The Spa Arbitration Clause In Post-Closing Disputes

Expert Determination or Arbitration for Earn-Outs and Completion Accounts? An Assessment from the Perspective of Turkish Law and the ISTAC Rules

Introduction: The Post-Closing Dispute Wave and How the Problem Arises

The upward trend in global M&A volumes in recent years has driven a proportional increase in the number of post-closing disputes. In practice, we see three types of dispute coming to the fore: (i) breaches of representations and warranties and price adjustments arising from (ii) earn-outs, and (iii) completion accounts. These disputes are increasingly referred to arbitration, because in cross-border transactions, parties favour arbitration for its confidentiality, a neutral forum/court, and ready enforceability under the New York Convention. Yet most share purchase agreements (“SPA“) do not adequately separate how and where disputes arising from earn-outs and completion accounts are to be resolved.