DELAWARE CHANCERY VERSUS ARBITRATION FOR M&A DISPUTES
M&A disputes are often some of the most important and high-stakes disputes a company can face. Because of these high stakes, it is especially important that companies engaging in M&A transactions thoroughly consider and prepare for the prospect of litigation and be able to strategically position themselves in the event of a later dispute.
One key element of this strategic thinking is considering what forum a company will want to litigate in if a dispute arises. Two common choices for M&A disputes are the Delaware Chancery Court and arbitration.
The Delaware Chancery Court is regarded as the nation’s preeminent business law venue (see Sun Life Assurance Co. of Can. – U.S. Operations Holdings, Inc. v. Grp. One Thousand One, LLC, 206 A.3d 261, 268 (Del. Super. Ct. 2019), noting the Chancery Court’s “reputation as the preeminent forum to resolve corporate disputes”). The Chancery Court is composed of seven judges whose dockets tend to be concentrated with business-related disputes. Not all M&A litigation occurs in court, though. Another common method of resolving M&A disputes is through arbitration, which poses unique benefits and drawbacks as opposed to public lawsuits.
This article provides a survey of some key differences between litigating M&A disputes in the Delaware Court of Chancery versus in arbitration, and assesses how practitioners may weigh these considerations when deciding on dispute resolution mechanisms.
Speed
Both the Delaware Court of Chancery and M&A arbitration are sensitive to the practical realities of M&A transactions, including external time pressures, and can be accommodating to the necessity of completing litigation before a deadline.
Jan-Mar 2023 issue
Quinn Emanuel Urquhart & Sullivan LLP