Share Purchase Agreement Arbitration Clause

The doctrine of “separation” is very important in preserving the autonomy and integrity of arbitration. In the absence of “dissociability,” a party to an arbitration agreement would be able to avoid or delay arbitration by challenging or terminating the contract in which the arbitration agreement was found. Although arbitration clauses are provided for in some share purchase contracts (PSPs), they are not widespread and the parties to these contracts still often refer to formal disputes before the state courts. However, arbitration has many advantages over government litigation in the event of a dispute between the parties to an GSB. Therefore, before introducing a dispute resolution clause into a contract, it is worth considering whether arbitration procedures or litigation are the best way to resolve any future disputes that may arise from them. Arbitration clauses apply to both the signing of the contract and the execution phase of the contract. In this case, although these are cross-border factors, the consistency of dispute resolution procedures must be taken into account. In accordance with the principles of arbitration law, jurisdiction is deducted, according to arbitral law rules, from agreements between parties to an arbitration agreement, to the exclusion of a system similar to the “third party system” in court proceedings. Therefore, as long as the parties involved are not parties to an arbitration agreement, there is no jurisdiction for arbitration. In this case, after the first aforementioned issue was resolved, there was a valid arbitration on Company B in the signing phase of the transitional agreement, prompting Company B to honour its payment obligations.

In addition to the basic clauses that govern, among other things, the sale and purchase of shares, the terms of the precedent, the conclusion or limitation of the seller`s liability, the share purchase contracts generally contain a jurisdictional and legal clause mentioning the competent jurisdictions and the law applicable to the agreement. A fundamental version of this clause could be: “This agreement is subject to Belgian laws and any dispute is definitively settled by the Belgian courts.” Conciliation is in principle possible for all disputes arising from share purchase contracts. For example, disputes over pricing clauses or clauses that determine the seller`s representations and guarantees are subject to arbitration. With regard to the first clause, it is appropriate to distinguish between purely numerical discussions and more complex discussions, for example with regard to the components or structure of a pricing formula. In the first case, in which. B the different assets must be assessed and inserted into an existing formula, the decision of the person designated for the valuation and the final calculation is a third binding decision1 and not an arbitration decision. In the latter case, if the parties do not agree on the interpretation of one or more elements of the pricing formula, they will return to arbitration, since the diverging arguments of the two parties regarding the determination of the sale price must be heard. Arbitration proceedings concerning an insurance and guarantee clause could be retained for the resolution of disputes resulting from allegedly imprecise repetitions and guarantees or, in the absence of disclosure by the seller, where certain information was to be disclosed. In summary, arbitration decision in the resolution of disputes arising from share purchase contracts may prove to be a valid alternative to litigation before national courts. It is a time-efficient and confidential dispute resolution mechanism in which the parties can have a significant influence on the course of the proceedings in which a final and binding decision is taken. In deciding on arbitration, the parties to a share purchase agreement opt for a private and confidential mechanism for resolving future disputes that may result from the share purchase agreement.