DealLawyers.com Blog

DE Supreme: Accountant May Resolve Earnout Claim Involving No Calculation

The Delaware Supreme Court in Fortis Advisors v. Stillfront held that an earn‑out dispute clause referencing the “calculation of the earn‑out amount” triggers arbitration, not merely expert determination. The court affirmed that the accounting firm acting as arbitrator could resolve all earn‑out issues, including bad‑faith claims and covenant breaches, even when no numerical calculation was involved. This ruling upholds the Chancery Court’s arbitration award in the buyer’s favor. The decision highlights the importance of precise ADR language in merger agreements to avoid unintended arbitration scope.