AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
10.3 “Broken-Deal” Disputes The general view is that no significant findings in con - nection with “broken-deal disputes” need to be con - sidered in the future.
terplan for the future direction of the company and its corporate policy.
10. Litigation 10.1 Frequency of Litigation
11. Activism 11.1 Shareholder Activism
In general, litigation is not common in connection with M&A transactions in Austria. In practice, costs and the duration of proceedings are the two main decid - ing factors influencing whether parties initiate litigation proceedings or seek other ways to resolve a dispute, such as arbitration. The parties in small M&A deals tend to favour litigation. The main argument in favour of litigation is that the costs incurred with arbitration proceedings are usually higher, making litigation a more attractive means of settling disputes. In the case of medium or large M&A deals with a multi- jurisdictional background, the parties mostly agree on arbitration to settle any arising disputes. Arbitration allows the parties involved to receive a swift decision on a dispute away from the public spotlight, compared to litigation proceedings, which sometimes drag on for years and are open to public scrutiny. Therefore, the parties to such transactions are often willing to bear the higher costs of arbitration. Enforcement issues need to be considered in cross- border M&A transactions, as arbitral awards may be enforceable in some countries where state court judg - ments are not. 10.2 Stage of Deal Disputes in connection with M&A deals occur at every stage of the transaction (pre-closing versus post-clos - ing). The majority of disputes occur after closing. Such dis - putes are often characterised by the buyer asserting claims regarding: • representations and warranties provided by the seller; • error on behalf of the buyer; or • the calculation of purchase price adjustment amounts.
Shareholder activism has emerged and become increasingly visible in Austria in recent years. How - ever, shareholder activist organisations (typically the Austrian Chamber of Labour, trade unions and consumer protection organisations) mainly focus on advising and representing consumers who have suf - fered damage to their investment made in units for collective investment or similar instruments, mainly by a wrongful prospectus or advertising (including in legal proceedings), rather than on tackling M&A cases. In addition, shareholders may exercise minority rights prior to and during the general meeting, eg, by taking advantage of their right to ask questions. Increasingly, minority shareholders have tried to stretch these rights (some public general meetings have lasted for hours), but as the law provides for a rather limited system of minority rights, these strategies have not often proved successful. 11.2 Aims of Activists In Austria, activists seeking to encourage companies to enter certain M&A transactions, spin-offs or major divestitures are hardly seen, though there may have been very rare M&A cases where this occurred – ie, where hostile acquisitions or takeovers with the likely intention to liquidate, restructure or dispose of large parts of the target business and/or workforce may have triggered certain activism or involvement (typi - cally on a discussion and negotiation level rather than by strikes) by politicians or trade unions. Undoubtedly, there are cases in which activists (typically minority shareholders) have sought to reinforce their ideas by exerting pressure on management. 11.3 Interference With Completion Shareholder activists rarely interfere with the comple - tion of announced transactions in Austria. Regarding the workforce and employee representatives (such
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