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Rajah Lehal

Setting Aside Arbitral Awards Is Becoming More Restrictive When It Comes to Asset Purchase Agreements

July 05, 2015

Links from this article: Read the article here.

Parties who choose arbitration to settle disputes under an APA should note that courts have become increasingly reluctant to interfere with arbitration awards if a fair process has been used to arrive at an arbitration decision. One of the risks involved with the right to choose the arbitrator(s)/decision maker, is the risk that the ‘binding arbitration award’ will not be resolved as the party wishes on the merits.

The APA pursuant to which the purchasers bought the corporation’s production facility and other related machinery, contained an arbitration clause that designated Singapore as the place of arbitration. The OMNA (omnibus agreement) did not have an arbitration clause. A dispute arose because certain taxes had not been paid, and the matter went to arbitration. The losing parties sought to overturn the arbitration award in the courts. The Singapore Court of Appeal indicated that minimal interference in arbitral awards was the core of the Model Law and the Singapore International Arbitration Act. ""From the courts’ perspective, the parties to an arbitration do not have a right to a “correct” decision from the arbitral tribunal that can be vindicated by the courts. Instead, they only have a right to a decision that is within the ambit of their consent to have their dispute arbitrated, and that is arrived at following a fair process."" The award was reinstated in part.

Read the article here.Take away:

  • When agreeing to an arbitration clause in an asset purchase agreement, parties should be aware that courts around the world are becoming more reluctant to disturb an arbitral award made after following fair procedures.

Written by Rajah. Rajah Lehal is Founder and CEO of Clausehound.com. Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.