Planning for Disputes in Cross-Border Private Equity Deals: Managing Risk (and Getting Some Benefits) with International Arbitration

August 18, 2014

Planning for future disputes is essential to managing the risk of any transaction—but it is ever more so for private equity managers, who are increasingly investing in foreign assets and in industries exposed to sovereign risk (e.g., oil & gas, natural resources, telecommunications, infrastructure). Appropriate dispute planning can avoid the pitfalls of local courts, the risk of parallel litigations in multiple jurisdictions and avert pyrrhic victories by ensuring the enforceability of any future judgment or award. At the same time, important trade benefits and investment protections offered to foreign investors by many states under bilateral investment treaties (BITs), multilateral treaties (e.g., the Energy Charter Treaty) and other trade agreements should not be ignored by private equity managers—who can unlock coverage under these treaties and sovereign risk protections with appropriate deal structuring. This article surveys the advantages of using international arbitration for disputes arising out of cross-border private equity deals.

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