Page 88 - M & A Disputes

agreement. In light of the fact that it is nearly impossible for an aggrieved party to overturn even the
most unfair award, parties should be circumspect in following the self-administration route, and parties
should set forth any specific procedural rules that they may require. Waiting until after a dispute arises
may leave the party without the ability to force any particular time, discovery, or other procedural rule
upon the neutral.

One option that the parties can use to impose some guidelines for the appointed arbitrator is agreeing
that the arbitration will be self-administered but will proceed according to the rules of one of the estab-
lished institutions. The parties may be able to avoid some of the costs and concomitant oversight of the
neutral institution while taking advantage of the certainty inherent in its rules. The parties may also set
out detailed rules, procedures, and limitations governing the arbitration in the agreement itself. Arbitra-
tion is a matter of contract, so the parties are generally free to impose whatever rules or procedures they
can agree upon.

Neutral Institution

In many acquisition agreements, the parties name a specific neutral institution to which they will submit
administration of their dispute. The dominant institution within the United States is the American Arbi-
tration Association (AAA). The AAA has an international arm, the International Centre for Dispute
Resolution (ICDR). The parties may find several other international institutions more suited to the par-
ticular transaction or jurisdiction or more palatable to the other side. Included among these international-
ly recognized institutions are the International Chamber of Commerce International Court of Arbitration
(ICC ICA), the CPR Institution for Dispute Resolution, the London Court of International Arbitration
(LCIA), the United Nations Commission on International Trade Law (UNCITRAL), the China Interna-
tional Economic and Trade Arbitration Commission, the World Intellectual Property Organization Arbi-
tration and Mediation Center, and the Commercial Arbitration and Mediation Center for the Americas.

The selection of a specific neutral institution may assist the parties in pursuing the stated goals of arbi-
tration — namely, speed, economy, and justice. Each institution will take an active role by assisting in
the selection of a neutral, providing oversight by trained staff, monitoring and scheduling the conduct of
the proceedings, and assisting the arbitrators in keeping to the process. Of course, with this assistance
often comes substantial charges.

A neutral institution also adds the benefit of its institutional experience regarding expert arbitrators and
established rules and procedures. As a result, the parties receive the benefit of the most efficacious ad-
ministration of its rules guiding the procedural, timing, or substantive aspects of the arbitration.

Each institution has its own unique procedures. Prior to the selection of a specific institution, the parties
should carefully review the rules of that institution to ensure that there are no surprises once the dispute
arises. Of course, the acquisition agreement may have identified a specific neutral institution to adminis-
ter the arbitration but, at the same time, may have selected a set of rules either promulgated by a differ-
ent institution or composed by the parties. However, the parties should be careful to confirm that the se-
lected neutral institution allows for the applications of foreign rules.

Procedural Rules of the Dispute

Every major neutral institution has its own set of rules and procedures by which its neutrals will govern
the dispute. These various sets of rules, although similar in many respects, have variations that may
cause a significant impact. It is advisable, therefore, for the parties to understand the benefits and detri-
ments of each set of rules prior to designating which will govern the arbitration. Because the institutions

86 © 2020 Association of International Certified Professional Accountants