Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
In general, litigation is not common in connection with M&A transactions in Austria. Whether the parties involved choose to initiate litigation proceedings or opt instead for other means of dispute resolution, such as arbitration, depends mainly on the structure and size of the respective M&A deal. In practice, the main deciding factors are costs and the duration of proceedings. The parties in small M&A deals tend to favour litigation. The main argument in favour of litigation is that the costs incurred in connection with arbitration proceedings are usually higher, making litigation the more attractive means of settling disputes.
In the case of medium or large M&A deals with a multi-jurisdictional background, the parties mostly agree on arbitration to settle any disputes that arise. Arbitration allows the parties involved to receive a swift decision on a dispute away from the public spotlight, compared to litigation proceedings that sometimes drag on for years and are open to public scrutiny. Therefore, the parties in such transactions are often willing to accept the higher costs that come with arbitration proceedings.
Enforcement issues need to be taken into consideration in the case of cross-border M&A transactions as arbitral awards might be enforceable in countries where judgments of state courts are not.
Disputes in connection with M&A deals occur at every stage of the transaction (pre-closing versus post-closing).
The majority of disputes occur after closing. Such disputes are often characterised by the buyer asserting claims either regarding reps and warranties provided by the seller, error on behalf of the buyer, or in connection with the calculation of purchase price adjustment amounts.