MULTI-PARTY AND MULTI-CONTRACT ARBITRATIONS IN M&A DISPUTES
In recent years, there has been a rise in M&A disputes. Many M&A contracts provide for arbitration as the means to resolve the parties’ disputes. The popularity of arbitration in M&A disputes can be explained by its unique advantages, such as procedural flexibility, confidentiality and ease of international enforcement of arbitral awards. At the same time, M&A disputes can be complex, particularly when they arise out of a number of multifaceted and interrelated contracts entered into among different parties based in various jurisdictions. This may give rise to parallel arbitration proceedings. Many risks are associated with parallel proceedings, including the inconsistency of arbitral awards, which may lead to setting aside or non-enforcement, prolonged arbitration proceedings and increased costs. Most arbitration rules published by arbitral institutions, such as the Hong Kong International Arbitration Centre (HKIAC), the international Chamber of Commerce (ICC), the Singapore International Arbitration Centre (SIAC), the London Court of International Arbitration (LCIA) and the China International Economic and Trade Arbitration Commission (CIETAC), offer different procedural tools to deal with multi-party and multi-contract disputes. These include single arbitration under multiple contracts, consolidation, joinder and concurrent proceedings. This article will illustrate how parties may avail of these procedural tools in complex M&A disputes. In so doing, we will use a hypothetical case scenario and refer to the 2018 HKIAC Administered Arbitration Rules (the Rules).
Case scenario
A (Hong Kong) and B (Mainland China) are pharmaceutical companies and belong to the same parent company. C (BVI) and E (BVI) are affiliates of D (Mainland China), a biopharmaceutical company focusing on developing and manufacturing biologic medications.
Apr-Jun 2022 issue
HKIAC