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US court grants arbitration order in Uber-Benchmark battle: Report

Travis Kalanick supporters see this as a minor victory for Uber.

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Uber has been locked in a court battle with its largest shareholder, Benchmark Capital, that sued founder Travis Kalanick for fraud and breach of contract. However, a ray of hope has reached the ride-hailing major, with a US court having sent the case to arbitration — which essentially means that proceedings will play out in the background sans courtroom appearances from either parties. Kalanick supporters are viewing this as a minor victory for Uber. “Mr. Kalanick is pleased that the court has ruled in his favor today and remains confident that he will prevail in the arbitration process,” a spokesperson told Recode.

Benchmark was one of Kalanick‘s closest aides and played a significant role in Uber becoming the world’s most valued private company at $69 billion. However, the venture capital firm not only sued him but also pressed for his ouster from Uber’s board. It sought a status quo order from the court such that Kalanick’s involvement in Uber’s business would come down. Reports suggest that the arbitration might only be temporary relief for the company as the arbitrator could still grant a status quo order in the future. ALSO READ: Uber Mishaps: From data breach to CEO Travis Kalanick’s leave of absence, here’s everything that went wrong

Uber, of course, has rubbished Benchmark’s allegations stating that it is an attempt to slander Kalanick — one of Silicon Valley’s most well-known faces. His lawyers claim that Benchmark had pressured and threatened him into stepping down as CEO in June, that triggered organizational chaos at Uber and led to the exit of several senior employees. Benchmark, which owns a 13 percent stake in Uber, claims that Kalanick misled investors about his performance, and also failed to explain why he increased the number of board seats from 8 to 11. ALSO READ: Uber to go public in 2-3 years, says new CEO Dara Khosrowshahi

Arbitration rulings are usually sacrosanct. That means if Kalanick loses, he wouldn’t be able to appeal to a higher court. And in the event of Uber going public in future, it would give Benchmark not only a court victory, but also a meaningful exit from the company. However, if Kalanick wins, he will continue to hold his board seat at Uber, and probably annoy a few investors including Benchmark. For now, Uber is setting out to restore some of its lost glory under newly appointed CEO Dara Khosrowshahi who assumes office early next week.

  • Published Date: August 31, 2017 3:25 PM IST