Alternative dispute resolution (ADR)

Alternative dispute resolution (ADR) encompasses all mechanisms for resolving disputes outside state court proceedings: mediation (facilitated negotiation), conciliation, expert determination (binding financial expert opinion), mini-trial, dispute boards and arbitration (private court with enforceable award). In M&A and corporate finance, ADR is widely embedded in SPAs and shareholders' agreements to handle post-closing disputes on earn-out calculations, completion accounts adjustments and warranty claims. The choice between mechanisms depends on the nature of the dispute, the desired level of confidentiality, the technical expertise required and the enforceability needs. For purely financial disputes (valuation disagreements, price adjustment mechanics, earn-out calculations), expert determination by a qualified financial professional, whose decision is binding, is typically faster and more cost-effective than arbitration.

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Example: a shareholders' agreement for a Franco-Swiss joint venture provides three dispute tiers: first, direct negotiation (30 days); second, mediation before the CMAP in Paris (60 days); third, ICC arbitration under Swiss law as a last resort. This cascade approach resolves 80% of disputes at the mediation stage, preserving the commercial relationship and avoiding costly arbitral proceedings. Similarly, after the sale of a Swiss hospitality group for CHF 22.0 million, seller and buyer disagree on a CHF 1.2 million working capital adjustment: the SPA provides for binding expert determination by an independent financial expert, which resolves the dispute in 6 weeks, compared with 18 to 36 months for institutional arbitration, at a fraction of the cost.

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Hectelion advises clients on the optimal ADR structure for their agreements and serves as independent financial expert in dispute resolution proceedings for M&A pricing disputes across French and Swiss jurisdictions.