign owner is straightforward to state, if not to predict in time:

1. Obtain a Supreme Court judgment, or a section 42F order recognising an award.
2. Register or sue on the foreign instrument where the claim originates abroad.
3. Execute against assets sited in Vanuatu.

No execution timeline data was available, so build enforcement realism into any decision to litigate offshore.

Drafting to Avoid Disputes: Shareholder Agreements and ConstitutionsCopy link to section

The cheapest dispute is the one the documents prevent. For an International Company, minority protection is essentially contractual, which puts the weight on the constitution and any separate shareholder agreement rather than on statute.

The constitution does the structural work. An IC's constitution must state its objects, whether it is limited by shares or guarantee, and any members' contribution undertaking; a 2012 Act company's rules set out the rights and duties of shareholders and directors but have no effect where they conflict with the Act. Directors hold all powers not reserved to members, so reservations must be written in deliberately.

Voting defaults matter too. Unless the constitution says otherwise, all shares vote as one class with one vote each, so any custom class or weighted right must be expressly drafted. An IC needs only one shareholder, who may be a nominee, and one director; corporate directors are allowed and no corporate secretary is required.

A shareholder agreement sits outside both statutes and is governed by general contract law, with no special statutory rules on its form or enforceability. Given that freedom, several provisions earn their place:

• Deadlock resolution mechanics for evenly split ownership
• Pre-emption rights on the transfer of shares
• Tag-along and drag-along clauses
• Thresholds for appointing and removing directors
• A valuation method for buyouts on exit
• A governing-law choice that accounts for the absence of New York Convention enforcement when an arbitration clause is contemplated

Records of directors and shareholders must be maintained at the registered office or another place the directors choose, though they are not necessarily placed on public file.

ConclusionCopy link to section

A Vanuatu company offers light governance and tax exemption for international business, but the dispute machinery behind it is thin and court-centred. Almost everything turns on the Supreme Court, on inherited common law, and, for International Companies, on the agreements the owners write for themselves. The absence of New York Convention membership and of treaty-based judgment enforcement means a foreign owner should plan for collection difficulties before a conflict arises, not after. Careful drafting of the constitution and shareholder agreement is the most reliable protection available.

How Expanship Can Help Your Business in VanuatuCopy link to section

Expanship supports foreign owners on the structural side of corporate and shareholder disputes, from drafting constitutions and shareholder agreements with workable deadlock, pre-emption, and exit terms to coordinating local counsel when a matter reaches the Supreme Court. The same team handles the wider work of running a foreign-owned entity in the jurisdiction.

• Company incorporation and re-domiciliation
• Registered agent and registered office services
• Tax registration and filing
• Ongoing compliance management
• Accounting and bookkeeping
• Banking introductions

To discuss your structure or an existing dispute, contact Expanship Vanuatu.

Frequently Asked QuestionsCopy link to section