Settlement of China-Related M&A Disputes by Arbitration CEAC as - PowerPoint PPT Presentation

Chinese European Arbitration Centre Settlement of China-Related M&A Disputes by Arbitration – CEAC as an Alternative Arbitration Institution? Dr Dominik Ziegenhahn Member of the Advisory Board of CEAC Vice President of the Chinese European Legal Association e.V. (CELA) : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Overview  Introduction  Typical Disputes in connection with M&A Transactions  Advantages of Arbitration for M&A Disputes  Selection of Arbitration Procedures for M&A Disputes  Using CEAC for China-related M&A Disputes  Conclusions 2 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Introduction  Foreign direct investments between Europe and China through cross-border M&A transactions are continuously increasing  Cross-border M&A disputes as complex as M&A transactions itself; broad variety of typical disputes during and after the negotiation process  Disputes often arise as a consequence of vague or even missing contractual clauses  Parties of M&A transactions prefer arbitration in particular for confidentiality reasons, the speed of arbitration procedures and competence of arbitrators  Difficult to provide statistics as information on arbitration proceedings and arbitral awards not public  CEAC as an alternative arbitration institution for China-related M&A disputes 3 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Typical Disputes in connection with M&A Transactions (1) Pre-Closing Disputes  Violation of a letter of intent  Violation of non-disclosure or exclusivity agreements  Disputes regarding pre-contractual disclosure requirements  Disputes regarding the occurrence of closing conditions  Withdrawal from negotiation in bad faith 4 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Typical Disputes in connection with M&A Transactions (2) Post-Closing Disputes  Disputes regarding purchase price adjustments and closing accounts  Disputes regarding the valuation  Violation of representations and warranties  Disputes regarding indemnification obligations  Disputes regarding calculation and compensation of damages  Violation of pre-contractual information duties  Violation of post-contractual non-compete or non-solicitation obligations  Disputes regarding put and call options 5 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Advantages of Arbitration for M&A Disputes  Exclusion of a home field advantage  Competence of the arbitrators  Speed  Confidentiality  Flexibility  Enforceability  Costs 6 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Selection of Arbitration Procedures for M&A Disputes  Choice of arbitrators and type of procedure key to the outcome of any dispute  Institutional arbitration  Ad-hoc arbitration  Fast track arbitration  Expert proceedings  Choice of the arbitration institution  Asia: CIETAC, BAC, HKIAC, SIAC, etc.  Europe: ICC, DIS, VIAC, CEAC, etc.  Choice of the seat of arbitration in China-related disputes 7 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (1) CEAC and CEAC Arbitration Rules at a Glance  International dispute resolution institution focusing on China-related disputes worldwide with seat in Hamburg, Germany  CEAC arbitration rules based on UNCITRAL arbitration rules  Deviations from UNCITRAL meet specific needs of China-related disputes  CEAC ‘core rules’ show deviations from UNCITRAL rules  Special focus on neutrality, in particular with respect to the composition of the appointing authority  Neutrality also evidenced by foundation of CEAC on UNCITRAL rules and the integration of neutral model choice of law clauses 8 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (2) Advantages of CEAC Arbitration in China-related M&A Disputes  Enforceability of arbitral awards in China ensured  Neutral appointing authority  Based on international rules accepted worldwide and, in particular, in China  Respecting party autonomy  Combination with conciliation or mediation  Service orientation of CEAC  Time and cost efficiency of CEAC arbitration procedures 9 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (3) Deviations from UNCITRAL Rules  Institutional arbitration only  Combination with conciliation or mediation possible  Model arbitration clause  Model choice of law clause  Place of the arbitration proceedings  Time limit for the award  Costs and fees 10 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (4) Specific Needs of Arbitral Proceedings for Cross-Border M&A Disputes  Multi-party proceedings and multi-contract disputes  Extension of arbitration agreements to third parties  Interim measures  Production of documents  Decisions based on documents only  Examination of witnesses through means of telecommunication  Tailor-made arbitration awards 11 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (5) CEAC Model Arbitration Clause  Institutional arbitration  Place of Arbitration  Number and Choice of Arbitrators  Qualification of Arbitrators  Language of Proceedings and Documents  Confidentiality 12 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (6) Composition of Arbitration Tribunal  Number of arbitrators  Appointment of arbitrators  Three-party-concept for the appointing authority  Appointment of sole arbitrator or presiding arbitrator (if necessary)  Challenge of arbitrators  Replacement of arbitrators 13 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (7) Arbitral Proceedings  Statement of claim  Statement of defence  Interim measures  Evidence  Hearings  Experts  Closure of hearings  Issuing an arbitral award 14 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (8) Arbitral Award  Time limit  Form and effect  Interpretation and correction  Enforcability 15 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Using CEAC for China-related M&A Disputes (9) Costs  Set out in fee schedule and annex  Appropriate (half of HKIAC frame, comparable to fee schedules of other European arbitration institutions)  Divided in steps based on amount in dispute  Special rule for cases with extreme workload for the arbitrators 16 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Conclusions  Arbitration in general offers great freedom and opportunities to solve M&A disputes efficiently  CEAC provides for modern and internationally recognized arbitration rules adopted to the specific needs of China-related transactions and disputes  With its specific emphasis on neutrality CEAC is a proper alternative to purely Chinese or purely European arbitration institution  Therefore, the parties of any China-related M&A transaction are encouraged to submit their potential disputed to CELA arbitration 17 : Clifford Chance Chinese European Arbitration Centre

Chinese European Arbitration Centre Thank you! Dr. Dominik Ziegenhahn ( 金道明 博士 ) Vice-President ( 副主席 ) CHINESE EUROPEAN LEGAL ASSOCIATION e.V. ( 中国欧洲法律协会 ) c/o Hanseatische Rechtsanwaltskammer Bleichenbrücke 9 20354 Hamburg ( 汉堡 ) Germany ( 德国 ) Phone ( 电话 ): +49 (0)40 35922-185 Fax ( 传真 ): +49 (0)40 35922-293 Mobile ( 手机 ): +49 (0)151 16128067 E-Mail ( 邮箱 ): ziegenhahn@cela-hamburg.com http://www.cela-hamburg.com : Clifford Chance Chinese European Arbitration Centre