Page 89 - M & A Disputes

make their rules public, it behooves any party to review the rules prior to selecting either the rules or in-
stitution to control any disputes under the M&A agreement. The parties may also want to consider speci-
fying certain rules and procedures to supplement or supplant the standard rules of the administering in-
stitution.

Even if the acquisition agreement does not establish a specific neutral institution, the agreement never-
theless may arm the neutral with a specific set of rules taken from an established organization. To this
end, the parties may want to consider incorporating some or all of a particular institution’s rules in the
agreement without necessarily submitting to that institution’s administration. This may afford the parties
some of the benefits of established rules while being able to select their own neutrals and avoiding cer-
tain extra costs.

Another alternative that the parties may select is to agree on their own set of rules and procedures to
govern an arbitration proceeding.

Some of the more significant procedural issues to be considered in selecting a particular set of rules or
composing one’s own rules are the following: the availability and extent of discovery, the role of ex-
perts, and the technical requirements for the award or decision.

Another important consideration is how the neutral(s) will be appointed to hear the dispute. All the ma-
jor institutions permit the parties to designate in the acquisition agreement both the number of arbitrators
and the method of appointment of the arbitrators. In the absence of such an agreement, however, the
general rule is that one arbitrator will hear the dispute, unless the institution determines otherwise. The
rules for all institutions also provide a method for the appointment of the arbitrator(s) in the absence of a
contrary agreement by the parties. Once appointed, the institutions all require that the arbitrators remain
impartial and independent. See, for example, Article 5 of the LCIA Arbitration Rules, Article 7 of the
ICC ICA’s Rules of Arbitration, and Article 7 of the ICDR’s International Dispute Resolution Proce-
dures.

Discovery

For an expert, one consideration is the type of material that will be available in connection with your
analysis. Although the parties can specify the extent of discovery in the agreement, the only mention of
discovery in the typical acquisition agreement is a limitation in time, number, form, or scope. In a typi-
cal U.S. litigation context, discovery often lasts for years and includes the production of documents
(hard copies, e-mails, and other electronic files); interrogatories; requests for admissions; and deposi-
tions. This type of discovery is uniquely American, and broadly speaking, parties to arbitration do not
have the opportunity to conduct such extensive discovery. Instead, these discovery obligations are trun-
cated and, in international arbitrations, frequently limited to the exchange of documents that will be re-
lied upon at the hearing.

Most agreements are silent on the specific provisions about discovery, relying either on the rules of a
neutral institution or the arbitrator to set forth the ground rules. Regardless of which guidelines apply,
the parties to a dispute resolution process inevitably will encounter discovery disputes for which they
require the neutral’s intervention. In light of the broad discretion afforded neutrals by the reviewing
courts, the neutral’s decisions with respect to discovery disputes are all but unchallengeable. It is for this
reason that predefined discovery rules guiding neutrals are so important.

Most institutions look to limit discovery in order to further the goal of expedited, cost-effective resolu-
tion. As a result, the rules of most institutions provide for the exchange of pertinent documents but do

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