Purchase Price Adjustment Subject To Arbitration
OSI Systems, Inc. v. Instrumentarium Corporation, download file, is a Chancery Court case that involved a motion for judgment on the pleadings filed by both parties regarding the interpretation of an Asset Purchase Agreement. The dispute involved an adjustment to the purchase price based on working capital as determined after the date of closing. The agreement provided for two different types of arbitration procedures depending on the type of issue raised. The lawsuit arose out of the method by which OSI came to its conclusions for the closing adjustment. OSI admits that it did not apply the same accounting principles that Instrumentarium had used to produce the amounts for working capital necessary for the post closing adjustment. The reason OSI gave for the different approach was based on their argument that the accounting methods used by Instrumentarium were not compliant with generally accepted accounting principles in the United States as required by the Purchase Agreement.
The court discussed the procedural standard for cross motions for judgment on the pleadings and determined that the allegations regarding the proper accounting method were to be treated as claims for misrepresentation--which required the parties to submit the issue to a law trained arbitrator as defined in the agreement, as opposed to the type of arbitration procedure provided for in the agreement that was to be conducted by an accountant.
