Satellite litigation refers to court proceedings that arise out of a central dispute but are not strictly necessary to determine its outcome.

Satellite Litigation in Company Disputes: Fighting on the Hidden Fronts

Company disputes often start with a clear flashpoint; a breakdown in the boardroom, allegations of unfair prejudice, or questions over misuse of company funds. But those familiar with the reality of shareholder and director disputes know that the main claim is rarely the whole story.

More often than not, the central proceedings (which will usually take years to get to court) are accompanied by a barrage of ancillary claims, applications, and procedural crossfire – some of which can be extremely fast moving. Collectively, these ancillary actions are known as “satellite litigation.” These satellite skirmishes can become almost as costly and strategically significant as the main dispute itself.

What Do We Mean by Satellite Litigation?

Satellite litigation refers to court proceedings that arise out of a central dispute but are not strictly necessary to determine its outcome. These may involve side-issues between the parties or procedural manoeuvring intended to gain leverage.

While often seen as a distraction, these actions can sometimes change the course of the litigation, by shifting costs, delaying progress, or bringing pressure to settle.

What Does Satellite Litigation Look Like in Practice?

Drawing on our experience acting in long-running shareholder disputes, we’ve seen the same patterns emerge time and again. Common forms include:

1. Insolvency Proceedings

When relationships between shareholders or directors sour, it's not uncommon for one party to seek to leverage debt claims through a statutory demand or winding-up petition—often strategically timed to coincide with another dispute.

Example: In one matter, a minority shareholder issued a winding-up petition based on an unpaid director loan, knowing it would cause reputational damage and derail an ongoing investment round.

2. Part 8 Claims

Used to seek court clarification on company issues, such as whether certain accounts were properly filed (or are still to be filed) or how a provision in the articles should be interpreted. These claims often arise where day-to-day operations become mired in disagreement.

3. Costs Litigation

Detailed assessments, disputes over indemnity costs, and non-party costs orders are all fertile ground for further proceedings—particularly where directors or related parties have funded claims indirectly.

4. Procedural Skirmishes

Strike-out applications, interim injunctions, and security for costs applications can all escalate tensions and delay resolution. While sometimes necessary, they are often used to test resolve or exhaust resources.

Strategy or Sabotage?

For parties with deep pockets, satellite litigation can serve as a pressure tactic—forcing less well-resourced opponents to spend time and money on multiple fronts. Even where ultimately unsuccessful, these tactics can drain management time, frustrate negotiations, and strain client-adviser relationships.

Courts increasingly recognise these issues. Judges have criticised parties for “disproportionate,” “oppressive,” or “hyper-aggressive” litigation conduct. But despite judicial disapproval, the reality is that satellite litigation remains widespread.

What Should Litigants and Advisers Do?

Being forewarned is half the battle. Businesses involved in corporate litigation should:

• Anticipate satellite issues: Claims involving company finances, director loans, or complex governance often give rise to related litigation. Plan accordingly.
• Manage expectations and costs: Clients should understand that even a “straightforward” company dispute may trigger multiple parallel proceedings.
• Maintain strategic focus: It’s easy to become bogged down in the periphery. Always ask whether a side-issue is worth the cost, or whether it’s distracting from resolution of the main dispute.
• Consider early settlement of tangential issues: Clearing the decks can reduce noise and improve your position in the core litigation.

Conclusion: Keep Your Eyes on the Prize

Satellite litigation is now a familiar feature of complex company disputes. While sometimes justified, these ancillary actions often serve to delay, distract or wear down the other side.

At Gannons, we help clients stay focused on the main dispute, while navigating the procedural traps and tactical manoeuvres that often surround it. In company litigation, strategic discipline and commercial awareness are as important as legal arguments.