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 connection with “broken-deal disputes” need to be considered in the future.
are the two main deciding 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 arbi - tration proceedings are usually higher, making litigation the 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 accept the higher costs of arbitration proceed - ings. Enforcement issues need to be considered in cross-border M&A transactions, as arbitral awards might be enforceable in countries where judgments of state courts are not. 10.2 Stage of Deal Disputes in connection with M&A deals occur at every transaction stage (pre-closing versus post-closing). The majority of disputes occur after closing. Such disputes 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.
11. Activism 11.1 Shareholder Activism
Shareholder activism has emerged and become increasingly visible in Austria in recent years. However, shareholder activist organisations (typically the Austrian Chamber of Labour, trade unions and consumer protection organisa - tions) mainly focus on advising and represent - ing consumers who have suffered 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 minor - ity rights prior to and during the general meet - ing, 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 since the law provides for a rather limited sys - tem of minority rights, these strategies have not In Austria, activists seeking to encourage com - panies 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 (typically on a often proved successful. 11.2 Aims of Activists
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