We are a business family and own considerable real estate. My grandfather passed away last year. He was the patriarch of the family. He did not leave a Will and did not name a successor to management of the business. Since his demise, our family has started fighting over his estate and the business. Our family relations, which have been cordial till now, are getting affected and there are rumours that my uncles will go to court. How do we resolve this without getting stuck in years of costly litigation?
– Name withheld on request
While court proceedings are sometimes unavoidable, every reasonable effort should be made to settle differences before they escalate. As you have recognized, litigation is a costly route to resolving an inheritance dispute — financially, emotionally and reputationally.
As differences have already arisen in your family, your family may first attempt to resolve them informally. Designate one or more senior, trusted family members who are not parties to the dispute to act as informal facilitators. They can set basic rules of engagement to keep discussions civil and, importantly, time-bound. Open-ended negotiations tend to drift and harden positions.
Mediation route
If informal talks stall, consider engaging a professional mediator who can create a confidential and structured space to assist the family in resolving the matter. Bear in mind that a mediator does not dictate what the family should do; instead, the mediator’s role is to assist parties in arriving at a settlement.
If the family has an agreement to resolve disputes by arbitration, then should mediation fail, parties may invoke arbitration. Unlike , arbitration is confidential and allows parties to choose the person(s) who will decide the matter. Arbitration is also a quicker recourse than court litigation. Similar to a court order, the arbitrator’s award is binding on the parties.
That said, bear in mind that trust-related disputes are not arbitrable as per a judgment of the Supreme Court of India.
If there is no agreement to resolve disputes by arbitration, or if the subject matter of the dispute is not arbitrable, then litigation in court becomes the default option.
Nonetheless, even if court proceedings are underway, can still be conducted with the court’s blessing, and the settlement can be filed and recorded as a consent decree enforceable as a court order.
Settlement framework
While following the above route, consider some key ingredients to achieve resolution.
Do seek independent valuations of the property and business, as they lend credibility to commercial terms of the settlement and assure family members that they are not being short-changed.
You must also choose your legal and other advisors carefully — preferably those experienced in handling family matters and capable of navigating family sensitivities with the attitude of prioritizing settlement over protracted conflict.
Once broad consensus on the settlement terms emerges, document them carefully in a . Such agreements are now well-recognized as legally binding and even tax-neutral if they are entered into in good faith and meet certain fundamental criteria.
The settlement agreement may also need supporting instruments to create binding rights and obligations over assets — including share purchase agreements, conveyance deeds and partition deeds.
Lastly, remember that resolving family disputes requires a facilitative attitude from all parties, with some degree of give and take being essential.
Shaishavi Kadakia is a partner at Cyril Amarchand Mangaldas, Mumbai