Background

The Respondent sold to the Claimant a new orthodontic solution that it had developed. The Share Purchase Agreement included an earn out mechanism that should have benefited the Respondent had the Claimant used reasonable effort to develop and market the new orthodontic solution. However, the Claimant failed to use reasonable effort and eventually initiated an arbitration claiming the Respondent was responsible for its failure to develop and market the product and asking for the reimbursement of earn out advanced payments.

Our Role

Secretariat professionals were engaged by the Respondent to perform a preliminary assessment of a possible counterclaim and assess the opportunity of a counterclaim for lost earn out. We eventually prepared expert reports assessing the market share that could have been achieved by the new solution had the Claimant used reasonable effort and quantified the net present value of the lost earn out attributable to the Respondent under two alternative scenarios.

Outcome

Based on our expert work, the tribunal rejected in its entirety the Claimant’s damages claim and awarded the Respondent for its counterclaim the amount that we had calculated under one of the two scenarios considered. The award also stipulated that the Claimant should support 80% of the tribunal expenses, and more than 50% of the legal and expert fees incurred by the Respondent.