Page 92 - M & A Disputes

ties may require the neutral to issue findings of fact and conclusions of law. However, a neutral who sets
forth extensive reasoning in an award may increase the possibilities for vacating the award when some
element made explicit within the award is determined to violate a tenet of law. Therefore, the neutral
award with the least chance of being overturned or modified in part is that which includes only the in-
formation necessary to explain the award and its underlying values.

Article 27 of the ICDR’s International Dispute Resolution Procedures and Article 25 of the ICC ICA’s
Rules of Arbitration each require that the neutral "state the reasons upon which [the award] is based"
(see also, Article 26.1 of the LCIA Arbitration Rules requiring that a written award "shall state the rea-
sons upon which its award is based"). Of course, this ambiguous guideline does not restrict or demand
any certain length, leading to written decisions of varied length. Once again, the neutral may want to
limit his or her reasoning to only that which is necessary to justify the award, thereby rendering the
award less prone to attack. Often, the neutral will seek in advance the parties’ input on the level of detail
of the award.

Designation of Situs of Arbitration

Parties should be sure to designate the place of the hearing within the arbitration provision. Factors to be
considered in designating a place of hearing include the following: the location of the parties, the loca-
tion of the parties’ representatives, the location of relevant witnesses and documents, the place of per-
formance of the agreement, the choice of substantive law, access to local courts for interim or emergen-
cy relief, the language of the agreement, the language of the arbitration, and the availability of any facili-
ties for the selected arbitrations.

All too often, the designated location will default to the principal place of business of the party primarily
responsible for drafting the agreement; however, careful selection on the part of both parties is the pre-
ferred route. Even more problematic is the failure to designate a place at all.

An inappropriate location could result not only in increased burden and expenses for parties and wit-
nesses but also the application of local laws or rules and oversight or lack of oversight from an unsuita-
ble local court. Any of these issues may be detrimental to either or both parties.

Even when the arbitration proceeds within the confines of an internationally recognized tribunal, nations
continue to vary in their approval of arbitration awards, depending on the location of the award. For ex-
ample, a United States court likely would scrutinize more carefully an arbitration award issued from a
nation with a legal system that has a checkered past.

Choice of Substantive Law

In the international context, the parties’ selection of the controlling law is particularly important. In ad-
dition to having a direct effect on the outcome of the dispute, the controlling law may well dictate the
factors that can be considered in formulating a valuation or an other expert opinion. It is for these rea-
sons that almost all purchase agreements include a specific choice of law clause; therefore, each transac-
tion party should be careful in selecting the most advantageous forum law. This is particularly important
in light of the almost unfettered authority that the arbitrator has in interpreting and applying the relevant
law.

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