The Lunch DIScussions on 13 February 2025 were devoted to a topical issue: Sven Förster, Lars Harzmeier and Oliver Sieg discussed W&I insurance arbitration.
Warranties and indemnities insurance has become indispensable in M&A transactions, especially on the buyer’s side. Particularly in the private equity sector, this insurance is now part of the standard repertoire. It is therefore not surprising that follow-up issues and disputes are also developing at the interface with corporate transactions. In addition to the post-M&A dispute, there may also be a dispute with the insurance company in the coverage relationship. This makes post-M&A arbitration even more complex.
Among other things, the speakers discussed the relationship between the company purchase agreement and the questions that typically arise with regard to W&I insurance. They concluded that the two contracts are holistically interrelated and should ideally be negotiated as such, so that definitions and provisions do not diverge in the event of a dispute.
In view of the large number of parties involved – policyholders/purchasers, sellers, insurers (sometimes several), brokers and other third parties – there is a particular need for rules on multi-party arbitration and rules for the inclusion of third parties in arbitration proceedings, for example on the basis of the DIS Supplementary Rules on Third-Party Notice (DIS TPNR).
The panel concluded that W&I insurance is a product that meets market needs. Arbitration is particularly well-suited as a dispute resolution mechanism because the contracts are often drafted in English and involve foreign parties.
Jennifer Bryant