Arbitration and M&A disputes: a global trend Australia cannot ignore

Over recent years, the use of arbitration to resolve mergers and acquisitions and private equity deal disputes has gained significant momentum globally. The catalyst has been a combination of increased cross-border deal activity, rising deal complexity and a growing appreciation of the limitations of domestic court systems in multi-jurisdictional transactions.

In some overseas jurisdictions, choosing arbitration for post-deal disputes is almost becoming the 'default' path in large, cross-border, or private equity-driven deals (where parties demand control, predictability and enforceability across borders).

The rise of arbitration in M&A disputes

One of the clearest signals around the rise or arbitration comes from institutions that track M&A or corporate disputes:

• The Stockholm Chamber of Commerce (SCC), one of the few institutions that disaggregate 'share purchase / acquisition / M&A' disputes, recently reported that in 2024, post-M&A disputes became the single largest category of its caseload, with 57 new registered cases. In that same year, SCC estimated the total disputed amounts in those M&A arbitrations exceeded EUR 5 billion, with an average dispute size of about EUR 112 million. The SCC's 2024 M&A snapshot highlights several high-stake claims among its post-M&A caseload, indicating how large corporations and private equity players are turning to arbitration for disputes that would once have been litigated or negotiated quietly.
• The Hong Kong International Arbitration Centre (HKIAC) reports 'corporate' disputes (a category encompassing M&A, joint ventures, shareholder and acquisition disputes) form a growing portion of its caseload. The most recent caseload data for 2024 reveals that out of a total of 503 cases, 13.6% of all disputes registered with HKIAC fell under the corporate category.
• Likewise, the Singapore International Arbitration Centre (SIAC) has seen a rise in its 'corporate disputes', handling 73 cases in 2024 - an increase from the 59 cases received in 2023.
• The London Court of International Arbitration (LCIA) has also seen rising shares of shareholder/joint venture/share purchase disputes. For example, in 2024, some 15% of LCIA cases [Corrs2] were said to arise under those categories (vs ~14% in 2019).
• In Europe, the CMS European M&A Study 2025 (spanning ~ 580 share/asset deals) reported that in Europe, the use of arbitration for M&A disputes has continued to increase over recent years. In 2024, 42% of all deals included an arbitration clause (compared to 37% in 2023).

These data points underscore two core overseas trends:

1. arbitration is increasingly used to resolve post-deal disputes, and
   
2. the quantum of cases and stakes involved is escalating.

As corporations and private-capital investors embrace arbitration as their default mechanism for resolving M&A disputes overseas, Australia lags behind its peers. While alternative dispute resolution methods are on occasion included in Australian joint venture / shareholder agreements, arbitration clauses in an Australian M&A context are rare.

Typical arbitration claims in global M&A

In practice, arbitrations in the global M&A context typically concern disputes falling within the following categories:

• Representations, warranties, and indemnities: post-closing claims that a seller's representation was false or incomplete, or that an undisclosed liability crystallised.
• Purchase price adjustments / closing accounts / earn-out disputes: quantification or methodology of adjusting the purchase price, or disagreements over earn-out triggers.
• Material Adverse Change (MAC) / Material Adverse Effect (MAE) claims, especially when the pre-closing environment is volatile.
• Pre-contractual disclosure or misrepresentation claims, especially when due diligence gaps are alleged.
• Post-closing obligations (covenants, retention, escrow, clawbacks).

Given that these categories of claims often involve complex accounting, forensic, and valuation issues (rather than pure legal questions), parties frequently prefer experts or arbitrators who combine technical, financial, audit or sectoral expertise.

Key advantages of arbitration in M&A disputes

Arbitration offers a number of particular advantages in the M&A / post-transaction setting:

Confidentiality / privacy

Deal disputes often touch sensitive commercial, financial, or reputational issues (e.g. hidden liabilities, misstatements, regulatory exposure). Arbitration affords a confidential forum, with limited public disclosure of documents or awards (subject to institutional or local law rules).

Selection of expertise / procedural design

The parties can choose arbitrators with deep industry, accounting or audit experience. They can also design procedural rules (e.g. document exchange limits, bifurcation, expert evidence, expedited tracks) tailored to M&A complexity.

Neutral seat and legal regime

In cross-border deals, parties often prefer a neutral seat (not tied to either party's home court). This helps mitigate bias perceptions or forum risk.

Enforceability and international recognition of awards

Under the New York Convention on the Recognition and Enforcement of Foreign Awards, arbitral awards are more reliably enforceable across jurisdictions than many court judgments, subject to limited grounds of refusal. This is particularly useful when recourse may be needed overseas.

Procedural finality / no appeal (in principle)

Parties generally relinquish broad appeal rights in arbitration, which provides the benefit of finality and discourages protracted litigation. In the M&A context, where value erosion over time is a concern, finality is a significant advantage.

Flexibility / efficiency

Arbitrations can adopt flexible timetables, case management, expedited procedures or emergency relief mechanisms. Many institutions now provide for fast-track or streamlined options.

Consolidation and joinder mechanisms

Given that M&A deals often involve multiple sellers, guarantors, group entities, or related contracts, arbitrations that include provisions for consolidation, multi-party joinder, and coordination across contracts and proceedings, are increasingly used to avoid parallel proceedings. Institutions like the ACICA, ICC, LCIA, and SCC provide more robust consolidation and joinder rules.

Interim / emergency relief

Many modern arbitration rules allow emergency arbitrators or provisional measures, which can be crucial in M&A settings (such as. where injunctions or preservation of assets are needed).

While it offers numerous potential advantages, there are certain limitations in choosing arbitration that parties should be aware of. These include limited document disclosure and inherent challenges in navigating multi-contract disputes in situations where parties do not consent to consolidation or joinder. On the balance, however, for many M&A parties, particularly in cross-border and private equity-driven deals, the benefits often outweigh the trade-offs.

The Australian M&A arbitration landscape: lessons from international practice

Australia has lagged in adopting arbitration for M&A disputes, but the jurisprudential and institutional winds are shifting. The courts are taking a more pro-arbitration stance, and deal parties should increasingly regard arbitration as a viable route - if the arbitration provisions are thoughtfully drafted and integrated with deal governance.

For Australian dealmakers, the lessons from international practice are instructive. Below are some reflections and recommendations for embedding arbitration more confidently in Australian M&A:

• Careful arbitration clause drafting: Given the multi-faceted nature of M&A deals (purchase agreement, guarantee, escrow, sale of shares, shareholders' agreement, warranties, covenants), parties must pay attention to consistency and consent being given for the purposes of consolidation and joinder. Provisions allowing consolidation or third-party joinder (subject to compatible clauses) are critical to avoid multiplicity of parallel proceedings.
• Choice of seat and local court support: Clauses should clearly specify the seat, language, administering institution (if any), tribunal constitution, and interaction with expert determination or accounting procedures. Australian deals could opt for an international seat if desirable, such as Singapore, London or Hong Kong where jurisprudence on the use of arbitration in M&A disputes is mature.
• Court supervision and urgent interim relief: Deal parties should consider whether courts have jurisdiction to grant interim or injunctive relief (or preserve evidence) ancillary to arbitration. Further, ensuring that the arbitration clause contemplates the appointment of an emergency arbitrator and/or tribunal jurisdiction to grant provisional measures is essential.
• Balancing disclosure and efficiency: In post-deal disputes, information is often asymmetrical. It is important to negotiate pragmatic disclosure protocols, document exchange parameters, and use of tribunal-mandated disclosure procedures suited to financial and forensic review.
• Insurer alignment: Parties should engage warranty and indemnity insurers early to ensure that the planned arbitration route is acceptable to them.

Arbitration is no longer a fringe option for deal disputes. Across leading arbitration institutions globally, the share and value of post-M&A arbitrations are rising steadily. Arbitration's features (confidentiality, procedural flexibility, expert tribunal, enforceability, finality) cater well to the demands of post-deal disputes, which often hinge on complex accounting, valuation or forensic questions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Lawyers Weekly Law firm of the year 2021	Employer of Choice for Gender Equality (WGEA)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Lawyers Weekly Law firm of the year 2021	Employer of Choice for Gender Equality (WGEA)