International Arbitration in M&A Agreements - Núm. 27, Febrero 2017 - Philippi Prietocarrizosa Ferrero DU & Uría - Noticias - VLEX 666097917
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International Arbitration in M&A Agreements

Document Citado por Relacionados
Vincent
AutorMeghan Waters

No matter how well-crafted a merger or acquisition (M&A) agreement, there is an inherent likelihood, given the complex nature of such transactions, that there could arise a dispute between parties. Disputes may arise throughout the transaction, but most often take place post-closing, in relation to the representations and warranties of the parties, or to post-closing adjustments to the purchase price. A clear dispute settlement clause is therefore essential to these agreements; however, with a growing number of cross-border transactions, there is now a strong argument to be made that international arbitration is better suited than local courts to resolve disputes between parties from different jurisdictions.

In 2012, Colombia enacted Law 1563, which allows international arbitration to be included as the dispute settlement mechanism in cross-border transactions. This Law allows for international arbitration to be used (i) when the parties conduct business in different countries; (ii) when the place of performance is different than where parties are located; and/or (iii) when the subject matter affects international commerce1. The Constitutional Court has held, however, that international arbitration may only be used when at least one party to the agreement is domiciled outside of Colombia, which should be considered, so as to not use this mechanism in transactions involving only Colombian parties. The Law also makes clear that the decision of the parties to use international arbitration must be explicitly stated in writing, making it even more essential that a M&A contract include an explicit dispute settlement clause.

Given that Colombian law now recognizes international arbitration, the benefits of this mechanism, over domestic courts particularly, cannot be over emphasized. International arbitration carries with it: a higher level of enforceability, as it is...

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