Mergers and acquisitions (M&A) disputes can arise at any point after the signing of the definitive agreement (e.g. the share purchase agreement (SPA) or the asset purchase agreement (APA)). Some disputes concern failure to complete the transaction in accordance with the agreement. Others arise after completion, especially where the buyer alleges that the seller breached warranties, indemnities, restrictive covenants, or post-completion undertakings.
For sellers and buyers, a common mistake is to treat dispute resolution as an afterthought. The dispute resolution clause, the warranty and indemnity wording, and the W&I insurance claims process should be considered before signing. Once a dispute arises, your options tend to be shaped by the contract you agreed to.
This guide explains how M&A disputes commonly arise, how mediation, early neutral evaluation and arbitration fit into the escalation pathway, and how W&I insurance changes the claims strategy.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
Why M&A disputes happen after signing
Post-signing and post-completion disputes often arise because the parties disagree on the meaning or effect of the definitive agreement. The most common problem areas include:
- post-completion undertakings;
- restrictive covenants;
- completion obligations;
- warranty breaches;
- indemnity claims;
- disclosure letter limitations;
- whether losses are recoverable; and
- whether the seller’s liability is capped, excluded or time-barred.
Warranty and indemnity disputes are especially common because these clauses allocate risk between buyer and seller. If the drafting is unclear, the dispute can become expensive and commercially damaging.
In practical terms, a warranty or indemnity dispute usually turns on four questions:
- Did a breach or indemnified event occur?
- For warranty claims, did the breach cause the alleged loss?
- How much loss is recoverable?
- Was the seller’s liability qualified or limited by disclosure or contractual limitations?
That fourth question is often decisive. If the issue was properly disclosed in the disclosure letter, the buyer may have limited or no recourse for a warranty claim relating to the disclosed matter.
Start with the contract, not the emotion
When a dispute arises, the first step is not to send an aggressive letter. The first step is to read the contract.
In such situations, you should review the relevant provisions in the agreement, such as:
- the relevant warranty or indemnity;
- the disclosure letter;
- limitation clauses;
- caps, baskets and deductibles;
- survival periods;
- notice requirements;
- conduct of third-party claim provisions;
- mitigation obligations;
- W&I insurance provisions;
- escrow arrangements; and
- the dispute resolution clause.
The wording matters. A buyer may believe something is “unfair”, but if the seller disclosed the issue clearly, the buyer’s claim may be weak. Conversely, a seller may believe a claim is remote, but if the indemnity is broadly drafted, the buyer may have a direct contractual route to recovery.
This is why warranties and indemnities should be drafted precisely from the outset. Litigation or arbitration after the event is usually more expensive than negotiating the risk allocation correctly before signing.
The escalation pathway: negotiation first
If the agreement sets out a dispute process, the parties should follow it. Many contracts require notice, negotiation, mediation, or other escalation steps before formal proceedings.
Where the contract does not prescribe a process, an incremental approach is usually sensible:
- negotiation;
- mediation;
- early neutral evaluation; and
- arbitration or litigation, depending on the contract.
Negotiation is often the best first step because many M&A disputes are commercial as much as legal. For example, if the seller remains involved in management after completion, a hostile approach may damage the working relationship and reduce the value of the acquired business.
Negotiation also allows the parties to explore commercial and practical solutions that a tribunal may not order, such as revised payment timing, operational cooperation, partial release of escrow, targeted indemnity compromise, or revised post-completion obligations.
Mediation: useful where relationships and speed matter
Mediation involves an experienced neutral intermediary helping both parties explore ways to resolve the dispute. The aim is not to decide who is right. The aim is to help both sides reach mutually acceptable compromise.
In Singapore, mediation is a credible commercial dispute resolution route. The Singapore Mediation Centre provides private commercial mediation and other dispute resolution services, while the Singapore International Mediation Centre positions mediation as a flexible, non-adversarial option that can save time and cost in cross-border and complex commercial disputes.
Mediation is particularly useful in M&A disputes where:
- the parties still need to work together post-completion;
- the seller remains in management;
- the claim amount does not justify full arbitration;
- the dispute involves business judgment as much as legal interpretation;
- confidentiality matters;
- reputational exposure is a concern; or
- both sides want speed and finality.
Mediation is not weakness. In the M&A context, it is often a commercially rational way to preserve value and avoid letting legal costs consume the upside of the deal.
Early neutral evaluation: useful where merits are unclear
Early neutral evaluation involves an independent legal expert giving an impartial assessment of each party’s case. It is not the same as mediation. The evaluator does not primarily facilitate compromise; instead, the evaluator helps the parties understand the likely strengths and weaknesses of their positions.
This can be valuable where each party believes the contract strongly supports its own interpretation. A neutral assessment can reset unrealistic expectations and provide a basis for settlement.
Public Singapore dispute resolution commentary recognises neutral evaluation as part of Singapore’s suite of alternative dispute resolution services, including through institutions such as the Singapore Mediation Centre.
In M&A disputes, early neutral evaluation may be useful for:
- warranty interpretation;
- indemnity scope;
- whether disclosure qualifies a warranty;
- whether a loss is recoverable;
- whether a claim falls inside a cap or exclusion;
- procedural questions under the dispute clause; and
- whether a claim is worth escalating.
It is especially useful where the parties want a reality check before committing to arbitration or court proceedings.
Arbitration: when the dispute needs a binding decision
Arbitration is a formal dispute resolution process where the parties appoint an independent tribunal to decide the dispute. In the M&A context, arbitration is attractive because it can be confidential, specialist, and binding.
If parties want their dispute to be settled by arbitration administered by the Singapore International Arbitration Centre (SIAC), they should include a proper SIAC arbitration clause in the definitive agreement. SIAC’s model clause provides that disputes arising out of or relating to the contract may be settled by arbitration administered by SIAC under the SIAC Rules, and SIAC also publishes model clauses for parties adopting SIAC-administered arbitration.
Arbitration may be appropriate where:
- the claim amount is significant;
- the dispute involves technical M&A issues;
- confidentiality is important;
- the parties are cross-border;
- the decision must be final and binding;
- a neutral forum is needed; or
- the contract already provides for arbitration.
That said, confidentiality should not be assumed casually. Singapore commentary notes that arbitration confidentiality should be addressed carefully because statutory and common-law positions can be nuanced. In practice, parties should draft express confidentiality obligations in the arbitration clause or related documents if confidentiality is commercially important.
Mediation vs arbitration: which should you choose?
For M&A disputes, the better question is not “mediation or arbitration?” but “what sequence gives the best commercial outcome?”
A common pathway is:
- negotiation between principals;
- mediation if negotiation fails;
- arbitration if settlement is not achieved.
Mediation is more flexible and relationship-preserving. Arbitration is better where the parties need a binding decision. Early neutral evaluation can sit between the two, especially where legal merits are unclear.
If the dispute involves ongoing working relationships, mediation should usually be attempted early. If the dispute concerns a high-value indemnity claim, fraud allegation, escrow release, or interpretation of the SPA/APA, arbitration may be necessary if compromise fails.
How W&I insurance changes the dispute map
Warranty and indemnity insurance changes the dispute landscape because the buyer may claim directly against the insurer for covered warranty breaches.
Where the policyholder is the buyer in an M&A transaction, a typical W&I policy may not require the buyer to first attempt recovery from the seller. This helps the seller achieve a cleaner exit because the seller is generally outside the claims process, except in cases such as fraud or excluded matters.
However, W&I insurance does not eliminate all disputes. It can create new dispute pathways, including:
- Buyer vs insurer: the insurer rejects a claim or disputes the claim amount.
- Insurer vs seller: the insurer pursues the seller after payment, typically in cases of seller fraud.
- Buyer vs seller: the claim falls outside policy coverage, or concerns uninsured matters.
This means W&I insurance must be integrated with the SPA/APA dispute resolution clause and the policy dispute clause.
W&I claims strategy: what buyers should consider
If you are the buyer and a potential warranty breach arises, your immediate steps should include:
- identify the relevant warranty;
- check whether the issue was disclosed;
- review policy exclusions;
- notify the insurer in accordance with the policy;
- preserve documents and evidence;
- assess mitigation obligations;
- consider whether the claim is covered or excluded;
- check whether any claim must also be notified to the seller;
- review deadlines; and
- avoid conduct that may prejudice coverage.
Buyers should remember that W&I insurance is designed for unexpected issues. Known breaches are usually excluded and should be dealt with in the transaction documents before signing.
W&I claims strategy: what sellers should consider
If you are the seller, W&I insurance can protect your clean exit, but only if the SPA/APA and policy are properly aligned.
Sellers should check:
- whether buyer claims are directed first to the insurer;
- whether the insurer has waived subrogation rights except for fraud;
- whether seller residual liability is capped;
- whether fraud carve-outs are clearly drafted;
- whether uninsured claims remain possible;
- whether escrow is reduced or eliminated;
- whether disclosure protects against known matters; and
- whether the dispute clause covers related claims efficiently.
If an insurer raises subrogation issues or alleges fraud, sellers should seek legal advice immediately.
Consolidation: why the SPA and policy clauses must align
One technical but important issue is whether the insurer will be a party to the same dispute process as the buyer and seller.
If a W&I claim gives rise to parallel disputes, for example, buyer vs insurer under the policy and buyer vs seller under the SPA, the parties may face inconsistent findings, duplicated costs, and procedural inefficiency.
The solution is to think about consolidation before signing. If the parties expect the insurer to participate directly in dispute resolution, they should include consolidation provisions in both the definitive agreement and the W&I policy contract.
This is a drafting issue, not an afterthought. It should be addressed when negotiating the SPA/APA and policy.
How to reduce M&A dispute risk before signing
The best dispute strategy is prevention.
Before signing, parties should ensure:
- warranties are clear and not overly broad;
- indemnities are tied to specific identified risks;
- liability caps and survival periods are clear;
- baskets, deductibles and de minimis thresholds are precise;
- disclosure letters contain specific, not merely general, disclosures;
- escrow terms are commercially sensible;
- W&I insurance is integrated with the SPA/APA;
- dispute resolution clauses are coherent; and
- consolidation is considered where W&I insurance is involved.
For sellers, the goal is to avoid open-ended exposure after completion. For buyers, the goal is to preserve meaningful recourse where the target is not as represented.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
Reach out to us if you would like to book an M&A dispute prevention / claims strategy review.
For such matters, send us your SPA/APA dispute resolution clause, warranty and indemnity schedule, disclosure letter, escrow terms and any W&I policy draft. We will assess:
- where a dispute is most likely to arise;
- whether warranty and indemnity claims are properly limited;
- whether the disclosure letter protects the seller;
- whether the dispute clause is coherent;
- whether mediation or SIAC arbitration is better suited;
- whether W&I policy claims align with the SPA/APA; and
- whether consolidation wording is needed.
This is valuable before signing, and urgent if a claim has already been threatened.
Frequently asked questions (FAQ)
- What are the most common M&A disputes after completion?
Common disputes involve warranty breaches, indemnity claims, post-completion undertakings, restrictive covenants, completion obligations, escrow release, and whether disclosures limit seller liability.
- Why are warranty and indemnity disputes so common?
Because they decide who bears risk after completion. Buyers want recourse for unknown risks; sellers want certainty and finality.
- Should M&A disputes go straight to arbitration?
Not always. If relationships matter or the claim can be commercially resolved, negotiation or mediation may be better first steps. Arbitration is appropriate where a binding decision is needed.
- What is mediation in an M&A dispute?
Mediation is a facilitated negotiation led by a neutral mediator. The mediator helps parties explore settlement, but does not impose a decision.
- What is early neutral evaluation?
Early neutral evaluation is where an independent expert assesses the merits of each party’s position. It can help parties evaluate litigation or arbitration risk before escalating.
- Why use SIAC arbitration for M&A disputes?
SIAC arbitration may be suitable where parties want a neutral, specialist and binding process, especially in cross-border or high-value M&A disputes. The clause should be drafted properly at the contract stage.
- Are SIAC arbitrations automatically confidential?
Confidentiality should be drafted expressly. Singapore commentary notes that confidentiality in arbitration can be nuanced, so parties should not leave it to assumption.
- How does W&I insurance affect claims?
Where the buyer in an M&A transaction is the policyholder, claims covered under such insurance policy may be made directly against the insurer, reducing the seller’s involvement except for matters such as fraud or excluded claims.
- Can W&I insurance prevent all seller claims?
No. Known issues, excluded matters, fraud, and uninsured claims may still create buyer-seller disputes.
- Why do consolidation clauses matter in W&I disputes?
If the SPA/APA and W&I policy have separate dispute processes, related disputes may run in parallel. Consolidation wording can reduce duplication and inconsistency.
For legal or media queries, please write to Waltson at waltson.tan@28falconlaw.com or send a WhatsApp message to +65 8079 0028.
