The success of any world economy depends on many factors, including the strength of investment flows. However, the investment sphere is characterized by a predisposition to various disputes between parties. Any participant in an investment project can provoke a breach of contract terms, e.g., investor, contractor, private company, government agencies, foreign enterprises, etc. Based on this, the specifics of investment disputes may vary, and finding the right way out of the conflict situation can only be done by professionals.

 

An experienced investment dispute lawyer from Lawrange LLC will provide detailed consultation and necessary legal expertise, analyze investment agreements, contracts, and much more. They will suggest the most effective legal way to resolve the conflict, which will help save time that can be used beneficially for your own business.

 

Definition of Investments

An investment is considered a monetary contribution to an object of entrepreneurial or other activity that has material or intellectual value with the aim of making a profit or achieving a specific social or environmental effect. Investment activities are regulated at the state level through special laws. For example, in Ukraine, this is the “Law on Investment Activity” and some other regulatory acts.

 

There are various types of investments, each serving specific purposes:

 

  • Protection against inflationary phenomena – traditional monetary assets tend to depreciate gradually.
  • Ability to accumulate pension savings – a relevant issue for most countries.
  • Access to passive income – provided by the popular concept of FIRE among many investors.
  • “Cash cushion” – required by absolutely everyone.

 

Every type of business involves a certain level of risk, and investment activities are no exception. Experienced investors diversify their portfolios to minimize such risk, meaning they invest not in one format of assets but several at once. At the same time, investors can earn money through investments in two ways:

 

  • Based on the difference in asset prices when buying and selling.
  • Receiving regular income in the form of interest or dividends.

 

Objects of Investment

Investment can be made in various types of assets, which can be real (for example, real estate, production lines), financial (currency, securities, precious metals), or intellectual (technologies, patents). Investments are also classified as short-term, medium-term, and long-term. It is precisely the time to receive income that distinguishes investments from trading.

 

Stocks

Stocks are securities used to increase the value of initial investments in any perspective. An investor who owns shares can take advantage of the opportunity to receive income from dividends or from the difference in the exchange rate. The issuance of securities is possible within the following:

 

  • IPO — Initial Public Offering on the stock exchange.
  • SPO — Secondary placement (carried out by organizations that already trade their own shares but want to attract additional investment).

 

Among the main advantages of investing in stocks are the opportunity to become a co-owner of a well-known company and the high chances of a subsequent sale. The downside is considered to be the regular volatility of the exchange rate.

 

Real Estate

Investments in residential properties are more common, while investments in non-residential real estate are less frequent. An investor can generate income from renting the property or subsequent resale. The benefits of investing in real estate are associated with the regular appreciation of such assets. Additionally, investors are practically risk-free even in times of crisis because income can always be derived from rented real estate. However, it is essential to understand that the profitability of real estate investments is relatively low, while the entry threshold is significant.

 

Precious Metals

Investments are made in gold, silver, iridium, palladium, platinum, and several other types of metals. They are characterized by resistance to corrosion and other negative environmental phenomena, high decorative properties, and other unique characteristics. An investor can profit from the increase in metal prices (which often occurs during crisis periods). The main risk of such investment activity is that the value of precious metals may increase and decrease, leading to losses.

 

When dealing with precious metals, investors are advised to use a long-term strategy (over 5 years) and not to forget about portfolio diversification. It is important to make regular investments in this type of asset if there is an interest in obtaining significant profits. Taxes should not be overlooked in this and other cases. In such situations, the services of an investment lawyer will be extremely useful.

 

Intellectual Property (IP)

More and more investors are paying attention to one of the most critical assets for businesses, which was previously often ignored. Intellectual property (IP) includes brands, software, copyrights, patents, trademarks, industrial designs, or trade secrets, which have value for investors.

 

Every company has a certain level of intellectual property, but not every enterprise is familiar with its market value. However, intellectual property gives the company a competitive advantage, which should be considered when analyzing the business. Although IP is intangible and may seem difficult to define, its use contributes to increasing the value of the company’s shares over time, as it is usually a key area of interest for analysts. Therefore, if investors can identify companies with strong IP assets before the broader market recognizes their value, they can make greater profits.

 

Before investing in IP, it is important to familiarize oneself with all possible risks and difficulties associated with this type of investment:

 

  • Lawsuits: there is a high probability of patent, copyright, and trademark infringements. If companies have to go to court to defend or prosecute, this will entail significant costs and potential reputational damage, which in turn will lead to losses for investors.
  • Complexity of IP assessment: ideas are intangible, so to accurately assess IP, it is necessary to use several methods simultaneously, which depend on the strength of the IP, the market, and potential revenue streams.

 

An experienced investment lawyer can help identify high-quality and truly valuable intellectual property worthy of investor attention. Through comprehensive assessment, it will become clear whether it is protected, what value it has, and whether it provides a reliable competitive advantage relevant to its field.

 

Difficulties in Investment Disputes and Their Types

The main problem lies in the insufficient development of Ukraine’s legislative framework regulating investment activities. This leads to a lack of a unified approach by the state to solving specific problems, which leaves investors poorly protected, thereby fueling the development of investment conflicts. These conflicts are classified depending on who is involved in the dispute. Thus, investment disputes arise between:

 

  • Investor and contractor.
  • Foreign companies operating in the same country.
  • Private companies and government bodies.
  • Foreign firms and authorities, etc.

 

Important! Legislation in many countries is often unable to resolve investment conflicts adequately. In such cases, the possibility of resolving the issue at the international level in arbitral tribunals is often utilized. In any case, the assistance of an experienced, qualified lawyer is essential.

 

In the event of a dispute between investors or with a venture enterprise, the parties involved can resort to various methods of dispute resolution:

 

  • Negotiations.
  • Mediation.
  • Arbitration or judicial proceedings.

 

The choice of method depends on the conditions specified in the contract or applicable legal frameworks.

 

Conflicts of interest between a foreign investor and the state occur much more frequently than conflicts of the “state-state” type. Considering this, clear procedures for resolving such disputes have already been established. Traditionally, efforts are made to encourage the parties to resolve the conflict amicably. If this cannot be achieved, the stage of arbitration proceedings begins. However, it is essential to understand that the cost of arbitration proceedings in “investor-state” disputes is quite high (often amounting to millions of dollars). Nevertheless, experts note a growing number of international arbitration disputes. The participation of an experienced lawyer or legal team in such a process guarantees the achievement of the necessary goals, including defending the interests of investors.

 

Legal Services for Investment Disputes

Such conflicts often require an understanding of not only domestic legislation but also foreign laws. In addition, a good understanding of all the nuances of procedures for resolving disputes between government agencies and investment contract participants is necessary. All this and much more is characteristic of experienced investment lawyers and attorneys at Lawrange, who specialize in providing services such as:

 

  • Drafting and analyzing investment contracts between individuals, legal entities.
  • Searching and analyzing the most beneficial areas for investors.
  • Attracting investors to the project.
  • Legal assessment of claims at the pre-trial stage.
  • Negotiation during extrajudicial settlement of disputes.
  • Searching for evidence to support the client’s case.
  • Representing the client’s interests in court or arbitration.
  • Monitoring the enforcement of court decisions.

 

By ordering legal assistance to resolve investment disputes, the client receives support regardless of the project category and its level of risk. Business support by a lawyer who is well-versed in the specifics and all nuances of investment activities, including foreign ones, allows for the swift recovery of invested funds, penalty sanctions, and resolution of other issues that arise during dispute resolution.

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Possible Disputed Scenarios

Successful investment activities and enterprise development are only possible if legally binding agreements between the parties are correctly drafted. The lack of attention from any participant to drafting agreements on the fundamental terms of an investment transaction, or, for example, the articles of incorporation or investor rights agreements, can lead to the development of contentious situations. These conflicts are diverse, but we can highlight several common ones.

 

Investor’s Non-Receipt of Income

This occurs, for example, when a joint-stock company refuses to pay the shareholder the full share in the agreed-upon percentage. Such occurrences often happen not directly as a refusal but as delays in payment justified each time by various reasons. It is also possible that you cannot receive your own share of the profits because, as it turns out, you are not listed in the shareholders’ register (even though you know you were). In such cases, only an investment dispute lawyer can defend your right to payment through court.

 

Non-payment Due to the Stipulated Event in the Contract

This includes the non-payment of insurance compensation in the event of an insurance claim. This conflict can only be successfully resolved through litigation. Therefore, it is recommended not to try to resolve issues with the insurance company independently over an extended period but to turn to a lawyer who will file a lawsuit.

 

Non-Receipt of Share Upon Investor’s Exit from the Business

This also happens during business division or the sale of shares to a third party. A fairly common phenomenon is the incorrectly calculated share of a shareholder that needs to be paid upon their exit from the business. It can also happen that it is not paid at all. Such a situation risks developing not only between the investor and the recipient but also between business partners. This is because not all participants in the business project agree to build transparent and honest relationships.

 

Non-fulfillment of Obligations Stated in the Contract

This is often encountered when investing in new construction projects. An investor invests funds in a residential property under construction, but in reality, they have no serious guarantees for their return or control over the construction progress. In such cases, the developer typically delays the completion of the property.

 

Unexpected Creditor Debt of the Enterprise

The reasons for such a situation are often inexplicable. Problems can arise due to the recipient of the investments’ dishonest performance of their duties or artificially created debt by the previous owner.

 

Disputes with Government Agencies

Any enterprise operating in any field may encounter such a problem. It is especially characteristic of large firms, which are often accused of violating legislation and are subject to fines, activity freezes, etc. Resolving such disputes out of court is practically impossible. In court, proving the groundlessness of repressive sanctions against the enterprise is possible only with the participation of an experienced, highly qualified lawyer.

 

Raider Seizure

This is a common problem for Ukrainian businesses. Today, unlike what happened 15 years ago, raiding practically does not involve an enterprise’s open seizure. Due to the development of legislation, raider schemes have become more sophisticated. For example, a company can be re-registered, and management can start immediately. In any case, an investor and owner in such a situation find themselves at a loss, not knowing what further actions to take. Therefore, it is important to note that in the case of a raider seizure or even a hint of its implementation, it is worth promptly contacting Lawrange. Our lawyers will do everything necessary to protect your business and investments.

 

Exclusion of the Investor from the Investment Project

Payment of funds as investments sometimes does not guarantee that the investor will receive their due share of the company’s income. This can happen due to unfavorable conditions for the investor, which are easily declared invalid by the other party. Moreover, the investor may end up without compensation.

 

Features of Joint Investment Fund

An investment fund is a useful tool for participants in investment projects. It is a private institution where money is invested for further investment. The main task of the Fund is to distribute the invested funds to make a profit, meaning that this organization decides where to invest your money, for example, in securities or in real estate. The investor’s income depends on the sale of securities by the Fund.

 

The first investment fund emerged in the early 19th century in Belgium, after which the United States, Europe, and the rest of the world adopted this practice. In Ukraine, the emergence of this institution became possible only in 2001 after the adoption of the Law “On Joint Investment Institutions”. Investment funds are quite popular worldwide, as they represent a lucrative alternative to bank deposits.

 

Important! The main difference between an investment deposit and a bank deposit lies in the degree of guaranteed income. In a bank, income is quite limited but still guaranteed by the respective contract. You can expect a higher income in an investment fund but without specific guarantees.

 

Why Choose Lawrange

If you need a lawyer for investment matters who knows their job and is deeply informed about all possible, even minor, nuances and peculiarities of this sphere, then Lawrange is the right choice. Our team consists of highly qualified, experienced lawyers who will provide detailed consultation on the issue at hand and help find the most optimal solution.

 

We will help you:

 

  • Develop a concept for presenting claims.
  • Prepare evidence, as well as gather a package of necessary documents.
  • Defend your interests at the pre-trial stage, as well as in court.
  • Monitor the implementation of court decisions.
  • Assess the commercial benefit of litigation; we will consider all the pros and cons of such a method so that you can make a well-founded decision, and more.

 

We offer consultations on legal rights and obligations in disputes, as well as strategic ideas that are crucial for resolving these conflicts. Our approach is developed to resolve complex disputes with a focus on protecting the client’s interests and ensuring the best outcome for the business. Contact us if you want to find out how to solve your problem.

 

FAQ

What consequences await the investor if the company goes bankrupt?

If a legal entity has critical debt, the investor, as one of the founders, may face bankruptcy.

 

What is commercial arbitration law?

Commercial arbitration is a means of resolving disputes by transferring them to a neutral party – an arbitrator, chosen by the parties to make a decision based on evidence and arguments presented to the arbitral tribunal.

 

How much do the services of a lawyer for investment disputes cost?

The final price depends on whether the specialist works on a one-time or permanent basis, provides consulting or organizational services, drafts documents, participates in court hearings, etc. In other words, pricing depends on the volume and type of work.

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