1.      Question 1: Kindly provide a brief introduction of yourself.

 

 

2.      Question 2: What are some post-Merger & Acquisition success factors?

As a disputes lawyer, I am normally not involved in the post-merger activities of the purchaser. However, from my experience of the disputes which we see following the transactions, it would seem to me that for the purchaser it is very important to keep on board the key personnel of the target and to build trust between the personnel of the target and the new owners very quickly after the closing of the transaction. Post-merger integration to me seems to be a key factor for making the transaction a success.

As regards potential disputes, I would advise the parties to the transaction to do a kind of "post M&A due diligence". Very often the purchaser is so busy with integrating the target into its group that no post-closing monitoring takes place. Likewise, the seller tends to turn to other projects once the purchase price has been paid. However, the SPA usually contains many deadlines for potential rights of both, the seller and the purchaser, which need to be observed in order to safeguard these rights. Often, disputes arise because the contractual requirements for the respective rights have not been observed.

3.      Question 3: What are some of the post-acquisition dispute resolution challenges?

Although the M&A lawyers take great care in carefully negotiating all the specific clauses contained in the SPA, the wording is sometimes still ambiguous when looked at from the outside. Consequently, many post M&A disputes arise from the question in which way a specific clause is to be understood. There, we often run into cultural differences with one side arguing that the contractual clause cannot be interpreted but needs to be taken at face value and the other side insists that the history of the specific disputed wording needs to be taken into account.

In addition, the SPA usually contains a very specific liability regime which normally has been negotiated in detail, for example the catalogue of representations and warranties. Therefore, the purchasers often try very hard to argue their claim as being a warranty claim even though this might be stretching the wording very much. In such cases, we also often see that purchasers try to raise claims for damages outside the negotiated warranties. This, however, creates new problems (see Question 4).

4.      Question 4: What are some of the new developments in M&A disputes in the last two years?

Because of the narrow liability regime which I have mentioned above, we very often see that purchasers try to plead bad faith on the part of the seller in order to overcome the restrictions of the warranty regime in the SPA. This means that the claiming purchaser alleges fraud on the part of the seller. Not only is it usually very difficult to prove fraud. It is my observation that pleading fraud always leads to the dispute being conducted in a very emotional and irrational way and results in fiercer fights than we have seen in the past.

5.      Question 5: To what extent can arbitration reflect the complexity and nuances of M&A transactions – perspectives of arbitration and transactional practitioners

In my view, arbitration is very well-positioned to take into consideration the complexity of many M&A transactions as it provides for much flexibility in the proceedings. In addition, arbitral tribunals usually have more time to look into the details of the dispute than normal state courts. For example, arbitrators are normally open to review the various drafts of the SPA (provided that are introduced into the proceedings by the parties) in order to understand the development of a certain clause. In addition, the members of an arbitral tribunal are usually able to read and understand the intricacies of the contract language even if the contract language is not their mother tongue. This is because the parties are usually able to select the arbitrators and have the opportunity to find people with the necessary language skills.

6.      Question 6: How to structure financing of M&A disputes in the case of strategic and financial investors – the problem of third party funding

I do not have any own and direct experience with third party funding. However, it seems to me that third party funding is increasingly used in all kinds of large disputes. In my view, this in itself is no problem. However, the use of third party funding definitely needs to be disclosed to the arbitral tribunal and to the other side. And the third party funder should be under the same disclosure obligations as the arbitrators.

7.      Question 7: The belt and road initiative means hundreds of M&A transactions. How can arbitration foster development of this business strategy?

It is my expectation that most of the contracts regarding any kind of infrastructure projects in connection with the belt and road initiative will be cross-border transactions, thus involving companies from different countries. In my opinion it is absolutely essential that the parties to such contracts agree on arbitration in their dispute resolution clause. It seems to me that it would be completely irrational and constitute a serious risk for both sides of such a transaction if they were not to agree on arbitration, but rather on litigation in front of the local courts. In such a situation, the party not being from the country the courts of which are being granted the power to decide such a dispute, will always have or at least feel to have a disadvantage over the other party, simply because of a different language being used in front of those courts than its own normal business language. This is something which needs to be explained to both parties at the negotiation time.

8.      Question 8: Are merger and acquisition disputes best resolved through arbitration?

In my view, the answer is yes. There are, in particular, two aspects which are very important here. First, arbitration proceedings are much better suited to protect the confidential details of the SPA as hearings before the arbitral tribunal are usually not open to the public (the press), but only to the parties and their advisors. Second, as the parties are directly involved in the selection of the arbitrators and have substantial influence on the composition of the arbitral tribunal, they can ensure that the arbitrators have the specific expertise which is needed or at least very helpful in order to decide the disputed issues. It is also very helpful that in arbitration proceedings, the parties can agree on the language in which the documents which they want to rely on are provided to the tribunal. Thereby, in many cases, burdensome (and costly) translations can be avoided.