October 12, 2011
Here's a tidbit from the ongoing Skyworks/AATI arbitration:
A preliminary hearing was held before Chancellor Leo Strine of the Delaware Court of Chancery on October 7, 2011 on the petitions for arbitration filed on September 26, 2011 by Skyworks Solutions, Inc., a Delaware corporation, against Advanced Analogic Technologies Incorporated and the petition for arbitration filed on September 23, 2011 by AATI against Skyworks in the Delaware Court of Chancery in connection with the parties' May 26, 2011 Merger Agreement. At the preliminary hearing, Chancellor Strine ordered the two petitions consolidated for all purposes of the arbitration proceedings, and ordered that the arbitration hearing take place on November 28, 29 and 30 and, if additional time is needed, one or more days during the week of December 5.
OK, that's ten weeks from filing to hearing. Although the results will be confidential, both parties have obligations to file something under the securities rules, so we'll presumably be able to find out the outcome of the arbitration hearing. What won't happen is that the result of the hearing will not become part of the Delaware common law. So, if for example the court were to find that there was a MAC, no one else can rely on the decision, or its reasoning, to plan transactions or counsel clients about how future courts might decide.
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Arbs must be hating this!
Posted by: Anon | Oct 14, 2011 8:42:53 AM
I know you've complained about this before, but court's are there primarily to solve disputes between parties, not make precedents for law professors and law schools... aren't they?
Posted by: Anon | Oct 16, 2011 9:20:11 PM
True. My only issue with respect to arbitration is that one has to be attentive to the long-term impacts of taking disputes private.
It's a mistake to think that precedents exist for law professors and law schools. They don't. The fiduciary law that comprises the heart of the corporate law is all common law. That means it requires precedent. If all takeover cases going forward were to be decided in arbitration and no further precedents set, then the "law" would forever be as it is today.
One of the values of the common law is that as the world changes and as nature of business disputes change, judges see new sets of facts and interpret the law against those new sets of facts. This is more important for deal-makers and those who counsel them than it is for law professors.
It's a bit of a "commons" problem. On the one hand, each individual litigant has an incentive to take care of their own dispute confidentially and quickly in private. On the other hand, the effect on the whole system, over time, may be negative for everyone. In any event, this is a long-term issue with a lot of uncertainty and likely one that Delaware can't resolve one way or the other on its own.
Posted by: bjmq | Oct 17, 2011 5:43:31 AM
In response to the comment above, they also make precedent for practitioners. Many important issues could be decided in a confidential arbitration and leave practitioners to keep guessing.
I do think the arbitration rules will be beneficial for many clients by keeping the dispute out of the public forum, particularly where the acquisition involves a privately-held company. I think this may appeal particularly to private equity firms.
Posted by: Anon 1 (first commenter) | Oct 17, 2011 6:20:17 AM