Your professional practice is focused on arbitration and merger and acquisition transactions, to the point where you have organised a conference devoted to the subject. Pardon me for asking, but isn’t this the most boring subject imaginable ?

By no means ! Arbitration in M&A transactions turns on real-life stories which touch the lives of many people. When you think about it, what are mergers and acquisitions ? Simply put, this is about purchasing business enterprises, oftentimes ones upon which thousands of people rely for their livelihoods. Clearly, the purchaser of such an enterprise must have a goal of some sort if he’s willing to put his money down. He may, for example, be convinced that a loss-making coal pit can be turned around and rendered profitable again, but a number of people must be made redundant before this goal can be achieved. So, I would argue that M&A is of relevance not only to specialised lawyers, but also to your average reader.

So, if it is arbitration that you deal in, I take it that this would be about resolving disputes surrounding such deals, for example acquisition of a coal mine.

Yes, if for no other reason that take-over of a business is a vast undertaking, oftentimes regulated by highly complex agreements. An investor who puts, say, PLN 200 million on the table is, understandably enough, keen to know what, exactly, he’s getting in return. And a company is a complex creature, not necessarily one that you can weigh and measure, describe, and valuate just like that. Also, many months usually elapse between expression of interest by a prospective buyer and the actual acquisition of the enterprise, and many things can come to pass during this time, affecting the essence of the enterprise and its value. The investment agreement must be clear as to what will go on during this time and what consequences this will bring. Some disputes stem from the fact that, once this time has elapsed and the actual acquisition is about to be effectuated, the parties can take divergent views of the same contractual provisions. The purchaser might say that he will pay PLN 300 million rather than PLN 200 million if a certain condition is fulfilled, and there then arises a controversy as to whether or not this condition has in fact been fulfilled. As you see, then, one can do much worse as regards a subject for an international conference. Many investment agreements hew to the same underlying model, so we might find that business people in Warsaw, in London, and in Hong Kong encounter very similar problems in practice. I am very pleased to see our conference attract practitioners from the world over to Warsaw.

And if, in the end, the transaction does not come to pass, what then ?

Such an outcome is bound to be problematic because all the parties concerned have devoted time and resources to the preparations. In some cases, the professed purchaser is not interested in actually purchasing the target at all, it is simply seeking to reconnoitre its competitor, to get a feel for its strong and weak points. In such a scenario, we may fund ourselves dealing with disputes concerning violation of privacy, use of confidential information, or poaching of key staff. More often than not, disputes of this kind go to arbitration rather than coming before the general courts. One reason is that, seeing as many investment agreements share many basic traits, an experienced arbitrator will know exactly what she’s looking for, and where to find it. A judge, on the other hand, dealing as he does with all manner of cases, would probably have to learn everything from scratch; even if this learning process does not detract from the quality and basic soundness of the proceedings, it is bound to make them last longer. At the Arbitration Court of the Lewiatan Confederation, meanwhile, we strive to close every case within six months.

So, if the general courts were more specialised and handled their caseload more quickly, would arbitration become redundant ?

Obviously, it wouldn’t hurt if major business cases were ruled upon by judges with thorough knowledge of the field. Yet arbitration would continue to offer advantages for business.

A major strength of arbitration is comprised in its confidential nature. If a contentious matter is pending before the courts, one of the parties may hit upon the idea of leaking certain information to the general public. This is hardly conducive to the quality of the proceedings. M&A cases often call for dwelling upon the financial standing of the companies involved – on something which the typical company would very much prefer to keep private rather than sharing it with all those concerned. The old saying about how money likes quiet is very true. This issue of confidentiality, incidentally, informs the conference organised by the Lewiatan Arbitration Court. Arbitration proceedings – even, or perhaps especially, the really important ones – are not covered in the daily news. Surely, it is a good idea for experts to debate cases and compare notes, of course with due heed for considerations of professional secrecy.

All right, so we have one real-terms advantage of arbitration – confidentiality. Any others ?

Many commercial disputes are international in character. Let’s say that a Polish and a British company have a dispute. None of them will be keen to have this dispute brought before the national courts of its rival. Arbitration makes things easier in this regard. The parties can settle upon arbitrators whom they both trust and whose judgement they will respect, and these arbitrators can come from any country, really.

Is it true that only the biggest companies can afford to go to arbitration ?

No, this is a myth. In order to debunk it, all you have to do is look at the cases coming before the arbitration courts. In the case of the Lewiatan Arbitration Court, the amount at issue in the smallest case was just over PLN 3,000. If one were to compare the cost of arbitration proceedings before the Lewiatan tribunal or before the arbitration court of the Polish Chamber of Commerce with that of ordinary court proceedings, the conclusion would be that, as long as we are dealing with disputes of up to PLN 3 million, arbitration presents the less expensive solution. Once this threshold is exceeded, the courts may, indeed, be less expensive, given that the court fee for bringing a statement of claim is capped at PLN 100,000. That said, it is up to the given claimant to consider whether he prefers less expensive court proceedings or arbitration proceedings which, while more expensive, offer the advantages discussed above.