France – Abrupt termination of contractual relationships and arbitration

8 noviembre 2020

  • Francia
  • Arbitraje
  • Litigios

El cobro internacional de deudas es, quizás, uno de los mayores desafíos en los negocios. Las empresas suelen afrontar con entusiasmo sus nuevos emprendimientos internacionales, pero cuando se interrumpen los pagos de distribuidores, clientes, franquiciados… surgen dificultades. Y, sobre todo, cuando ocurren en el extranjero. Su cobro es, la mayoría de las veces complicado, implica gastos, quebraderos de cabeza y, en ocasiones, las empresas simplemente deciden darse por vencidas. A continuación, ofrecemos algunos consejos para tener en cuenta a modo de prevención.

Los siguientes puntos son un resumen de las ideas que se discutieron en un webinar organizado por Legalmondo y la Cámara de Comercio de Treviso / Belluno en Italia el 11 de noviembre de 2020.

¿Cuáles son las formas de actuar más recomendables para cobrar internacionalmente cuentas pendientes?

La primera cuestión se refiere a las prácticas que las empresas podrían implementar para evitar o, al menos, intentar minimizar el impacto de la falta de pago cuando se trata de negocios internacionales.

En una fase preliminar de las negociaciones y del desarrollo empresarial, es necesario tener en cuenta los siguientes.

Verificación de la identidad de la empresa

¿Quién es la entidad con la que estamos contratando? Es importante comprobar su existencia, su situación jurídica y su capacidad para realizar negocios. Y, también, las facultades o la autorización de quien firma el tipo de contrato. ¿Es la persona la adecuada? ¿Dicha persona ha seguido las exigencias legales para hacerlo? Y esto es particularmente relevante durante este período de pandemia en el que se están usando las firmas electrónicas y los acuerdos se suscriben frecuentemente con firmas no originales y únicamente como documentos pdf.

Solicitud de información financiera

¿Cuál es la calificación crediticia de la empresa? Conviene buscar y obtener información contable oficial, ya sea registrada en el registro mercantil (cuando sea posible de acuerdo con las normas locales), o mediante búsquedas con investigadores privados; certificado de regularidad fiscal para acreditar que la empresa cumple con las normas (en los lugares en los que se posible), cartas de conformidad (comfort letters) por parte de accionistas o de terceros (bancos)… Es importante tener una certeza razonable sobre la capacidad de esa empresa para llevar a cabo el negocio concreto. Y, cuando sea posible, seguir haciéndolo con regularidad.

Utilice el contrato correcto

¿Cuál es el tipo de contrato adecuado para la relación comercial que deseamos? Busque el asesoramiento de un abogado especializado en la legislación del país donde se cobrará la deuda. Este será un elemento esencial, por ejemplo, para saber cuándo se transfiere legalmente la propiedad del bien adquirido; cuándo las partes han acordado pagar las facturas; la vigencia de las condiciones generales (o si tienen que estar redactadas en el idioma local o en el idioma de las negociaciones o qué sucede cuando hay varias —las del vendedor y las del comprador— y son contradictorias); si se trata de un contrato de distribución o un mero suministro de productos y las obligaciones y consecuencias relacionadas según la ley aplicable, etc.

Escriba sus acuerdos

Redacten las condiciones por escrito y no solo sobre el tipo de contrato, sino también sobre las formas de pago, condiciones y retrasos. Y tenga en cuenta el tipo de documentos necesarios para la validez del contrato. ¿Un intercambio de correos electrónicos sería suficiente para crear una obligación jurídicamente vinculante? ¿Serían necesarios otras formalidades para tener un contrato/obligación válida (notario, registro, firma separada de algunas condiciones)?

Haga un seguimiento de su contrato

Cuando existe un contrato en vigor es importante hacer un seguimiento de lo que se ha firmado o acordado para asegurarse de que se respeten estas condiciones. Una práctica comercial diferente y sostenida en el tiempo podría implicar un cambio tácito de lo que se acordó originalmente.

Documentar todas las transacciones

Comenzando desde el pedido por parte del cliente/distribuidor, su aceptación por el fabricante, el documento de transporte vinculado con la recepción de la mercancía, y hasta la factura final. Toda la documentación debe ser clara y coherente. En caso de falta de pago, todos estos documentos pueden ser necesarios para acreditar la correcta ejecución del contrato.

¿Ha presentado objeciones el deudor?

Verifique también que usted ha cumplido con su parte del contrato. Es bastante frecuente que la parte que deja de pagar justifique su decisión sobre un incumplimiento previo. Si existe dicha supuesta infracción previa por parte de un proveedor —por ejemplo, relacionada con el envío de mercancías: retrasos, productos defectuosos, etc.— será probablemente más complicado solicitar el pago al distribuidor o, al menos, será necesario un procedimiento adicional.

Sea claro con el devengo de intereses de demora

En los países de la UE, la legislación basada en la Directiva 2011/7 permite combatir la morosidad en las operaciones comerciales con tipos de interés especiales: asegúrese de que esto se menciona en el contrato, ya que las empresas fuera de la UE podrían no ser conscientes de esto, y la diferencia con el interés legal general puede ser sustancial.

Busque garantías para sus créditos

Obviamente, esto dependerá y será diferente en función del tipo de contrato y la relación entre las partes. Y es recomendable una garantía no solo al principio, sino también cuando la relación dura varios años. En ocasiones, la confianza en su contraparte en el pasado dificulta la solicitud de garantías adicionales y esto podría implicar que los pagos atrasados ​​no se gestionen correctamente.

Considere también garantías adicionales sobre bienes vendidos como la reserva de dominio cuando sea posible de acuerdo con la ley. Esto implicará que la propiedad permanece en manos del proveedor hasta el pago completo. En algunos casos, también es posible obtener garantías adicionales como, por ejemplo, la posibilidad de registrar la reserva de dominio en registros públicos. Estas condiciones especiales también deben verificarse localmente para conocer su alcance y respetar la forma en que se acuerden, acepten y documenten

Echa un vistazo a nuestro seminario web sobre el cobro de deudas

El 11 de noviembre de 2020, tuve el placer de participar en el seminario web sobre Cobro Internacional de Deudas organizado por la Cámara de Comercio de Treviso y Belluno y Legalmondo: discutimos las mejores prácticas y compartimos información sobre el cobro de deudas en España, Alemania, Francia, EE.UU., China, Vietnam y Singapur.

Puede ver la grabación del webinar aquí

El servicio de ayuda de Legalmondo sobre la colección de crédito internacional

Si desea saber más sobre cómo cobrar una deuda en el extranjero, puede encontrar los informes de nuestros expertos de 20 países aquí

Unfair commercial behaviours between professionals are sanctioned in Sections L442-1 and seq. of the French Commercial Code. French Courts tend to consider that those dispositions of the Commercial Code are mandatory, in particular Section L442-1, II of the Code on abrupt termination of commercial relationships. Based on this section, an operator can be held liable if he terminates a commercial relationship without respecting a prior notice which duration depends on the duration of the relationship.

Although this is considered to be a mandatory law, the French Supreme Court considers that it does not preclude to bring a dispute before foreign Courts in compliance with a jurisdiction clause (Civ.1, 8 July 2010, Doga, n°09-67013). Moreover, Courts have ruled for a long time now that arbitrators are entitled to apply national mandatory laws (Court of Appeal of Paris, 19 March 1993, Labinal, n°9221091). In the case Doga above quoted, the Court concluded that arbitrators are also entitled to apply Sections 442-1, II of the Commercial Code related to the conditions of termination of commercial relationship. Therefore, if a contract contains an arbitration clause, the judge is obliged to give priority to the arbitrators to decide on their own jurisdiction to decide on the case (principle « compétence-compétence ») in conformity with Section 1465 of the French Procedural Code. This solution was confirmed in a recent decision rendered on 5 September 2019 by the Court of Appeal of Paris in  Charlivari v. Sté Equivalanza, n°17/03703.

It is noteworthy to underline that two sets of sanctions are considered under Sections 442-1 and seq. of the Commercial Code: the first sanction allows the victim of unfair practice to seek damages (for instance for abrupt termination of commercial relationship) against the author of unfair practices;  the second sanction is decided by the public administration, under the authority of the Ministry of Economics : the Ministry is entitled to bring the case to Courts, which can then decide to fine the party who is liable of unfair practices (the fine can be up to 5% of the turnover made in France by the person liable or 5 Million EUR).

Therefore, one single matter can give rise to two procedures at the same time, the first one initiated by the victim and the second one at the request of the Ministry of Economics (Section L442-4 of the Code). In a case Apple v. Ministre de l’Economie, the Supreme Court (Civ.1, 6 juillet 2016, n° 15-21811) considered that the action of the Ministry of Economics cannot be decided by arbitrators, even if the contract contains an arbitration clause, because of the specificity of this action, which is not based on the contract by itself but on powers that the Ministry draws from the law.

Therefore, a clear distinction must be made between the two procedures: one is subject to the application of the dispute resolution clause (either national Courts, even foreign, or arbitration tribunals), when damages are sought from the author of unfair practices, including abrupt termination; the other one can be brought only before French national Courts, and the dispute resolution clause has no effect, in cases which are brought by the Ministry of Economics for administrative sanctions against the same author.

Brexit had surprised nations all over the world. It is now confusing lawyers all over the world whose clients are engaged in contracts or disputes with English choice of law or jurisdiction clauses.

Should they advise their clients to continue to choose English law, jurisdiction or arbitral seats in new contracts? Should they litigate or arbitrate under choices they made in existing contracts before anyone dreamed of Brexit; or does Brexit mean the recognition and enforcement of judgments or awards may be problematic?

The United Kingdom finally left the European Union on 31 January 2020. Little in the world of enforcement and recognition has changed to date. However, the UK is due to drop out of the EU regimes with which European lawyers are familiar on 31 December 2020. From then, we will enter unchartered territory.

This first blog explores the legal framework the UK and EU politicians agreed in 2019 to carry us through to the end of 2020 and what that framework tells us about the changes to enforcement and recognition of judgments from the beginning of 2021.

What is the Withdrawal Agreement and the Withdrawal Agreement Act?

The Withdrawal Agreement is a treaty between the EU and the UK which was agreed on 17 October 2019 as a result of Brexit negotiations. The purpose of the Withdrawal Agreement is to establish the terms of the UK’s withdrawal from the EU, including what happens to jurisdiction and enforcement of judgments as between the UK and the EU.

The European (Withdrawal Agreement) Act 2020 is an Act of UK Parliament. The purpose of the Withdrawal Agreement Act is to enshrine and implement the provisions of the Withdrawal Agreement into the domestic law of the UK. Having been given Royal Assent on 23 January 2020 and ratified by the Council of the European Union on 30 January 2020, the Withdrawal Agreement Act came into force on 31 January 2020.

What is the transition period?

The Withdrawal Agreement provides for a transition period to give businesses time to adjust to the new situation and time for the UK and EU governments to negotiate new trade, travel, business and legal arrangements.

How then does the Withdrawal Agreement affect the jurisdiction and enforcement of judgments between the UK and EU during the transition period and when is the transition period to and from?

The transition period commenced on 31 January 2020 and will end on 31 December 2020, as provided for by Article 126 of the Withdrawal Agreement.

Article 132 of the Withdrawal Agreement also provides that the transition period may be extended for up to one or two years by a one-off decision made before 1 July 2020 by the joint UK-EU Committee. Although, such an extension is effectively ruled out by section 33 of the Withdrawal Agreement Act. This prohibition could be overridden by further legislation; the possibility of which is perhaps more real given the global effects of the coronavirus pandemic. However, as it stands, the default position is that the transition period will end on 31 December 2020.

What is the effect on jurisdiction and enforcement of judgments during the transition period?

There are four key provisions of the Withdrawal Agreement which affect jurisdiction and enforcement of judgments:

  • Article 127 provides that EU law will apply to and in the UK during the transition period, unless otherwise provided in the Withdrawal Agreement, and any reference to Member States in EU law will be understood as including the UK.
  • Article 129 provides that the UK will also continue to comply and be bound by obligations stemming from international agreements to which the EU is party during the transition period.
  • Article 67(1) provides that in the UK, as well as in the Member States in situations involving the UK, the Brussels (Recast) Regulation (No. 1215/2012) (“Brussels Recast”) will apply to:
    • “legal proceedings instituted before the end of the transition period”; and
    • “legal proceedings or actions” which although themselves are not instituted before the end of the transition period “are related to such legal proceedings pursuant to Articles 29 to 31 of the Brussels Recast Regulation”. Articles 29 to 31 of Brussels Recast concern the rules on lis pendens and related actions.
  • Article 67(2) provides that in the UK, as well as in the Member States in situations involving the UK, Brussels Recast will apply to “to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period.”

Practically, the effect of these provisions is as follows:

  • The rules on jurisdiction and recognition and enforcement of judgments between the UK and other EU Member States will continue to be governed by Brussels Recast during the transition period.
  • The courts in the UK and EU Member States in situations involving the UK will continue to apply Brussels Recast to determine jurisdiction, provided the proceedings are issued before 31 December 2020 or they are related to such proceedings.
  • The courts in the UK and EU Members States in situations involving the UK will also continue to apply Brussels Recast to recognise and enforce their respective judgments, provided proceedings are issued before 31 December 2020.
  • The UK will continue to comply and be bound by obligations stemming from international agreements relating to jurisdiction and enforcement of judgments to which the EU is party during the transition period. This includes the Hague Convention on Choice of Court Agreements 2005 and the Lugano Convention 2007.
  • The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The UK is currently party to the Hague Convention by virtue of its EU membership, however, that will cease at the end of the transition period. Whether the Hague Convention will continue to apply as between the UK and other Contracting states after the end of the transition period is covered in my next Brexit blog post – ultimately, it depends on whether the UK joins the Hague Convention in its own right.
  • The Lugano Convention 2007 applies between EU Member States and EFTA countries Iceland, Norway and Switzerland. Again, the UK is currently party to the Lugano Convention by virtue of its EU membership, however, that will cease at the end of the transition period. The applicability of the Lugano Convention between the UK and other Contracting States after the end of the transition period is also covered in my next Brexit blog post.

Before the end of the transition period, commercial parties should review dispute resolution clauses in their contracts to assess whether the clause’s intended utility will be affected by Brexit. If parties are engaged in current disputes, they should consider whether it is appropriate to issue proceedings before 31 December 2020 in order to benefit from the ongoing application of the existing framework of the rules governing jurisdiction and enforcement, in particular, Brussels Recast.

Summary – The company that incurs into a counterfeiting of its Community design shall not start as many disputes as are the countries where the infringement has been carried out: it will be sufficient to start a lawsuit in just one court of the Union, in its capacity as Community design court, and get a judgement against a counterfeiter enforceable in different, or even all, Countries of the European Union.

Italian companies are famous all over the world thanks to their creative abilities regarding both industrial inventions and design: in fact, they often make important economic investments in order to develop innovative solutions for the products released on the market.

Such investments, however, must be effectively protected against cases of counterfeiting that, unfortunately, are widely spread and ever more realizable thanks to the new technologies such as the e-commerce. Companies must be very careful in protecting their own products, at least in the whole territory of the European Union, since counterfeiting inevitably undermines the efforts made for the research of an original product.

In this respect the content of a recent judgement issued by the Court of Milan, section specialized in business matters, No. 2420/2020, appears very significant since it shows that it is possible and necessary, in case of counterfeiting (in this case the matter is the counterfeiting of a Community design) to promptly take a legal action, that is to start a lawsuit to the competent Court specialized in business matters.

The Court, by virtue of the EU Regulation No. 6/2002, will issue an order (an urgent and protective remedy ante causam or a judgement at the end of the case) effective in the whole European territory so preventing any extra UE counterfeiter from marketing, promoting and advertising a counterfeited product.

The Court of Milan, in this specific case, had to solve a dispute aroused between an Italian company producing a digital flowmeter, being the subject of a Community registration, and a competitor based in Hong Kong. The Italian company alleged that the latter had put on the European market some flow meters in infringement of a Community design held by the first.

First of all, the panel of judges effected a comparison between the Community design held by the Italian company (plaintiff) and the flow meter manufactured and distributed by the Hong Kong company (defendant). The judges noticed that the latter actually coincided both for dimensions and proportions with the first so that even an expert in the field (the so-called informed user) could mistake the product of the defendant company with that of the plaintiff company owner of the Community design.

The Court of Milan, in its capacity as Community designs court, after ascertaining the counterfeiting, in the whole European territory, carried out by the defendant at the expense of the plaintiff, with judgement No. 2420/2020 prohibited, by virtue of articles 82, 83 and 89 of the EU Regulation No. 6/2002, the Hong Kong company to publicize, offer for sale, import and market, by any means and methods, throughout the European Union, even through third parties, the flow meter subject to the present judgement, with any name if presenting similar characteristics.

The importance of this judgement lies in its effects spread all over the territory of the European Union. This is not a small thing since the company that incurs into a counterfeiting of its Community design shall not start as many disputes as are the countries where the infringement has been carried out: it will be sufficient for this company to start a lawsuit in just one court of the Union, in its capacity as Community design court, and get a judgement against a counterfactor who makes an illicit in different, or even all, Countries of the European Union.

Said judgement will be even more effective if we consider that, by virtue of the UE Customs Regulation No. 608/2013, the company will be able to communicate the existence of a counterfeited product to the customs of the whole European territory (through a single request filed with the customs with the territorial jurisdiction) in order to have said products blocked and, in case, destroyed.

El procedimiento arbitral en España se caracteriza, y constituye una de sus grandes ventajas, por la dificultad de anular o revocar judicialmente el laudo; las partes saben que el laudo que se dicte es en la mayoría de los casos firme y definitivo y pone punto final al conflicto.

El art. 41 de la Ley de Arbitraje únicamente permite la anulación del laudo por razones de forma (inexistencia o invalidez del convenio arbitral, falta de notificación a alguna de las partes sobre la designación del árbitro o de las actuaciones arbitrales, indebida designación de los árbitros o que los árbitros hayan resuelto sobre materias que no eran o no podían ser objeto de arbitraje por imperio de la ley). Y adicionalmente el laudo también es anulable cuando es contrario al “orden público”.

Que cosa sea el “orden público” como para dar lugar, en caso de vulneración, a la anulación del laudo, es cuestión que de siempre ha sido controvertida y debatida; ya en la Convención de Nueva York de 1958 se alude el “orden público” como causa de denegación del reconocimiento de laudos extranjeros. Como recuerda el Tribunal Constitucional (“TC”) en la sentencia que comentamos, citando su propia jurisprudencia, “el orden público material es el conjunto de principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada y el orden público procesal se configura como el conjunto de formalidades y principios necesarios de nuestro ordenamiento jurídico procesal y solo el arbitraje que contradiga alguno o algunos de tales principios podrá ser tachado de nulo por vulneración del orden público”.

A título de ejemplo, durante 2018 se presentaron 38 demandas de anulación de laudos ante los Tribunales Superiores de Justicia (“TSJ”) de los que 31 se fundamentaban en vulneración del orden público; resultaron estimadas 8 de las demandas (21%), 5 por vulneración del orden público y 3 por invalidez del convenio arbitral.

El TSJ de Madrid ha venido manteniendo en los últimos tiempos una interpretación muy “expansiva” del orden público, lo que ha generado dudas y temores en las instituciones y Cortes Arbitrales, por el efecto disuasorio que dicha posición podría tener a la hora de elegir Madrid como sede de arbitrajes, nacionales o internacionales.

Y en la línea interpretativa a la que nos referimos, el TSJ de Madrid ha mantenido el siguiente y sorprendente criterio: dictado un laudo e interpuesta demanda de anulación por una de las partes, los litigantes alcanzaron un acuerdo extrajudicial y solicitaron conjuntamente  el archivo de la demanda de anulación; es decir, ambos daban el laudo por bueno y definitivo; el TSJ rechazó la petición y siguió adelante hasta dictar sentencia anulando el laudo, argumentando que como la demanda de anulación se basaba en la infracción del orden público, entonces ya la materia no era disponible por las partes y no era, en opinión del Tribunal, susceptible de transacción o renuncia.

No era esta la primera vez que el TSJ adoptaba esta postura: impetrada la anulación de un laudo por ser contrario al “orden público”, las partes ya no tenían la posibilidad de transar y renunciar a la demanda de anulación.

Por primera vez el asunto ha llegado al Tribunal Constitucional (TC): en un reciente fallo del 15 de junio de 2020, el TC ha sido claro y rotundo; recuerda en su sentencia que el proceso civil se fundamenta en el principio de “disposición de las partes para regular sus intereses privados, es decir, para iniciar la actividad jurisdiccional, determinar el objeto del proceso y ponerle fin cuando estimen conveniente”. Es lo que llamamos “justicia rogada”; y este principio aplica no solo a los procedimientos civiles ante los tribunales ordinarios sino también a los procedimientos arbitrales; asimismo afirma la sentencia que el arbitraje está configurado por la Ley como un mecanismo heterónomo de resolución de conflictos al que es consustancial la mínima intervención de los órganos judiciales a favor de la autonomía de la voluntad.

Y concluye sentando que la acción de anulación debe ser entendida como un proceso de control externo sobre el laudo que no permite una decisión sobre el fondo de la decisión de los árbitros, al estar tasadas las causas, lo que justifica que “el control de los laudos tenga carácter limitado y solo pueda obtenerse la anulación del laudo en casos excepcionales”.

En suma, entiende y proclama el TC que es contrario al derecho a la tutela judicial efectiva que protege el art. 24 de la Constitución la negativa del Tribunal a reconocer la virtualidad de un acuerdo alcanzado entre los litigantes con fundamento en el poder dispositivo de las partes sin que medie norma prohibitiva que así lo autorice e imponiendo una decisión que subvierte el principio dispositivo o de “justicia rogada” que inspira el proceso civil; por lo que concede el amparo solicitado y ordena retrotraer las actuaciones al momento anterior al auto que denegó virtualidad a la solicitud conjunta de archivo para que el TSJ dicte otra resolución acompasada al criterio del TC.

En suma, no podrá ya nunca más el TSJM impedir a los litigantes transar y poner fin a una demanda de anulación de laudo (como ocurre pacífica y habitualmente con los recursos de apelación o de casación) y además deberá tomar en consideración en adelante la interpretación restrictiva del concepto de orden público que ha establecido el TC en esta importante sentencia. En efecto, el arbitraje español sale muy reforzado con esta sentencia del TC.

The COVID-19 pandemic’s dramatic disruption of the legal and business landscape has included a steep drop in overall M&A activity in Q1 2020.  Much of this decrease has been due to decreased target valuations, tighter access by buyers to liquidity, and perhaps above all underlying uncertainty as to the crisis’s duration.

For pending transactions, whether the buyer can walk away from the deal (or seek a purchase price reduction) by invoking a material adverse change (MAC) or material adverse effect (MAE) clause – or another clause in the purchase agreement – due to COVID-19 has become a question of increasing relevance.  MAC/MAE clauses typically allow a buyer to terminate an acquisition agreement if a MAC or MAE occurs between signing and closing.

Actual litigated cases in this area have been few and far between, as under longstanding Delaware case law[1], buyer has the burden of proving MAC or MAE, irrespective of who initiates the lawsuit.  And the standard of proof is high – a buyer must show that the effects of the intervening event are sufficiently large and long lasting as compared to an equivalent period of the prior year.  A short-term or immaterial deviation will not suffice.  In fact, Delaware courts have only once found a MAC, in the December 2018 case Akorn, Inc. v. Fresenius Kabi AG.

And yet, since the onset of the COVID-19 pandemic, numerous widely reported COVID-19 related M&A litigations have been initiated with the Delaware Court of Chancery.  These include:

  • Bed, Bath & Beyond suing 1-800-Flowers (Del. Ch. April 1, 2020) to complete its acquisition of Perosnalizationmall.com (purchaser sought an extension in closing, without citing specifically the contractual basis for the request);
  • Level 4 Yoga, franchisee of CorePower Yoga, suing CorePower Yoga (Del. Ch. Apr 2, 2020) to compel CorePower Yoga to purchase of Level 4 Yoga studios (after CorePower Yoga took the position that studio closings resulting from COVID-19 stay-at-home orders violated the ordinary course covenant);
  • Oberman, Tivoli & Pickert suing Cast & Crew (Del. Ch. Apr 6, 2020), an industry competitor, to complete its purchase of Oberman’s subsidiary (Cast & Crew maintained it was not obligated to close based on alleged insufficiencies in financial data provided in diligence);
  • SP VS Buyer LP v. L Brands, Inc. (Del. Ch. Apr 22, 2020), in which buyer sought a declaratory judgment in its favor on termination); and
  • L Brands, Inc. v. SP VS Buyer L.P., Sycamore Partners III, L.P., and Sycamore Partners III-A, L.P (Del. Ch. Apr 23), in which seller instead seeks declaratory judgment in its favor on buyer obligation to close.

Such cases, typically signed up at an early stage of the pandemic, are likely to increase.  Delaware M&A-MAC-related jurisprudence suggests that buyers seeking to cite MAC in asserting their positions should expect an uphill fight, given buyer’s high burden of proof.  Indeed, Delaware courts’ sole finding of a MAC in Akorn was based on rather extreme facts: target’s (Akorn’s) business deteriorated significantly (40% and 20% drops in profit and equity value, respectively), measured over a full year.  And quite material to the Court’s decision was the likely devastating effect on Akorn’s business resulting from Akorn’s deceptive conduct vis-à-vis the FDA.

By contrast, cases before and after Akorn, courts have not found a MAC/MAE, including in the 2019 case Channel Medsystems, Inc. v. Bos. Sci. Corp.  There, Boston Scientific Corporation (BSC) agreed to purchase Channel Medsystems, Inc., an early stage medical device company.  The sale was conditioned on Channel receiving FDA approval for its sole product, Cerene. In late December 2017, Channel discovered that falsified information from reports by its Vice President of Quality (as part of a scheme to steal over $2 million from Channel) was included in Channel’s FDA submissions.  BSC terminated the merger agreement in May 2018, asserting that Channel’s false representations and warranties constituted a MAC.

The court disagreed.  While Channel and Akron both involved a fraud element, Chanel successfully resubmitted its FDA application, such that the fraudulent behavior – the court found – would not cause the FDA to reject the Cerene device.  BSC also failed to show sufficiently large or long-lasting effects on Channel’s financial position.  Channel thus reaffirmed the high bar under pre-Akron Delaware jurisprudence for courts to find a MAC/MAE (See e.g. In re IBP, Inc. S’holders Litig., 789 A.2d 14 (Del. Ch. 2001); Frontier Oil Corp. v. Holly Corp., 2005 WL 1039027 (Del. Ch. Apr. 29, 2005); Hexion Specialty Chemicals v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008)).

Applied to COVID-19, buyers may have challenges in invoking MAC/MAE clauses under their purchase agreements.

First, it may simply be premature at this juncture for a buyer to show the type of longer-term effects that have been required under Delaware jurisprudence.  The long-term effects of COVID-19 itself are unclear.  Of course, as weeks turn into months and longer, this may change.

A second challenge is certain carve-outs typically included in MAC/MAE clauses.  Notably, it is typical for these clauses to include exceptions for general economic and financial conditions generally affecting a target’s industry, unless a buyer can demonstrate that they have disproportionately affected the target.

A buyer may be able to point to other clauses in a purchase agreement in seeking to walk away from the deal.  Of note is the ordinary course covenant that applies to the period between signing and closing.  By definition, most targets are unable to carry out business during the COVID-19 crisis consistent with past practice.  It is unclear whether courts will allow for a literal reading of these clauses, or interpret them taking into account the broader risk allocation regime as evidenced by the MAC or MAE clause in the agreement, and in doing so reject a buyer’s position.

For unsigned deals, there may be some early lessons for practitioners as they prepare draft purchase agreements.  On buyer walk-away rights, buyers will want to ensure that the MAE/MAC definition includes express reference to “pandemics” and “epidemics”, if not to “COVID-19” itself.  Conversely, Sellers may wish to seek to loosen ordinary course covenant language, such as by including express exceptions for actions required by the MAC or MAE and otherwise ensure that they comply with all obligations under their control.  Buyers will also want to pay close attention to how COVID-19 affects other aspects of the purchase agreement, including seeking more robust representations and warranties on the impact of COVID-19 on the target’s business.

 

[1] Although the discussion of this based Delaware law, caselaw in other U.S. jurisdictions often is consistent Delaware.  

This week the Interim Injunction Judge of the Netherlands Commercial Court ruled in summary proceedings, following a video hearing, in a case on a EUR 169 million transaction where the plaintiff argued that the final transaction had been concluded and the defendant should proceed with the deal.

This in an – intended – transaction where the letter of intent stipulates that a EUR 30 million break fee is due when no final agreement is signed.

In addition to ruling on this question of construction of an agreement under Dutch law, the judge also had to rule on the break fee if no agreement was concluded and whether it should be amended or reduced because of the current Coronavirus / Covid-19 crisis.

English Language proceedings in a Dutch state court, the Netherlands Commercial Court (NCC)

The case is not just interesting because of the way contract formation is construed under Dutch law and application of concepts of force majeure, unforeseen circumstances and amendment of agreements under the concepts of reasonableness and fairness as well as mitigation of contractual penalties, but also interesting because it was ruled on by a judge of the English language chamber of the Netherlands Commercial Court (NCC).

This new (2019) Dutch state court offers a relatively fast and cost-effective alternative for international commercial litigation, and in particular arbitration, in a neutral jurisdiction with professional judges selected for both their experience in international disputes and their command of English.

The dispute regarding the construction of an M&A agreement under Dutch law in an international setting

The facts are straightforward. Parties (located in New York, USA and the Netherlands) dispute whether final agreement on the EUR 169 million transaction has been reached but do agree a break fee of €30 million in case of non-signature of the final agreement was agreed. However, in addition to claiming there is no final agreement, the defendant also argues that the break fee – due when there is no final agreement – should be reduced or changed due to the coronavirus crisis.

As to contract formation it must be noted that Dutch law allows broad leeway on how to communicate what may or may not be an offer or acceptance. The standard is what a reasonable person in the same circumstances would have understood their communications to mean.  Here, the critical fact is that the defendant did not sign the so-called “Transaction Agreement”. The letter of intent’s binary mechanism (either execute and deliver the paperwork for the Transaction Agreement by the agreed date or pay a EUR 30 million fee) may not have been an absolute requirement for contract formation (under Dutch law) but has significant evidentiary weight. In M&A practice – also under Dutch law – with which these parties are thoroughly familiar with, this sets a very high bar for  concluding a contract was agreed other than by explicit written agreement. So, parties may generally comfortably rely on what they have agreed on in writing with the assistance of their advisors.

The communications relied on by claimant in this case did not clear the very high bar to assume that despite the mechanism of the letter of intent and the lack of a signed Transaction Agreement there still was a binding agreement. In particular attributing the other party’s advisers’ statements and/or conduct to the contracting party they represent did not work for the claimant in this case as per the verdict nothing suggested that the advisers would be handling everything, including entering into the agreement.

Court order for actual performance of a – deemed – agreement on an M&A deal?

The Interim Injunction Judge finds that there is not a sufficient likelihood of success on the merits so as to justify an interim measure ordering the defendant to actually perform its obligations under the disputed Transaction Agreement (payment of EUR 169 million and take the claimant’s 50% stake in an equestrian show-jumping business).

Enforcement of the break fee despite “Coronavirus”?

Failing the conclusion of an agreement, there was still another question to answer as the letter of intent mechanism re the break fee as such was not disputed. Should the Court enforce the full EUR 30 million fee in the current COVID-19 circumstances? Or should the fee’s effects be modified, mitigated or reduced in some way, or  the fee agreement should even be dissolved?

Unforeseen circumstances, reasonableness and fairness

The Interim Injunction Judge rules that the coronavirus crisis may be an unforeseen circumstance, but it is not of such a nature that, according to standards of reasonableness and fairness, the plaintiff cannot expect the break fee obligation to remain unchanged. The purpose of the break fee is to encourage parties to enter into the transaction and attribute / share risks between them. As such the fee limits the exposure of the parties. Payment of the fee is a quick way out of the obligation to pay the purchase price of EUR 169 million and the risks of keeping the target company financially afloat. If financially the coronavirus crisis turns out less disastrous than expected, the fee of EUR 30 million may seem high, but that is what the parties already considered reasonable when they waived their right to invoke the unreasonableness of the fee. The claim for payment of the EUR 30 million break fee is therefore upheld by the Interim Injunction Judge.

Applicable law and the actual practice of it by the courts

The relevant three articles are in this case articles 6:94, 6:248 and 6:258 of the Dutch Civil Code. They relate to the mitigation of contractual penalties, unforeseen circumstances and amendment of the agreement under the tenets of reasonableness and fairness. Under Dutch law the courts must with all three exercise caution. Contracts must generally be enforced as agreed. The parties’ autonomy is deemed paramount and the courts’ attitude is deferential. All three articles use language stating, essentially, that interference by the courts in the contract’s operation is allowed only to avoid an “unacceptable” impact, as assessed under standards of reasonableness and fairness.

There is at this moment of course no well- established case law on COVID-19. However, commentators have provided guidance that is very helpful to think through the issues. Recently a “share the pain” approach has been advocated by a renowned law Professor, Tjittes, who focuses on preserving the parties’ contractual equilibrium in the current circumstances. This is, in the Court’s analysis, the right way to look at the agreement here. There is no evidence in the record suggesting that the parties contemplated or discussed the full and exceptional impact of the COVID-19 crisis. The crisis may or may not be unprovided for.  However, the court rules in the current case there is no need to rule on this issue. Even if the crisis is unprovided for, there is no support in the record for the proposition that the crisis makes it unacceptable for the claimant to demand strict performance by the defendant. The reasons are straightforward.

The break fee allocates risk and expresses commitment and caps exposure. The harm to the business may be substantial and structural, or it may be short-term and minimal. Either way, the best “share the pain” solution, to preserve the contractual equilibrium in the agreement, is for the defendant to pay the fee as written in the letter of intent. This allocates a defined risk to one party, and actual or potential risks to the other party. Reducing the break fee in any business downturn, the fee’s express purpose – comfort and confidence to get the deal done – would not be accomplished and be derived in precisely the circumstances in which it should be robust. As a result, the Court therefore orders to pay the full EUR 30 million fee. So the break fee stipulation works under the circumstances without mitigation because of the Corona outbreak.

The Netherlands Commercial Court, continued

As already indicated above, the case is interesting because the verdict has been rendered by a Dutch state court in English and the proceedings where also in English. Not because of a special privilege granted in a specific case but based on an agreement between parties with a proper choice of forum clause for this court. In addition to the benefit to of having an English forum without mandatorily relying on either arbitration or choosing an anglophone court, it also has the benefit of it being a state court with the application of the regular Dutch civil procedure law, which is well known by it’s practitioners and reduces the risk of surprises of a procedural nature.  As it is as such also a “normal” state court, there is the right to appeal and particularly effective under Dutch law access to expedited proceeding as was also the case in the example referred to above. This means a regular procedure with full application of all evidentiary rules may still follow, overturning or confirming this preliminary verdict in summary proceedings.

Novel technology in proceedings

Another first or at least a novel application is that all submissions were made in eNCC, a document upload procedure for the NCC. Where the introduction of electronic communication and litigation in the Dutch court system has failed spectacularly, the innovations are now all following in quick order and quite effective. As a consequence of the Coronavirus outbreak several steps have been quickly tried in practice and thereafter formally set up. At present this – finally – includes a secure email-correspondence system between attorneys and the courts.

And, also by special order of the Court in this present case, given the current COVID-19 restrictions the matter was dealt with at a public videoconference hearing on 22 April 2020 and the case was set for judgment on 29 April 2020 and published on 30 April 2020.

Even though it is a novel application, it is highly likely that similar arrangements will continue even after expiry of current emergency measures. In several Dutch courts videoconference hearings are applied on a voluntary basis and is expected that the arrangements will be formalized.

Eligibility of cases for the Netherlands Commercial Court

Of more general interest are the requirements for matters that may be submitted to NCC:

  • the Amsterdam District Court or Amsterdam Court of Appeal has jurisdiction
  • the parties have expressly agreed in writing that proceedings will be in English before the NCC (the ‘NCC agreement’)
  • the action is a civil or commercial matter within the parties’ autonomy
  • the matter concerns an international dispute.

The NCC agreement can be recorded in a clause, either before or after the dispute arises. The Court even recommends specific wording:

“All disputes arising out of or in connection with this agreement will be resolved by the Amsterdam District Court following proceedings in English before the Chamber for International Commercial Matters (“Netherlands Commercial Court” or “NCC District Court”), to the exclusion of the jurisdiction of any other courts. An action for interim measures, including protective measures, available under Dutch law may be brought in the NCC’s Court in Summary Proceedings (CSP) in proceedings in English. Any appeals against NCC or CSP judgments will be submitted to the Amsterdam Court of Appeal’s Chamber for International Commercial Matters (“Netherlands Commercial Court of Appeal” or “NCCA”).”

The phrase “to the exclusion of the jurisdiction of any other courts” is included in light of the Hague Convention on Choice of Court Agreements. It is not mandatory to include it of course and parties may decide not to exclude the jurisdiction of other courts or make other arrangements they consider appropriate. The only requirement being that such arrangements comply with the rules of jurisdiction and contract. Please note that choice of court agreements are exclusive unless the parties have “expressly provided” or “agreed” otherwise (as per the Hague Convention and Recast Brussels I Regulation).

Parties in a pending case before another Dutch court or chamber may request that their case be referred to NCC District Court or NCC Court of Appeal. One of the requirements is to agree on a clause that takes the case to the NCC and makes English the language of the proceedings. The NCC recommends using this language:

We hereby agree that all disputes in connection with the case [name parties], which is currently pending at the *** District Court (case number ***), will be resolved by the Amsterdam District Court following proceedings in English before the Chamber for International Commercial Matters (“Netherlands Commercial Court” or ”NCC District Court). Any action for interim measures, including protective measures, available under Dutch law will be brought in the NCC’s Court in Summary Proceedings (CSP) in proceedings in English. Any appeals against NCC or CSP judgments will be submitted to the Amsterdam Court of Appeal’s Chamber for International Commercial Matters (“Netherlands Commercial Court of Appeal” or “NCC Court of Appeal”).

To request a referral, a motion must be made before the other chamber or court where the action is pending, stating the request and contesting jurisdiction (if the case is not in Amsterdam) on the basis of a choice-of-court agreement (see before).

Additional arrangements in the proceedings before the Netherlands Commercial Court

Before or during the proceedings, parties can also agree special arrangements in a customized NCC clause or in another appropriate manner. Such arrangements may include matters such as the following:

  • the law applicable to the substantive dispute
  • the appointment of a court reporter for preparing records of hearings and the costs of preparing those records
  • an agreement on evidence that departs from the general rules
  • the disclosure of confidential documents
  • the submission of a written witness statement prior to the witness examination
  • the manner of taking witness testimony
  • the costs of the proceedings.

Visiting lawyers and typical course of the procedure

All acts of process are in principle carried out by a member of the Dutch Bar. Member of the Bar in an EU or EEA Member State or Switzerland may work in accordance with Article 16e of the Advocates Act (in conjunction with a member of the Dutch Bar). Other visiting lawyers may be allowed to speak at any hearing.

The proceedings will typically follow the below steps:

  • Submitting the initiating document by the plaintiff (summons or request as per Dutch law)
  • Assigned to three judges and a senior law clerk.
  • The defendant submits its defence statement.
  • Case management conference or motion hearing (e.g. also in respect of preliminary issues such as competence, applicable law etc.) where parties may present their arguments.
  • Judgment on motions: the court rules on the motions. Testimony, expert appointment, either at this stage or earlier or later.
  • The court may allow the parties to submit further written statements.
  • Hearing: the court interviews the parties and allows them to present their arguments. The court may enquire whether the dispute could be resolved amicably and, where appropriate, assist the parties in a settlement process. If appropriate, the court may discuss with the parties whether it would be advisable to submit part or all of the dispute to a mediator. At the end of the hearing, the court will discuss with the parties what the next steps should be.
  • Verdict: this may be a final judgment on the claims or an interim judgment ordering one or more parties to produce evidence, allowing the parties to submit written submissions on certain aspects of the case, appointing one or more experts or taking other steps.

Continuous updates, online resources Netherlands Commercial Court

As a final note the English language website of the Netherlands Commercial Court provides ample information on procedure and practical issues and is updated with a high frequence. Under current circumstance even at a higher pace. In particular for practitioners it’s recommended to regularly consult the website. https://www.rechtspraak.nl/English/NCC/Pages/default.aspx

Resumen – ¿Qué podemos aprender en el tiempo de Covid-19 que se pueda usar en la mediación? ¿Y qué podemos aprender de la mediación para utilizarlo en esta crisis?

Como saben, la mediación es una forma de resolver conflictos en los que las partes mantienen en sus manos la posible solución. No necesitan acudir a un tercero (juez o árbitro) que les imponga la respuesta. Las partes pueden imaginar más libremente lo que necesitan y cómo resolver sus diferencias.

Algunos de los elementos y técnicas que usan los mediadores en una mediación también se pueden usar y aprender del tiempo actual de Covid-19. Y esta crisis también nos ayuda a comprender por qué son tan importantes en la mediación.

La cooperación para obtener la solución es mejor que las decisiones unilaterales e impuestas

Por lo general, tendemos a pensar que la cooperación es un signo de debilidad y recurrimos a ella solo si no podemos imponer nuestro parecer o ganar nuestro caso. Sin embargo, como en esta época del Covid-19, donde los países, los científicos y las personas debemos luchar juntos, cuando nos enfrentamos a un conflicto, la cooperación y el ir más allá de las propias posiciones nos ofrece la posibilidad de explorar soluciones que, de lo contrario, permanecerían ocultas.

«Ahora se reconoce cada vez más que existen formas cooperativas de negociar nuestras diferencias y que incluso si no se puede encontrar una solución “ganar-ganar”, a menudo se puede llegar a un acuerdo inteligente que es mejor para ambas partes que la alternativa. […]

Vale la pena recordar tres puntos sobre intereses compartidos. Primero, los intereses compartidos permanecen latentes en cada negociación. Puede que no sean inmediatamente obvios. Segundo, los intereses compartidos son oportunidades, no regalos del cielo. Tercero, enfatizar los intereses compartidos puede hacer que la negociación sea más fluida y amigable.» [Fisher, Richard; Ury, William. «Getting to Yes: Negotiating an agreement without giving in»].

Escuchar es altamente eficaz

En el tiempo del Covid-19 tendemos a aceptar mejor una información que confirma nuestras creencias y aceptamos mejores indicaciones que están de acuerdo con nuestras preferencias y creencias. Sin embargo, también en este momento, escuchar es de una enorme importancia para comprender las causas y las soluciones.

Un mediador siempre escuchará a las partes y les ayudará a hacer lo mismo. Escuchar los argumentos del otro, su explicación de los hechos, intereses y necesidades, las razones de sus decisiones … tiene también una importancia crucial para encontrar una solución conjunta.

«Ya sea que usted sea un tercero neutral (facilitador profesional, amigo o gerente) o uno de los participantes, a medida que escucha todas las historias, comienza a sentir la mejor solución.» [Levine, Stewart. «Getting to Resolution: Turning Conflict Into Collaboration».]

Una solución para mí también puede ser una solución para ti

En la época del Covid-19 nos parece claro a todos que una solución común va a ser la única posible. Una vacuna salvará al mundo entero. En la mediación, el principal beneficio es comprender que, a diferencia de una sentencia judicial o un laudo arbitral, una solución conjunta (no impuesta) es posible y un beneficio para mí no implica un daño o una pérdida para mi oponente.

«Un mediador trabaja para comprender la perspectiva de cada parte en el conflicto y buscar el valor en ella. En este rol, se abstiene de juzgar qué lado está bien o mal. En cambio, intenta ver el mérito en la perspectiva de cada lado.» [Shapiro, Daniel. «Building Agreement»].

Dominamos la solución y creamos el acuerdo en un entorno seguro

La solución a la crisis actual no solo depende de las autoridades y de los profesionales de la salud. Una gran parte de la solución se basa en la participación de todos, lavarse las manos, respetar la distancia social, mantenerse a salvo en casa evitando el contagio y el colapso de los hospitales.

En el tribunal dejamos la decisión del conflicto en manos de un tercero –el juez, el árbitro–. En una mediación, por el contrario, la solución permanece en nuestras manos. Sabemos cuáles son nuestros intereses, creamos nuestro acuerdo. Nuestra imaginación es nuestra aliada para encontrar la solución junto con la contraparte y la asistencia y experiencia del mediador que no la impone, pero ayuda a las partes a encontrarla. Muy a menudo, lo que las partes podrían obtener en la mediación va mucho más allá de lo que un juez podría haber otorgado. Y esto en un ambiente confidencial.

«El sabio es modesto y escaso de palabras. Cuando se ha cumplido su tarea y las cosas se han completado, todas las personas dicen: «¡Nosotros mismos lo hemos logrado!«» [Lao Tzu]

Las emociones son importantes

Las emociones, buenas y malas, son inevitables. En especial en períodos de incertidumbre, crisis y pérdida de control, todos nos enfrentamos a fuertes emociones. Esto es cierto en situaciones como en esta del Covid-19 y en todos los conflictos, y no solo en los personales. Los egos, las envidias, los miedos, las ansiedades … también son parte de nuestra vida cotidiana, trabajo y negocios, pero rara vez se tienen en cuenta en los tribunales cuando se resuelven los conflictos. Un mediador ayudará a tenerlos en cuenta en un entorno seguro y como parte del conflicto mismo.

«Resolver problemas parece más fácil que hablar de emociones. El problema es que cuando los sentimientos están en el corazón de lo que está sucediendo, son el negocio en cuestión e ignorarlos es casi imposible.» [Stone, Douglas. «Difficult Conversations: How to Discuss What Matters Most»].

[NOTA: Los pasajes reproducidas en los puntos 1, 2, 3 y 5 son traducciones libres del autor]

Alexandre Malan

Áreas de práctica

  • Arbitraje
  • Contratos de distribución
  • Seguros
  • Comercio internacional
  • Derecho Internacional Privado
Contáctanos Alexandre

Contacta con Alexandre





    Lea la política de privacidad de Legalmondo.
    Este sitio está protegido por reCAPTCHA y se aplican la Política de privacidad de Google y los Términos de servicio.

    Brexit – Jurisdiction and Enforcement of Judgments during the Transition Period

    10 octubre 2020

    • Inglaterra
    • Litigios

    El cobro internacional de deudas es, quizás, uno de los mayores desafíos en los negocios. Las empresas suelen afrontar con entusiasmo sus nuevos emprendimientos internacionales, pero cuando se interrumpen los pagos de distribuidores, clientes, franquiciados… surgen dificultades. Y, sobre todo, cuando ocurren en el extranjero. Su cobro es, la mayoría de las veces complicado, implica gastos, quebraderos de cabeza y, en ocasiones, las empresas simplemente deciden darse por vencidas. A continuación, ofrecemos algunos consejos para tener en cuenta a modo de prevención.

    Los siguientes puntos son un resumen de las ideas que se discutieron en un webinar organizado por Legalmondo y la Cámara de Comercio de Treviso / Belluno en Italia el 11 de noviembre de 2020.

    ¿Cuáles son las formas de actuar más recomendables para cobrar internacionalmente cuentas pendientes?

    La primera cuestión se refiere a las prácticas que las empresas podrían implementar para evitar o, al menos, intentar minimizar el impacto de la falta de pago cuando se trata de negocios internacionales.

    En una fase preliminar de las negociaciones y del desarrollo empresarial, es necesario tener en cuenta los siguientes.

    Verificación de la identidad de la empresa

    ¿Quién es la entidad con la que estamos contratando? Es importante comprobar su existencia, su situación jurídica y su capacidad para realizar negocios. Y, también, las facultades o la autorización de quien firma el tipo de contrato. ¿Es la persona la adecuada? ¿Dicha persona ha seguido las exigencias legales para hacerlo? Y esto es particularmente relevante durante este período de pandemia en el que se están usando las firmas electrónicas y los acuerdos se suscriben frecuentemente con firmas no originales y únicamente como documentos pdf.

    Solicitud de información financiera

    ¿Cuál es la calificación crediticia de la empresa? Conviene buscar y obtener información contable oficial, ya sea registrada en el registro mercantil (cuando sea posible de acuerdo con las normas locales), o mediante búsquedas con investigadores privados; certificado de regularidad fiscal para acreditar que la empresa cumple con las normas (en los lugares en los que se posible), cartas de conformidad (comfort letters) por parte de accionistas o de terceros (bancos)… Es importante tener una certeza razonable sobre la capacidad de esa empresa para llevar a cabo el negocio concreto. Y, cuando sea posible, seguir haciéndolo con regularidad.

    Utilice el contrato correcto

    ¿Cuál es el tipo de contrato adecuado para la relación comercial que deseamos? Busque el asesoramiento de un abogado especializado en la legislación del país donde se cobrará la deuda. Este será un elemento esencial, por ejemplo, para saber cuándo se transfiere legalmente la propiedad del bien adquirido; cuándo las partes han acordado pagar las facturas; la vigencia de las condiciones generales (o si tienen que estar redactadas en el idioma local o en el idioma de las negociaciones o qué sucede cuando hay varias —las del vendedor y las del comprador— y son contradictorias); si se trata de un contrato de distribución o un mero suministro de productos y las obligaciones y consecuencias relacionadas según la ley aplicable, etc.

    Escriba sus acuerdos

    Redacten las condiciones por escrito y no solo sobre el tipo de contrato, sino también sobre las formas de pago, condiciones y retrasos. Y tenga en cuenta el tipo de documentos necesarios para la validez del contrato. ¿Un intercambio de correos electrónicos sería suficiente para crear una obligación jurídicamente vinculante? ¿Serían necesarios otras formalidades para tener un contrato/obligación válida (notario, registro, firma separada de algunas condiciones)?

    Haga un seguimiento de su contrato

    Cuando existe un contrato en vigor es importante hacer un seguimiento de lo que se ha firmado o acordado para asegurarse de que se respeten estas condiciones. Una práctica comercial diferente y sostenida en el tiempo podría implicar un cambio tácito de lo que se acordó originalmente.

    Documentar todas las transacciones

    Comenzando desde el pedido por parte del cliente/distribuidor, su aceptación por el fabricante, el documento de transporte vinculado con la recepción de la mercancía, y hasta la factura final. Toda la documentación debe ser clara y coherente. En caso de falta de pago, todos estos documentos pueden ser necesarios para acreditar la correcta ejecución del contrato.

    ¿Ha presentado objeciones el deudor?

    Verifique también que usted ha cumplido con su parte del contrato. Es bastante frecuente que la parte que deja de pagar justifique su decisión sobre un incumplimiento previo. Si existe dicha supuesta infracción previa por parte de un proveedor —por ejemplo, relacionada con el envío de mercancías: retrasos, productos defectuosos, etc.— será probablemente más complicado solicitar el pago al distribuidor o, al menos, será necesario un procedimiento adicional.

    Sea claro con el devengo de intereses de demora

    En los países de la UE, la legislación basada en la Directiva 2011/7 permite combatir la morosidad en las operaciones comerciales con tipos de interés especiales: asegúrese de que esto se menciona en el contrato, ya que las empresas fuera de la UE podrían no ser conscientes de esto, y la diferencia con el interés legal general puede ser sustancial.

    Busque garantías para sus créditos

    Obviamente, esto dependerá y será diferente en función del tipo de contrato y la relación entre las partes. Y es recomendable una garantía no solo al principio, sino también cuando la relación dura varios años. En ocasiones, la confianza en su contraparte en el pasado dificulta la solicitud de garantías adicionales y esto podría implicar que los pagos atrasados ​​no se gestionen correctamente.

    Considere también garantías adicionales sobre bienes vendidos como la reserva de dominio cuando sea posible de acuerdo con la ley. Esto implicará que la propiedad permanece en manos del proveedor hasta el pago completo. En algunos casos, también es posible obtener garantías adicionales como, por ejemplo, la posibilidad de registrar la reserva de dominio en registros públicos. Estas condiciones especiales también deben verificarse localmente para conocer su alcance y respetar la forma en que se acuerden, acepten y documenten

    Echa un vistazo a nuestro seminario web sobre el cobro de deudas

    El 11 de noviembre de 2020, tuve el placer de participar en el seminario web sobre Cobro Internacional de Deudas organizado por la Cámara de Comercio de Treviso y Belluno y Legalmondo: discutimos las mejores prácticas y compartimos información sobre el cobro de deudas en España, Alemania, Francia, EE.UU., China, Vietnam y Singapur.

    Puede ver la grabación del webinar aquí

    El servicio de ayuda de Legalmondo sobre la colección de crédito internacional

    Si desea saber más sobre cómo cobrar una deuda en el extranjero, puede encontrar los informes de nuestros expertos de 20 países aquí

    Unfair commercial behaviours between professionals are sanctioned in Sections L442-1 and seq. of the French Commercial Code. French Courts tend to consider that those dispositions of the Commercial Code are mandatory, in particular Section L442-1, II of the Code on abrupt termination of commercial relationships. Based on this section, an operator can be held liable if he terminates a commercial relationship without respecting a prior notice which duration depends on the duration of the relationship.

    Although this is considered to be a mandatory law, the French Supreme Court considers that it does not preclude to bring a dispute before foreign Courts in compliance with a jurisdiction clause (Civ.1, 8 July 2010, Doga, n°09-67013). Moreover, Courts have ruled for a long time now that arbitrators are entitled to apply national mandatory laws (Court of Appeal of Paris, 19 March 1993, Labinal, n°9221091). In the case Doga above quoted, the Court concluded that arbitrators are also entitled to apply Sections 442-1, II of the Commercial Code related to the conditions of termination of commercial relationship. Therefore, if a contract contains an arbitration clause, the judge is obliged to give priority to the arbitrators to decide on their own jurisdiction to decide on the case (principle « compétence-compétence ») in conformity with Section 1465 of the French Procedural Code. This solution was confirmed in a recent decision rendered on 5 September 2019 by the Court of Appeal of Paris in  Charlivari v. Sté Equivalanza, n°17/03703.

    It is noteworthy to underline that two sets of sanctions are considered under Sections 442-1 and seq. of the Commercial Code: the first sanction allows the victim of unfair practice to seek damages (for instance for abrupt termination of commercial relationship) against the author of unfair practices;  the second sanction is decided by the public administration, under the authority of the Ministry of Economics : the Ministry is entitled to bring the case to Courts, which can then decide to fine the party who is liable of unfair practices (the fine can be up to 5% of the turnover made in France by the person liable or 5 Million EUR).

    Therefore, one single matter can give rise to two procedures at the same time, the first one initiated by the victim and the second one at the request of the Ministry of Economics (Section L442-4 of the Code). In a case Apple v. Ministre de l’Economie, the Supreme Court (Civ.1, 6 juillet 2016, n° 15-21811) considered that the action of the Ministry of Economics cannot be decided by arbitrators, even if the contract contains an arbitration clause, because of the specificity of this action, which is not based on the contract by itself but on powers that the Ministry draws from the law.

    Therefore, a clear distinction must be made between the two procedures: one is subject to the application of the dispute resolution clause (either national Courts, even foreign, or arbitration tribunals), when damages are sought from the author of unfair practices, including abrupt termination; the other one can be brought only before French national Courts, and the dispute resolution clause has no effect, in cases which are brought by the Ministry of Economics for administrative sanctions against the same author.

    Brexit had surprised nations all over the world. It is now confusing lawyers all over the world whose clients are engaged in contracts or disputes with English choice of law or jurisdiction clauses.

    Should they advise their clients to continue to choose English law, jurisdiction or arbitral seats in new contracts? Should they litigate or arbitrate under choices they made in existing contracts before anyone dreamed of Brexit; or does Brexit mean the recognition and enforcement of judgments or awards may be problematic?

    The United Kingdom finally left the European Union on 31 January 2020. Little in the world of enforcement and recognition has changed to date. However, the UK is due to drop out of the EU regimes with which European lawyers are familiar on 31 December 2020. From then, we will enter unchartered territory.

    This first blog explores the legal framework the UK and EU politicians agreed in 2019 to carry us through to the end of 2020 and what that framework tells us about the changes to enforcement and recognition of judgments from the beginning of 2021.

    What is the Withdrawal Agreement and the Withdrawal Agreement Act?

    The Withdrawal Agreement is a treaty between the EU and the UK which was agreed on 17 October 2019 as a result of Brexit negotiations. The purpose of the Withdrawal Agreement is to establish the terms of the UK’s withdrawal from the EU, including what happens to jurisdiction and enforcement of judgments as between the UK and the EU.

    The European (Withdrawal Agreement) Act 2020 is an Act of UK Parliament. The purpose of the Withdrawal Agreement Act is to enshrine and implement the provisions of the Withdrawal Agreement into the domestic law of the UK. Having been given Royal Assent on 23 January 2020 and ratified by the Council of the European Union on 30 January 2020, the Withdrawal Agreement Act came into force on 31 January 2020.

    What is the transition period?

    The Withdrawal Agreement provides for a transition period to give businesses time to adjust to the new situation and time for the UK and EU governments to negotiate new trade, travel, business and legal arrangements.

    How then does the Withdrawal Agreement affect the jurisdiction and enforcement of judgments between the UK and EU during the transition period and when is the transition period to and from?

    The transition period commenced on 31 January 2020 and will end on 31 December 2020, as provided for by Article 126 of the Withdrawal Agreement.

    Article 132 of the Withdrawal Agreement also provides that the transition period may be extended for up to one or two years by a one-off decision made before 1 July 2020 by the joint UK-EU Committee. Although, such an extension is effectively ruled out by section 33 of the Withdrawal Agreement Act. This prohibition could be overridden by further legislation; the possibility of which is perhaps more real given the global effects of the coronavirus pandemic. However, as it stands, the default position is that the transition period will end on 31 December 2020.

    What is the effect on jurisdiction and enforcement of judgments during the transition period?

    There are four key provisions of the Withdrawal Agreement which affect jurisdiction and enforcement of judgments:

    • Article 127 provides that EU law will apply to and in the UK during the transition period, unless otherwise provided in the Withdrawal Agreement, and any reference to Member States in EU law will be understood as including the UK.
    • Article 129 provides that the UK will also continue to comply and be bound by obligations stemming from international agreements to which the EU is party during the transition period.
    • Article 67(1) provides that in the UK, as well as in the Member States in situations involving the UK, the Brussels (Recast) Regulation (No. 1215/2012) (“Brussels Recast”) will apply to:
      • “legal proceedings instituted before the end of the transition period”; and
      • “legal proceedings or actions” which although themselves are not instituted before the end of the transition period “are related to such legal proceedings pursuant to Articles 29 to 31 of the Brussels Recast Regulation”. Articles 29 to 31 of Brussels Recast concern the rules on lis pendens and related actions.
    • Article 67(2) provides that in the UK, as well as in the Member States in situations involving the UK, Brussels Recast will apply to “to the recognition and enforcement of judgments given in legal proceedings instituted before the end of the transition period.”

    Practically, the effect of these provisions is as follows:

    • The rules on jurisdiction and recognition and enforcement of judgments between the UK and other EU Member States will continue to be governed by Brussels Recast during the transition period.
    • The courts in the UK and EU Member States in situations involving the UK will continue to apply Brussels Recast to determine jurisdiction, provided the proceedings are issued before 31 December 2020 or they are related to such proceedings.
    • The courts in the UK and EU Members States in situations involving the UK will also continue to apply Brussels Recast to recognise and enforce their respective judgments, provided proceedings are issued before 31 December 2020.
    • The UK will continue to comply and be bound by obligations stemming from international agreements relating to jurisdiction and enforcement of judgments to which the EU is party during the transition period. This includes the Hague Convention on Choice of Court Agreements 2005 and the Lugano Convention 2007.
    • The Hague Convention 2005 applies between EU Member States, Mexico, Singapore and Montenegro. The UK is currently party to the Hague Convention by virtue of its EU membership, however, that will cease at the end of the transition period. Whether the Hague Convention will continue to apply as between the UK and other Contracting states after the end of the transition period is covered in my next Brexit blog post – ultimately, it depends on whether the UK joins the Hague Convention in its own right.
    • The Lugano Convention 2007 applies between EU Member States and EFTA countries Iceland, Norway and Switzerland. Again, the UK is currently party to the Lugano Convention by virtue of its EU membership, however, that will cease at the end of the transition period. The applicability of the Lugano Convention between the UK and other Contracting States after the end of the transition period is also covered in my next Brexit blog post.

    Before the end of the transition period, commercial parties should review dispute resolution clauses in their contracts to assess whether the clause’s intended utility will be affected by Brexit. If parties are engaged in current disputes, they should consider whether it is appropriate to issue proceedings before 31 December 2020 in order to benefit from the ongoing application of the existing framework of the rules governing jurisdiction and enforcement, in particular, Brussels Recast.

    Summary – The company that incurs into a counterfeiting of its Community design shall not start as many disputes as are the countries where the infringement has been carried out: it will be sufficient to start a lawsuit in just one court of the Union, in its capacity as Community design court, and get a judgement against a counterfeiter enforceable in different, or even all, Countries of the European Union.

    Italian companies are famous all over the world thanks to their creative abilities regarding both industrial inventions and design: in fact, they often make important economic investments in order to develop innovative solutions for the products released on the market.

    Such investments, however, must be effectively protected against cases of counterfeiting that, unfortunately, are widely spread and ever more realizable thanks to the new technologies such as the e-commerce. Companies must be very careful in protecting their own products, at least in the whole territory of the European Union, since counterfeiting inevitably undermines the efforts made for the research of an original product.

    In this respect the content of a recent judgement issued by the Court of Milan, section specialized in business matters, No. 2420/2020, appears very significant since it shows that it is possible and necessary, in case of counterfeiting (in this case the matter is the counterfeiting of a Community design) to promptly take a legal action, that is to start a lawsuit to the competent Court specialized in business matters.

    The Court, by virtue of the EU Regulation No. 6/2002, will issue an order (an urgent and protective remedy ante causam or a judgement at the end of the case) effective in the whole European territory so preventing any extra UE counterfeiter from marketing, promoting and advertising a counterfeited product.

    The Court of Milan, in this specific case, had to solve a dispute aroused between an Italian company producing a digital flowmeter, being the subject of a Community registration, and a competitor based in Hong Kong. The Italian company alleged that the latter had put on the European market some flow meters in infringement of a Community design held by the first.

    First of all, the panel of judges effected a comparison between the Community design held by the Italian company (plaintiff) and the flow meter manufactured and distributed by the Hong Kong company (defendant). The judges noticed that the latter actually coincided both for dimensions and proportions with the first so that even an expert in the field (the so-called informed user) could mistake the product of the defendant company with that of the plaintiff company owner of the Community design.

    The Court of Milan, in its capacity as Community designs court, after ascertaining the counterfeiting, in the whole European territory, carried out by the defendant at the expense of the plaintiff, with judgement No. 2420/2020 prohibited, by virtue of articles 82, 83 and 89 of the EU Regulation No. 6/2002, the Hong Kong company to publicize, offer for sale, import and market, by any means and methods, throughout the European Union, even through third parties, the flow meter subject to the present judgement, with any name if presenting similar characteristics.

    The importance of this judgement lies in its effects spread all over the territory of the European Union. This is not a small thing since the company that incurs into a counterfeiting of its Community design shall not start as many disputes as are the countries where the infringement has been carried out: it will be sufficient for this company to start a lawsuit in just one court of the Union, in its capacity as Community design court, and get a judgement against a counterfactor who makes an illicit in different, or even all, Countries of the European Union.

    Said judgement will be even more effective if we consider that, by virtue of the UE Customs Regulation No. 608/2013, the company will be able to communicate the existence of a counterfeited product to the customs of the whole European territory (through a single request filed with the customs with the territorial jurisdiction) in order to have said products blocked and, in case, destroyed.

    El procedimiento arbitral en España se caracteriza, y constituye una de sus grandes ventajas, por la dificultad de anular o revocar judicialmente el laudo; las partes saben que el laudo que se dicte es en la mayoría de los casos firme y definitivo y pone punto final al conflicto.

    El art. 41 de la Ley de Arbitraje únicamente permite la anulación del laudo por razones de forma (inexistencia o invalidez del convenio arbitral, falta de notificación a alguna de las partes sobre la designación del árbitro o de las actuaciones arbitrales, indebida designación de los árbitros o que los árbitros hayan resuelto sobre materias que no eran o no podían ser objeto de arbitraje por imperio de la ley). Y adicionalmente el laudo también es anulable cuando es contrario al “orden público”.

    Que cosa sea el “orden público” como para dar lugar, en caso de vulneración, a la anulación del laudo, es cuestión que de siempre ha sido controvertida y debatida; ya en la Convención de Nueva York de 1958 se alude el “orden público” como causa de denegación del reconocimiento de laudos extranjeros. Como recuerda el Tribunal Constitucional (“TC”) en la sentencia que comentamos, citando su propia jurisprudencia, “el orden público material es el conjunto de principios jurídicos públicos y privados, políticos, morales y económicos que son absolutamente obligatorios para la conservación de la sociedad en un pueblo y en una época determinada y el orden público procesal se configura como el conjunto de formalidades y principios necesarios de nuestro ordenamiento jurídico procesal y solo el arbitraje que contradiga alguno o algunos de tales principios podrá ser tachado de nulo por vulneración del orden público”.

    A título de ejemplo, durante 2018 se presentaron 38 demandas de anulación de laudos ante los Tribunales Superiores de Justicia (“TSJ”) de los que 31 se fundamentaban en vulneración del orden público; resultaron estimadas 8 de las demandas (21%), 5 por vulneración del orden público y 3 por invalidez del convenio arbitral.

    El TSJ de Madrid ha venido manteniendo en los últimos tiempos una interpretación muy “expansiva” del orden público, lo que ha generado dudas y temores en las instituciones y Cortes Arbitrales, por el efecto disuasorio que dicha posición podría tener a la hora de elegir Madrid como sede de arbitrajes, nacionales o internacionales.

    Y en la línea interpretativa a la que nos referimos, el TSJ de Madrid ha mantenido el siguiente y sorprendente criterio: dictado un laudo e interpuesta demanda de anulación por una de las partes, los litigantes alcanzaron un acuerdo extrajudicial y solicitaron conjuntamente  el archivo de la demanda de anulación; es decir, ambos daban el laudo por bueno y definitivo; el TSJ rechazó la petición y siguió adelante hasta dictar sentencia anulando el laudo, argumentando que como la demanda de anulación se basaba en la infracción del orden público, entonces ya la materia no era disponible por las partes y no era, en opinión del Tribunal, susceptible de transacción o renuncia.

    No era esta la primera vez que el TSJ adoptaba esta postura: impetrada la anulación de un laudo por ser contrario al “orden público”, las partes ya no tenían la posibilidad de transar y renunciar a la demanda de anulación.

    Por primera vez el asunto ha llegado al Tribunal Constitucional (TC): en un reciente fallo del 15 de junio de 2020, el TC ha sido claro y rotundo; recuerda en su sentencia que el proceso civil se fundamenta en el principio de “disposición de las partes para regular sus intereses privados, es decir, para iniciar la actividad jurisdiccional, determinar el objeto del proceso y ponerle fin cuando estimen conveniente”. Es lo que llamamos “justicia rogada”; y este principio aplica no solo a los procedimientos civiles ante los tribunales ordinarios sino también a los procedimientos arbitrales; asimismo afirma la sentencia que el arbitraje está configurado por la Ley como un mecanismo heterónomo de resolución de conflictos al que es consustancial la mínima intervención de los órganos judiciales a favor de la autonomía de la voluntad.

    Y concluye sentando que la acción de anulación debe ser entendida como un proceso de control externo sobre el laudo que no permite una decisión sobre el fondo de la decisión de los árbitros, al estar tasadas las causas, lo que justifica que “el control de los laudos tenga carácter limitado y solo pueda obtenerse la anulación del laudo en casos excepcionales”.

    En suma, entiende y proclama el TC que es contrario al derecho a la tutela judicial efectiva que protege el art. 24 de la Constitución la negativa del Tribunal a reconocer la virtualidad de un acuerdo alcanzado entre los litigantes con fundamento en el poder dispositivo de las partes sin que medie norma prohibitiva que así lo autorice e imponiendo una decisión que subvierte el principio dispositivo o de “justicia rogada” que inspira el proceso civil; por lo que concede el amparo solicitado y ordena retrotraer las actuaciones al momento anterior al auto que denegó virtualidad a la solicitud conjunta de archivo para que el TSJ dicte otra resolución acompasada al criterio del TC.

    En suma, no podrá ya nunca más el TSJM impedir a los litigantes transar y poner fin a una demanda de anulación de laudo (como ocurre pacífica y habitualmente con los recursos de apelación o de casación) y además deberá tomar en consideración en adelante la interpretación restrictiva del concepto de orden público que ha establecido el TC en esta importante sentencia. En efecto, el arbitraje español sale muy reforzado con esta sentencia del TC.

    The COVID-19 pandemic’s dramatic disruption of the legal and business landscape has included a steep drop in overall M&A activity in Q1 2020.  Much of this decrease has been due to decreased target valuations, tighter access by buyers to liquidity, and perhaps above all underlying uncertainty as to the crisis’s duration.

    For pending transactions, whether the buyer can walk away from the deal (or seek a purchase price reduction) by invoking a material adverse change (MAC) or material adverse effect (MAE) clause – or another clause in the purchase agreement – due to COVID-19 has become a question of increasing relevance.  MAC/MAE clauses typically allow a buyer to terminate an acquisition agreement if a MAC or MAE occurs between signing and closing.

    Actual litigated cases in this area have been few and far between, as under longstanding Delaware case law[1], buyer has the burden of proving MAC or MAE, irrespective of who initiates the lawsuit.  And the standard of proof is high – a buyer must show that the effects of the intervening event are sufficiently large and long lasting as compared to an equivalent period of the prior year.  A short-term or immaterial deviation will not suffice.  In fact, Delaware courts have only once found a MAC, in the December 2018 case Akorn, Inc. v. Fresenius Kabi AG.

    And yet, since the onset of the COVID-19 pandemic, numerous widely reported COVID-19 related M&A litigations have been initiated with the Delaware Court of Chancery.  These include:

    • Bed, Bath & Beyond suing 1-800-Flowers (Del. Ch. April 1, 2020) to complete its acquisition of Perosnalizationmall.com (purchaser sought an extension in closing, without citing specifically the contractual basis for the request);
    • Level 4 Yoga, franchisee of CorePower Yoga, suing CorePower Yoga (Del. Ch. Apr 2, 2020) to compel CorePower Yoga to purchase of Level 4 Yoga studios (after CorePower Yoga took the position that studio closings resulting from COVID-19 stay-at-home orders violated the ordinary course covenant);
    • Oberman, Tivoli & Pickert suing Cast & Crew (Del. Ch. Apr 6, 2020), an industry competitor, to complete its purchase of Oberman’s subsidiary (Cast & Crew maintained it was not obligated to close based on alleged insufficiencies in financial data provided in diligence);
    • SP VS Buyer LP v. L Brands, Inc. (Del. Ch. Apr 22, 2020), in which buyer sought a declaratory judgment in its favor on termination); and
    • L Brands, Inc. v. SP VS Buyer L.P., Sycamore Partners III, L.P., and Sycamore Partners III-A, L.P (Del. Ch. Apr 23), in which seller instead seeks declaratory judgment in its favor on buyer obligation to close.

    Such cases, typically signed up at an early stage of the pandemic, are likely to increase.  Delaware M&A-MAC-related jurisprudence suggests that buyers seeking to cite MAC in asserting their positions should expect an uphill fight, given buyer’s high burden of proof.  Indeed, Delaware courts’ sole finding of a MAC in Akorn was based on rather extreme facts: target’s (Akorn’s) business deteriorated significantly (40% and 20% drops in profit and equity value, respectively), measured over a full year.  And quite material to the Court’s decision was the likely devastating effect on Akorn’s business resulting from Akorn’s deceptive conduct vis-à-vis the FDA.

    By contrast, cases before and after Akorn, courts have not found a MAC/MAE, including in the 2019 case Channel Medsystems, Inc. v. Bos. Sci. Corp.  There, Boston Scientific Corporation (BSC) agreed to purchase Channel Medsystems, Inc., an early stage medical device company.  The sale was conditioned on Channel receiving FDA approval for its sole product, Cerene. In late December 2017, Channel discovered that falsified information from reports by its Vice President of Quality (as part of a scheme to steal over $2 million from Channel) was included in Channel’s FDA submissions.  BSC terminated the merger agreement in May 2018, asserting that Channel’s false representations and warranties constituted a MAC.

    The court disagreed.  While Channel and Akron both involved a fraud element, Chanel successfully resubmitted its FDA application, such that the fraudulent behavior – the court found – would not cause the FDA to reject the Cerene device.  BSC also failed to show sufficiently large or long-lasting effects on Channel’s financial position.  Channel thus reaffirmed the high bar under pre-Akron Delaware jurisprudence for courts to find a MAC/MAE (See e.g. In re IBP, Inc. S’holders Litig., 789 A.2d 14 (Del. Ch. 2001); Frontier Oil Corp. v. Holly Corp., 2005 WL 1039027 (Del. Ch. Apr. 29, 2005); Hexion Specialty Chemicals v. Huntsman Corp., 965 A.2d 715 (Del. Ch. 2008)).

    Applied to COVID-19, buyers may have challenges in invoking MAC/MAE clauses under their purchase agreements.

    First, it may simply be premature at this juncture for a buyer to show the type of longer-term effects that have been required under Delaware jurisprudence.  The long-term effects of COVID-19 itself are unclear.  Of course, as weeks turn into months and longer, this may change.

    A second challenge is certain carve-outs typically included in MAC/MAE clauses.  Notably, it is typical for these clauses to include exceptions for general economic and financial conditions generally affecting a target’s industry, unless a buyer can demonstrate that they have disproportionately affected the target.

    A buyer may be able to point to other clauses in a purchase agreement in seeking to walk away from the deal.  Of note is the ordinary course covenant that applies to the period between signing and closing.  By definition, most targets are unable to carry out business during the COVID-19 crisis consistent with past practice.  It is unclear whether courts will allow for a literal reading of these clauses, or interpret them taking into account the broader risk allocation regime as evidenced by the MAC or MAE clause in the agreement, and in doing so reject a buyer’s position.

    For unsigned deals, there may be some early lessons for practitioners as they prepare draft purchase agreements.  On buyer walk-away rights, buyers will want to ensure that the MAE/MAC definition includes express reference to “pandemics” and “epidemics”, if not to “COVID-19” itself.  Conversely, Sellers may wish to seek to loosen ordinary course covenant language, such as by including express exceptions for actions required by the MAC or MAE and otherwise ensure that they comply with all obligations under their control.  Buyers will also want to pay close attention to how COVID-19 affects other aspects of the purchase agreement, including seeking more robust representations and warranties on the impact of COVID-19 on the target’s business.

     

    [1] Although the discussion of this based Delaware law, caselaw in other U.S. jurisdictions often is consistent Delaware.  

    This week the Interim Injunction Judge of the Netherlands Commercial Court ruled in summary proceedings, following a video hearing, in a case on a EUR 169 million transaction where the plaintiff argued that the final transaction had been concluded and the defendant should proceed with the deal.

    This in an – intended – transaction where the letter of intent stipulates that a EUR 30 million break fee is due when no final agreement is signed.

    In addition to ruling on this question of construction of an agreement under Dutch law, the judge also had to rule on the break fee if no agreement was concluded and whether it should be amended or reduced because of the current Coronavirus / Covid-19 crisis.

    English Language proceedings in a Dutch state court, the Netherlands Commercial Court (NCC)

    The case is not just interesting because of the way contract formation is construed under Dutch law and application of concepts of force majeure, unforeseen circumstances and amendment of agreements under the concepts of reasonableness and fairness as well as mitigation of contractual penalties, but also interesting because it was ruled on by a judge of the English language chamber of the Netherlands Commercial Court (NCC).

    This new (2019) Dutch state court offers a relatively fast and cost-effective alternative for international commercial litigation, and in particular arbitration, in a neutral jurisdiction with professional judges selected for both their experience in international disputes and their command of English.

    The dispute regarding the construction of an M&A agreement under Dutch law in an international setting

    The facts are straightforward. Parties (located in New York, USA and the Netherlands) dispute whether final agreement on the EUR 169 million transaction has been reached but do agree a break fee of €30 million in case of non-signature of the final agreement was agreed. However, in addition to claiming there is no final agreement, the defendant also argues that the break fee – due when there is no final agreement – should be reduced or changed due to the coronavirus crisis.

    As to contract formation it must be noted that Dutch law allows broad leeway on how to communicate what may or may not be an offer or acceptance. The standard is what a reasonable person in the same circumstances would have understood their communications to mean.  Here, the critical fact is that the defendant did not sign the so-called “Transaction Agreement”. The letter of intent’s binary mechanism (either execute and deliver the paperwork for the Transaction Agreement by the agreed date or pay a EUR 30 million fee) may not have been an absolute requirement for contract formation (under Dutch law) but has significant evidentiary weight. In M&A practice – also under Dutch law – with which these parties are thoroughly familiar with, this sets a very high bar for  concluding a contract was agreed other than by explicit written agreement. So, parties may generally comfortably rely on what they have agreed on in writing with the assistance of their advisors.

    The communications relied on by claimant in this case did not clear the very high bar to assume that despite the mechanism of the letter of intent and the lack of a signed Transaction Agreement there still was a binding agreement. In particular attributing the other party’s advisers’ statements and/or conduct to the contracting party they represent did not work for the claimant in this case as per the verdict nothing suggested that the advisers would be handling everything, including entering into the agreement.

    Court order for actual performance of a – deemed – agreement on an M&A deal?

    The Interim Injunction Judge finds that there is not a sufficient likelihood of success on the merits so as to justify an interim measure ordering the defendant to actually perform its obligations under the disputed Transaction Agreement (payment of EUR 169 million and take the claimant’s 50% stake in an equestrian show-jumping business).

    Enforcement of the break fee despite “Coronavirus”?

    Failing the conclusion of an agreement, there was still another question to answer as the letter of intent mechanism re the break fee as such was not disputed. Should the Court enforce the full EUR 30 million fee in the current COVID-19 circumstances? Or should the fee’s effects be modified, mitigated or reduced in some way, or  the fee agreement should even be dissolved?

    Unforeseen circumstances, reasonableness and fairness

    The Interim Injunction Judge rules that the coronavirus crisis may be an unforeseen circumstance, but it is not of such a nature that, according to standards of reasonableness and fairness, the plaintiff cannot expect the break fee obligation to remain unchanged. The purpose of the break fee is to encourage parties to enter into the transaction and attribute / share risks between them. As such the fee limits the exposure of the parties. Payment of the fee is a quick way out of the obligation to pay the purchase price of EUR 169 million and the risks of keeping the target company financially afloat. If financially the coronavirus crisis turns out less disastrous than expected, the fee of EUR 30 million may seem high, but that is what the parties already considered reasonable when they waived their right to invoke the unreasonableness of the fee. The claim for payment of the EUR 30 million break fee is therefore upheld by the Interim Injunction Judge.

    Applicable law and the actual practice of it by the courts

    The relevant three articles are in this case articles 6:94, 6:248 and 6:258 of the Dutch Civil Code. They relate to the mitigation of contractual penalties, unforeseen circumstances and amendment of the agreement under the tenets of reasonableness and fairness. Under Dutch law the courts must with all three exercise caution. Contracts must generally be enforced as agreed. The parties’ autonomy is deemed paramount and the courts’ attitude is deferential. All three articles use language stating, essentially, that interference by the courts in the contract’s operation is allowed only to avoid an “unacceptable” impact, as assessed under standards of reasonableness and fairness.

    There is at this moment of course no well- established case law on COVID-19. However, commentators have provided guidance that is very helpful to think through the issues. Recently a “share the pain” approach has been advocated by a renowned law Professor, Tjittes, who focuses on preserving the parties’ contractual equilibrium in the current circumstances. This is, in the Court’s analysis, the right way to look at the agreement here. There is no evidence in the record suggesting that the parties contemplated or discussed the full and exceptional impact of the COVID-19 crisis. The crisis may or may not be unprovided for.  However, the court rules in the current case there is no need to rule on this issue. Even if the crisis is unprovided for, there is no support in the record for the proposition that the crisis makes it unacceptable for the claimant to demand strict performance by the defendant. The reasons are straightforward.

    The break fee allocates risk and expresses commitment and caps exposure. The harm to the business may be substantial and structural, or it may be short-term and minimal. Either way, the best “share the pain” solution, to preserve the contractual equilibrium in the agreement, is for the defendant to pay the fee as written in the letter of intent. This allocates a defined risk to one party, and actual or potential risks to the other party. Reducing the break fee in any business downturn, the fee’s express purpose – comfort and confidence to get the deal done – would not be accomplished and be derived in precisely the circumstances in which it should be robust. As a result, the Court therefore orders to pay the full EUR 30 million fee. So the break fee stipulation works under the circumstances without mitigation because of the Corona outbreak.

    The Netherlands Commercial Court, continued

    As already indicated above, the case is interesting because the verdict has been rendered by a Dutch state court in English and the proceedings where also in English. Not because of a special privilege granted in a specific case but based on an agreement between parties with a proper choice of forum clause for this court. In addition to the benefit to of having an English forum without mandatorily relying on either arbitration or choosing an anglophone court, it also has the benefit of it being a state court with the application of the regular Dutch civil procedure law, which is well known by it’s practitioners and reduces the risk of surprises of a procedural nature.  As it is as such also a “normal” state court, there is the right to appeal and particularly effective under Dutch law access to expedited proceeding as was also the case in the example referred to above. This means a regular procedure with full application of all evidentiary rules may still follow, overturning or confirming this preliminary verdict in summary proceedings.

    Novel technology in proceedings

    Another first or at least a novel application is that all submissions were made in eNCC, a document upload procedure for the NCC. Where the introduction of electronic communication and litigation in the Dutch court system has failed spectacularly, the innovations are now all following in quick order and quite effective. As a consequence of the Coronavirus outbreak several steps have been quickly tried in practice and thereafter formally set up. At present this – finally – includes a secure email-correspondence system between attorneys and the courts.

    And, also by special order of the Court in this present case, given the current COVID-19 restrictions the matter was dealt with at a public videoconference hearing on 22 April 2020 and the case was set for judgment on 29 April 2020 and published on 30 April 2020.

    Even though it is a novel application, it is highly likely that similar arrangements will continue even after expiry of current emergency measures. In several Dutch courts videoconference hearings are applied on a voluntary basis and is expected that the arrangements will be formalized.

    Eligibility of cases for the Netherlands Commercial Court

    Of more general interest are the requirements for matters that may be submitted to NCC:

    • the Amsterdam District Court or Amsterdam Court of Appeal has jurisdiction
    • the parties have expressly agreed in writing that proceedings will be in English before the NCC (the ‘NCC agreement’)
    • the action is a civil or commercial matter within the parties’ autonomy
    • the matter concerns an international dispute.

    The NCC agreement can be recorded in a clause, either before or after the dispute arises. The Court even recommends specific wording:

    “All disputes arising out of or in connection with this agreement will be resolved by the Amsterdam District Court following proceedings in English before the Chamber for International Commercial Matters (“Netherlands Commercial Court” or “NCC District Court”), to the exclusion of the jurisdiction of any other courts. An action for interim measures, including protective measures, available under Dutch law may be brought in the NCC’s Court in Summary Proceedings (CSP) in proceedings in English. Any appeals against NCC or CSP judgments will be submitted to the Amsterdam Court of Appeal’s Chamber for International Commercial Matters (“Netherlands Commercial Court of Appeal” or “NCCA”).”

    The phrase “to the exclusion of the jurisdiction of any other courts” is included in light of the Hague Convention on Choice of Court Agreements. It is not mandatory to include it of course and parties may decide not to exclude the jurisdiction of other courts or make other arrangements they consider appropriate. The only requirement being that such arrangements comply with the rules of jurisdiction and contract. Please note that choice of court agreements are exclusive unless the parties have “expressly provided” or “agreed” otherwise (as per the Hague Convention and Recast Brussels I Regulation).

    Parties in a pending case before another Dutch court or chamber may request that their case be referred to NCC District Court or NCC Court of Appeal. One of the requirements is to agree on a clause that takes the case to the NCC and makes English the language of the proceedings. The NCC recommends using this language:

    We hereby agree that all disputes in connection with the case [name parties], which is currently pending at the *** District Court (case number ***), will be resolved by the Amsterdam District Court following proceedings in English before the Chamber for International Commercial Matters (“Netherlands Commercial Court” or ”NCC District Court). Any action for interim measures, including protective measures, available under Dutch law will be brought in the NCC’s Court in Summary Proceedings (CSP) in proceedings in English. Any appeals against NCC or CSP judgments will be submitted to the Amsterdam Court of Appeal’s Chamber for International Commercial Matters (“Netherlands Commercial Court of Appeal” or “NCC Court of Appeal”).

    To request a referral, a motion must be made before the other chamber or court where the action is pending, stating the request and contesting jurisdiction (if the case is not in Amsterdam) on the basis of a choice-of-court agreement (see before).

    Additional arrangements in the proceedings before the Netherlands Commercial Court

    Before or during the proceedings, parties can also agree special arrangements in a customized NCC clause or in another appropriate manner. Such arrangements may include matters such as the following:

    • the law applicable to the substantive dispute
    • the appointment of a court reporter for preparing records of hearings and the costs of preparing those records
    • an agreement on evidence that departs from the general rules
    • the disclosure of confidential documents
    • the submission of a written witness statement prior to the witness examination
    • the manner of taking witness testimony
    • the costs of the proceedings.

    Visiting lawyers and typical course of the procedure

    All acts of process are in principle carried out by a member of the Dutch Bar. Member of the Bar in an EU or EEA Member State or Switzerland may work in accordance with Article 16e of the Advocates Act (in conjunction with a member of the Dutch Bar). Other visiting lawyers may be allowed to speak at any hearing.

    The proceedings will typically follow the below steps:

    • Submitting the initiating document by the plaintiff (summons or request as per Dutch law)
    • Assigned to three judges and a senior law clerk.
    • The defendant submits its defence statement.
    • Case management conference or motion hearing (e.g. also in respect of preliminary issues such as competence, applicable law etc.) where parties may present their arguments.
    • Judgment on motions: the court rules on the motions. Testimony, expert appointment, either at this stage or earlier or later.
    • The court may allow the parties to submit further written statements.
    • Hearing: the court interviews the parties and allows them to present their arguments. The court may enquire whether the dispute could be resolved amicably and, where appropriate, assist the parties in a settlement process. If appropriate, the court may discuss with the parties whether it would be advisable to submit part or all of the dispute to a mediator. At the end of the hearing, the court will discuss with the parties what the next steps should be.
    • Verdict: this may be a final judgment on the claims or an interim judgment ordering one or more parties to produce evidence, allowing the parties to submit written submissions on certain aspects of the case, appointing one or more experts or taking other steps.

    Continuous updates, online resources Netherlands Commercial Court

    As a final note the English language website of the Netherlands Commercial Court provides ample information on procedure and practical issues and is updated with a high frequence. Under current circumstance even at a higher pace. In particular for practitioners it’s recommended to regularly consult the website. https://www.rechtspraak.nl/English/NCC/Pages/default.aspx

    Resumen – ¿Qué podemos aprender en el tiempo de Covid-19 que se pueda usar en la mediación? ¿Y qué podemos aprender de la mediación para utilizarlo en esta crisis?

    Como saben, la mediación es una forma de resolver conflictos en los que las partes mantienen en sus manos la posible solución. No necesitan acudir a un tercero (juez o árbitro) que les imponga la respuesta. Las partes pueden imaginar más libremente lo que necesitan y cómo resolver sus diferencias.

    Algunos de los elementos y técnicas que usan los mediadores en una mediación también se pueden usar y aprender del tiempo actual de Covid-19. Y esta crisis también nos ayuda a comprender por qué son tan importantes en la mediación.

    La cooperación para obtener la solución es mejor que las decisiones unilaterales e impuestas

    Por lo general, tendemos a pensar que la cooperación es un signo de debilidad y recurrimos a ella solo si no podemos imponer nuestro parecer o ganar nuestro caso. Sin embargo, como en esta época del Covid-19, donde los países, los científicos y las personas debemos luchar juntos, cuando nos enfrentamos a un conflicto, la cooperación y el ir más allá de las propias posiciones nos ofrece la posibilidad de explorar soluciones que, de lo contrario, permanecerían ocultas.

    «Ahora se reconoce cada vez más que existen formas cooperativas de negociar nuestras diferencias y que incluso si no se puede encontrar una solución “ganar-ganar”, a menudo se puede llegar a un acuerdo inteligente que es mejor para ambas partes que la alternativa. […]

    Vale la pena recordar tres puntos sobre intereses compartidos. Primero, los intereses compartidos permanecen latentes en cada negociación. Puede que no sean inmediatamente obvios. Segundo, los intereses compartidos son oportunidades, no regalos del cielo. Tercero, enfatizar los intereses compartidos puede hacer que la negociación sea más fluida y amigable.» [Fisher, Richard; Ury, William. «Getting to Yes: Negotiating an agreement without giving in»].

    Escuchar es altamente eficaz

    En el tiempo del Covid-19 tendemos a aceptar mejor una información que confirma nuestras creencias y aceptamos mejores indicaciones que están de acuerdo con nuestras preferencias y creencias. Sin embargo, también en este momento, escuchar es de una enorme importancia para comprender las causas y las soluciones.

    Un mediador siempre escuchará a las partes y les ayudará a hacer lo mismo. Escuchar los argumentos del otro, su explicación de los hechos, intereses y necesidades, las razones de sus decisiones … tiene también una importancia crucial para encontrar una solución conjunta.

    «Ya sea que usted sea un tercero neutral (facilitador profesional, amigo o gerente) o uno de los participantes, a medida que escucha todas las historias, comienza a sentir la mejor solución.» [Levine, Stewart. «Getting to Resolution: Turning Conflict Into Collaboration».]

    Una solución para mí también puede ser una solución para ti

    En la época del Covid-19 nos parece claro a todos que una solución común va a ser la única posible. Una vacuna salvará al mundo entero. En la mediación, el principal beneficio es comprender que, a diferencia de una sentencia judicial o un laudo arbitral, una solución conjunta (no impuesta) es posible y un beneficio para mí no implica un daño o una pérdida para mi oponente.

    «Un mediador trabaja para comprender la perspectiva de cada parte en el conflicto y buscar el valor en ella. En este rol, se abstiene de juzgar qué lado está bien o mal. En cambio, intenta ver el mérito en la perspectiva de cada lado.» [Shapiro, Daniel. «Building Agreement»].

    Dominamos la solución y creamos el acuerdo en un entorno seguro

    La solución a la crisis actual no solo depende de las autoridades y de los profesionales de la salud. Una gran parte de la solución se basa en la participación de todos, lavarse las manos, respetar la distancia social, mantenerse a salvo en casa evitando el contagio y el colapso de los hospitales.

    En el tribunal dejamos la decisión del conflicto en manos de un tercero –el juez, el árbitro–. En una mediación, por el contrario, la solución permanece en nuestras manos. Sabemos cuáles son nuestros intereses, creamos nuestro acuerdo. Nuestra imaginación es nuestra aliada para encontrar la solución junto con la contraparte y la asistencia y experiencia del mediador que no la impone, pero ayuda a las partes a encontrarla. Muy a menudo, lo que las partes podrían obtener en la mediación va mucho más allá de lo que un juez podría haber otorgado. Y esto en un ambiente confidencial.

    «El sabio es modesto y escaso de palabras. Cuando se ha cumplido su tarea y las cosas se han completado, todas las personas dicen: «¡Nosotros mismos lo hemos logrado!«» [Lao Tzu]

    Las emociones son importantes

    Las emociones, buenas y malas, son inevitables. En especial en períodos de incertidumbre, crisis y pérdida de control, todos nos enfrentamos a fuertes emociones. Esto es cierto en situaciones como en esta del Covid-19 y en todos los conflictos, y no solo en los personales. Los egos, las envidias, los miedos, las ansiedades … también son parte de nuestra vida cotidiana, trabajo y negocios, pero rara vez se tienen en cuenta en los tribunales cuando se resuelven los conflictos. Un mediador ayudará a tenerlos en cuenta en un entorno seguro y como parte del conflicto mismo.

    «Resolver problemas parece más fácil que hablar de emociones. El problema es que cuando los sentimientos están en el corazón de lo que está sucediendo, son el negocio en cuestión e ignorarlos es casi imposible.» [Stone, Douglas. «Difficult Conversations: How to Discuss What Matters Most»].

    [NOTA: Los pasajes reproducidas en los puntos 1, 2, 3 y 5 son traducciones libres del autor]

    Richard Samuel

    Áreas de práctica

    • Arbitraje
    • Reclamación de deudas
    • Derecho Internacional Privado
    Contáctanos Richard