Gail Weinstein is a Senior Counsel, Philip Richter is a Partner, and Steven Epstein is the Managing Partner at Fried, Frank, Harris, Shriver & Jacobson LLP. This post is based on a Fried Frank memorandum by Ms. Weinstein, Mr. Richter, Mr. Epstein, Steven J. Steinman, Randi Lally, and Maxwell Yim, and is part of the Delaware law series; links to other posts in the series are available here.
In Fortis Advisors v. Stillfront (Feb. 13, 2026), the Delaware Supreme Court held that an alternative dispute resolution (ADR) provision in a merger agreement, which called for an independent accounting firm to resolve disputes relating to “calculation of the earnout amount” payable by the buyer, permitted resolution by the accounting firm of claims that the buyer had breached earnout-related operational covenants and acted in bad faith—even though the claims involved no “calculation.” Having decided that the ADR provision called for an “arbitration” rather than an “expert determination,” the Supreme Court concluded that the accounting firm had broad authority to resolve all issues (including legal issues) relating to the earnout amount that was owed. Therefore, the Supreme Court upheld the Court of Chancery’s decision that enforced the accounting firm’s conclusions that no change was required to the buyer’s calculations and the buyer was not entitled to any earnout or other recovery.
