Page 86 - M & A Disputes

Chapter 7

International Considerations

Introduction

This chapter will familiarize the reader with general principles relating to the use of international arbitra-
tion to resolve a merger and acquisition (M&A) dispute. In addition, this chapter will discuss how the
rules and procedures of the various administrators and forums relate to and affect the practitioner’s role
in that process.

Overview

A business may be a party to a merger or an acquisition involving international aspects, including such
facets as the parties residing in different countries or the place of performance being different from the
place of business of one or both parties. After considering the general differences between arbitration
and litigation through the courts, a party to a merger or an acquisition involving international aspects
may elect to provide an agreement for arbitration in the event of a dispute. If such a decision is made,
the party needs to consider many strategic choices that may well determine whether any dispute relating
to the merger or acquisition is brought to a successful conclusion.

These strategic choices include the selection of the following: the issues subject to arbitration, the insti-
tution to administer the arbitration, the process for the selection of a neutral, the rules that will govern
the arbitration proceedings, the availability and extent of prehearing discovery, the role of experts in the
arbitration, the place of the arbitration, the substantive law on which resolution of the dispute will be
based, confidentiality of documents or the proceeding, and the availability of punitive damages.

M&A agreements often contain a general dispute resolution clause that requires arbitration of all dis-
putes arising under the agreement. Such agreements may also contain more specific rules and proce-
dures or carve-outs for expert determination of certain designated issues often related to valuation. In in-
ternational arbitrations, a practitioner may serve as a party-appointed expert, an expert adviser to a party,
a neutral-appointed expert, or the neutral.

As discussed subsequently, the arbitration procedures implicated by specific arbitration agreements af-
fect a variety of components of the arbitration process and the practitioner’s role in that process. For ex-
ample, the arbitration procedures determine the following: what evidence may be considered by the neu-
tral, how that evidence is presented to the neutral, the availability of discovery in advance of the hearing
or expert testimony, and the type of relief that may be granted. For this reason, it is important that any
practitioner, whether serving as an expert, an adviser, or in a neutral arbitrator capacity, understand the
various forums and the applicable rules.

This chapter describes the strategic considerations to be weighed in making the referenced choices in the
formulation of the dispute resolution clause in the acquisition agreement. This chapter discusses the
ramifications of such choices in the context of the international arbitration actually taking place. Further,
this chapter explains the effect of these choices on the role of a practitioner in the arbitration proceeding.

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