Beata Gessel-Kalinowska vel Kalisz
Representations and warranties originated in the common law system, but are now used widely in merger and acquisition (M&A) transactions generally. While their underlying purpose, wherever they are used, is to protect the fair exchange of goods between the parties, they may be perceived and regulated differently, depending on local practices and applicable law.
This article looks at the effect such differences may have on the understanding of representations and warranties, their nature and scope, the remedies available in the event of their breach, and the awarding and calculation of damages to compensate for loss suffered as a result of their breach.
While the resolution of disputes over breaches of representations and warranties in cross-border M&A transactions is a challenging exercise that calls for an awareness of these differences, international arbitration is ideally placed to provide the intercultural perspective fundamental to the task. The article ends with a look at how some international arbitral tribunals have exercised their powers to award damages for breaches of representations and warranties.