Title

Legal challenges facing cross-border mergers and acquisitions in the global economy within the energy sector.

Abstract

The purpose of this dissertation paper is to investigate the legal challenges faced by energy companies during the process of cross-border mergers and acquisitions (M&A). The dissertation has been sub-divided into five chapters: the introduction, the literature review, case analysis, discussion and finally the conclusion.  The study focuses on the energy sector globally and analyses the effects of national laws and regulations on the process of cross-border M&A. In addition, the research also aims to identify possible strategies that can be used to reduce legal risks that emerge during the cross-border M&A. A mixed-methods approach has been employed where the data is obtained from both primary and secondary sources. Among these sources include case studies that have involved energy firm’s mergers or acquisitions globally, national laws and regulations, government policies and documents, academic papers, journal articles as well as books. To answer the research questions adequately, the data has been analysed, interpreted and discussed using applicable and relevant case laws from different parts of the world.  The findings of the analysis stresses how geopolitical, taxation, regulatory and cultural distinctions are key factors in successful foreign investments. The market size, assets and institutional regulations of a target country should all be taken into account before making an international merger or acquisition (M&A). For such M&As to take place smoothly, democratic systems must remain intact with laws being abided by everyone involved as well as zero tolerance towards corruption present.   

CHAPTER ONE: INTRODUCTION

1.1  Background

According to Malik et al[1], mergers and acquisitions (M&A) involves the combining of a company with another company or acquiring a portion of it, resulting in a consolidation of ownership and control. Chakravarty and Chua[2] state that this has become a popular strategy for companies in recent times as it offers a means of growth, expansion into new markets, and an increase in market share. The energy sector has experienced a substantial rise in cross-border M&A activity as organisations seek to broaden their operations and access new energy sources. Wu[3] mentions that the increase in cross-border M&A activity in the energy sector such as the Suez/GdF merger[4] has been made possible by the establishment of international laws and treaties that create a positive environment for these transactions. One such international law is the WTO's TRIPS agreement, which has been in effect since January 1, 1995 and provides a framework for protecting intellectual property rights in cross-border deals and ensures the free transfer of technology, know-how, and other intellectual property assets across borders. This protection is crucial for companies in the energy sector, which heavily depend on technology and innovation.

Further, there is the Energy Charter Treaty (ECT)[5] which was established in 1991 to offer a multilateral framework for the protection of energy-related investments. This treaty includes procedures that both investors and individual States should undertake to initiate dispute resolution. For instance, in 2014, the case of Yukos Universal Limited (Isle of Man) v. The Russian Federation[6], utilised the ECT as the applicable legal instrument and the claimants were awarded a record-breaking US$50 billion award despite the appeals. ECT is a critical treaty geared towards the promotion of cooperation and investment in the energy sector by offering provisions on property rights, protection against expropriation, and protection against discriminatory measures. As a result, this has led to a more stable and predictable environment for cross-border transactions. Additionally, international arbitration courts, such as the International Centre for Settlement of Investment Disputes (ICSID)[7], provide a neutral platform for resolving disputes between investors and states and help reduce the legal uncertainty for companies engaged in M&A activities. Some cases such as Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic[8] and Salini Costruttori S.p.A. and Italstrade S.p.A. v. Kingdom of Morocco[9] among others have all been determined using the ICSID. Moreover, bilateral and regional trade agreements, such as NAFTA[10] and the European Union, provide a framework for the free flow of goods, services, and capital, reducing barriers to trade and investment, and creating opportunities for cross-border M&A. The EU, for instance, has created a single market for energy, allowing companies access to multiple countries' energy resources as noted by Jamasb, and Pollitt[11].

However, as documented by Özgür, and Wirl[12], the process of cross-border M&A in the energy sector is not without its legal challenges. These transactions involve a complex array of legal, regulatory, and cultural differences that can pose significant obstacles to a successful deal. The regulatory environment according to Cairney, McHarg, McEwen, and Turner[13] for energy companies is particularly complex, with a patchwork of rules and regulations at both the national and international level. Subsequently, navigation of the legal landscape and completing a potential deal that is both compliant and beneficial to all parties involved can be a challenge to achieve.

At the same time cross-border M&A can also present substantial cultural challenges. Different countries have different business practices, cultural norms, and attitudes towards risk and liability, which can make it difficult for companies to agree on the terms of a deal. There may also be concerns about intellectual property rights, data protection, and the transfer of sensitive information across borders. Therefore, in light of these legal and cultural challenges, it is essential for companies to be well-prepared before entering into a cross-border M&A transaction in the energy sector.  It is essential that the involved companies conduct thorough due diligence, engage in meaningful and slow negotiations and ensure that the negotiators have a solid understanding of the legal and regulatory environment in the target country. All it takes for companies is the right preparation to overcome the legal challenges of cross-border M&A and enter into deals that are successful, compliant, and beneficial to all involved.

1.1.1 Legal Framework

Cross border M&A within the energy sector is often subject to a wide range of legal frameworks globally which often vary dependent on the involved nations.  In general, the in place legal frameworks are formulated to ensure that the transaction between the merging or acquisitioning companies do not have negative impacts on the competition, national security or the consumers. There are various legal frameworks guiding cross border M&A.

First there are the National Regulatory frameworks where each nation across the globe has its individual framework which is used to govern these mergers and acquisitions. It is imperative that these cross-border transactions undergo regulatory approvals for purposes of ensuring that the transactions do not result in a monopoly player. For instance, in the United States, there is the Energy Policy Act of 2005[14] which seeks to regulate cross-border transactions within the energy sector in addition to the Federal Energy Regulatory Commission (FERC) which acts as a regulatory supervisor when such transactions are occurring. In Canada, there is the Invest Canada Act[15] which demands that all foreign investors seek government approval for any mergers or acquisitions touching on the energy sector. In the EU, there is the Third Energy Package which was created to protect consumers in ways such as promotion of renewable energy. There is also the Gas Directive[16] which regulates the transmission, distribution and storage of natural gas in the EU aiming at promotion of competition practices. These frameworks have been implemented and amended with the goal of ensuring cross-border M&A are done to not only promote competition but also protect consumers by ensuring security of supply and transition into a sustainable energy.

Secondly, cross-border M&A among energy companies is guided by international trade agreements such as the North American Free Trade Agreement (NAFTA) and the World Trade Organisation (WTO). The sole aim of these agreements is promotion of competition and the free flow of goods and services between countries. Others include the Trans-Pacific Partnership (TPP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which have provisions that relate to cross-border mergers and acquisitions. These agreements promote competition and the free flow of goods and services between countries where for instance, the CPTPP provides for greater transparency and consultation between member countries in the event of a cross-border M&A. Another critical international trade agreement that energy companies seeking for cross-border M&A must consult widely to understand it is the Energy Charter Treaty (ECT) which covers a wide range of energy related issues such as transit, investment and trade. The ECT emphasises on the protection of foreign investors in the energy sector and in case there are disputes, it has a mechanism for resolution via the international arbitration. Additionally, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) has specific standards for the enforcement and protection of intellectual property rights (IPRs)[17] among the member nations and owing to the amount of research and development of new technologies in the energy sector, it is important for cross-border M&A. Therefore, within the energy sector, international trade agreements have implications for cross-border M&A in areas such as market access, protection of investment and intellectual property. Companies seeking cross-border M&A ought to be aware of the relevant provisions within these agreements to ensure compliance. 

Finally, there are antitrust and competition laws which are essential in transactions involving cross-border M&A. The purpose of these laws is prevention of anti-competitive behaviours like market manipulation and price-fixing of energy products upon merge or acquisition. Different countries have in place competition authorities that enforce these laws. For instance, in the EU, the European Commission is tasked with enforcing competition law via the Merger Regulation[18] whose goal is ensuring that all mergers and acquisitions which are proposed are reviewed thoroughly to avoid a scenario where the emerging organisation is dominant within the market. In some countries, energy-specific regulatory frameworks apply to cross-border mergers and acquisitions such as in Australia where the Foreign Acquisitions and Takeovers Act 1975[19] applies to mergers and acquisitions in the energy sector whereas the Australian Competition and Consumer Commission (ACCC) is empowered to M&As to ensure they do not result in a substantial lessening of competition.

1.2 Problem Statement

Within the global economy, cross-border M&A’s are becoming more prevalent and this can be seen in the energy industry[20]. Companies that are adopting this business strategy have the desire to broaden their reach, enter into new overseas market while at the same time securing the technology and resources required to gain a competitive edge.

Nevertheless, as noted, deals concerned with cross-border M&A’s can be difficult and complex as they come with a range of legal, cultural, and economic obstacles. While different international laws, and agreements are available to ensure that the process of cross-border M&As is undertaken smoothly including having dispute resolution mechanisms such as the use of the International Centre for Settlement of Investment Disputes (ICSID)[21] many firms in the energy sector still face a wide range of legal difficulties.

Companies in the energy sector seeking cross-border merger or acquisition ought to overcome the challenge of having to navigate via different legal policies, regulations and systems in various nations. They have to find ways to deal with hurdles like taxes, intellectual property, labour laws, and environmental regulations. It is important to note that these challenges are often further complicated by the cross-border differences in legal practices, corporate governance norms, and cultural attitudes toward business deals.

It is clear that the energy sector is becoming increasingly interconnected globally, with companies operating across borders and facing intricate legal challenges. The complexities of cross-border M&A’s mean that companies must be well-versed in the legal and regulatory landscape in order to successfully complete the process. It is essential that representatives of the companies seeking cross border mergers or acquisitions comprehend different business practices, cultures, and legal systems in different nations and adjust their strategy accordingly. Despite these challenges, cross-border M&A’s remain a critical aspect of the energy sector's growth plan.  Consequently, there is need to balance the legal, cultural, and economic hurdles faced in order to succeed in this challenging environment. This research intends to shed light on the intricate legal difficulties facing cross-border M&A’s in the energy sector, and to find out strategies that companies can use to overcome them.

1.3 Scope of the Research Work

The purpose of the present study is to investigate the legal challenges that energy companies face during the process of cross-border mergers and acquisitions. Consequently, in this research, the legal challenges and implications are analysed, the effects of national laws and regulations during the cross-border M&A are also examined and finally, possible strategies that can be utilised to reduce the legal risks that emerge are identified. The focus of the study is within the energy sector across the globe because of its unique economic, cultural and legal barriers that have been faced in the past and continue to be present.  Both secondary and primary data has been used in the study. Some of the data sources include national laws, case studies, government documents, journal articles, academic papers as well as books. In the context of energy companies, relevant jurisprudence has been analysed with the goal of demonstrating the legal difficulties of cross border M&As.  The study’s questions are answered via data analysis, interpretation and discussion.

1.4 Research Aim, Objectives and Research Questions

Studies done on the legal challenges faced during cross-border mergers and acquisitions in the global economy do not necessarily focus on the energy sector and they are not entirely specific to legal problems.  Consequently, it is critical to conduct a research that is dedicated towards examining legal challenges that companies in the energy sector face when seeking for cross-border mergers and acquisitions.

The purpose/ aim of this study is to determine the legal challenges facing cross-border mergers and acquisitions in the global economy within the energy sector.

1.4.1 Research Objectives

a)     To analyse the legal implications and challenges in cross-border mergers and acquisitions within the energy sector.

b)     To identify strategies that can be adopted to mitigate the legal risks and challenges facing cross-border mergers and acquisitions in the energy sector.

1.4.2 Research Questions

a)     What are the major legal challenges facing cross-border mergers and acquisitions in the energy sector?

b)     What are the best practices and strategies that companies can adopt to mitigate the legal risks and challenges in cross-border mergers and acquisitions in the energy sector?

1.5 Research Methodology

The research involves gathering data through a mix of primary and secondary research methods. Secondary data is collected through desk research from trustworthy and authoritative sources, such as academic papers, journal articles, and books. Primary data is obtained from relevant case studies and national laws and policy documents. The data is then analysed, interpreted, and discussed to draw conclusions and answer the research questions.

Consequently, appropriate case laws that relates to challenges of cross-border mergers and acquisitions within the energy sector are analysed. Among the cases to be analysed are: Commission v. General Electric/Alstom[22], Commission v. EON/RWE[23], Commission v. Gaz de France/Suez[24], and Chevron Corporation and Texaco Petroleum Corporation v. Ecuador.[25] Apart from the use of these case laws, other relevant case studies are obtained and used to show the difficulties of cross-border mergers and acquisitions such as the case of CNOOC/Unocal among others.

Consequently, the research questions are answered by making inferences through the process of interpretation, analysis and discussions.

1.6 Dissertation Structure

The dissertation composes of five chapters including the introduction as follows:

Chapter 2 is the Literature Review which examines previous research conducted on the subject, focusing on studies done across the world and the conclusions drawn.

Chapter 3 documents relevant Cases Analysis. Analysis of important cases related to cross-border mergers and acquisitions within the energy sector is provided with the aim of understanding the factors that contribute towards the disputes.

Chapter 4 is the details a Discussion, and Analysis: Includes a discussion of the findings of the study which answers the first question of the dissertation.

Chapter 5 is the Conclusion and Recommendation: This section summarises the key findings of the research and offer recommendations for future study answering the second question of the dissertation.

CHAPTER 2: LITERATURE REVIEW

Numerous researchers and authors have investigated the difficulties that organisations across the world have to deal with during the process of cross-border mergers and acquisitions. Below are the various findings from different researchers:

The study by Alimov[26] examines the relationship between employment protection regulations and cross-border merger activity. The findings indicate that changes in employment regulations in a country play a crucial role in attracting foreign acquirers, particularly those from countries with less restrictive labour regulations. These results are strong and noticeable in sectors with high skill levels and productivity such as Information Technology (IT), healthcare and engineering among others. Alimov[27] also presents evidence that transactions driven by pro-labour reforms result in greater deal synergies and improved post-merger performance, as foreign acquirers have the ability to select more skilled and productive local firms. Alimov[28] study suggests that during the process of a cross-border merger, firms should weigh up the differences in labour market regulations between countries. It was discovered that foreign acquirers are more likely to target companies from those nations with tighter employment protection regulation as compared to countries with softer laws on the matter. Therefore, businesses must take into account how these different rules affect their proposed transaction when planning such mergers and acquisitions.

Additionally, this study[29] revealed that companies facing cross-border mergers must tackle cultural differences between foreign employees and their own. This may result in communication issues, confusion, and reluctance to alter behaviours since the members have varying backgrounds. To make matters run more smoothly, businesses should include resources in training regarding the new culture as well as other activities that can ease workers' transitions into a different environment. Ultimately, Alimov[30] opines that organisations engaging in cross-border merging must tackle laws and regulations concerning foreign currencies as well as the obligations that different tax frameworks might impose. This view by Alimov is something that I agree with because regulations on currencies/ foreign exchange control, funds repatriation and currency conversion differ across countries similar to the fact that tax laws differ across jurisdictions and companies seeking mergers or acquisitions require to have this understanding. At the same time, this process can require large amounts of time and resources to make sure everything is in accordance with local statutes. In addition, companies may also need to factor into their calculations how exchange rate fluctuations could influence revenues or profits.

In their study, Feito-Ruiz and Menéndez-Requejo[31] analysed the effect of legal and institutional factors on European acquiring firm returns in cross-border M&A’s between 2002 and 2006. The study covered differences in legal and institutional environments of acquiring and target firms, including the impact of the 2002 Sarbanes-Oxley Act (SOX).  According to the authors, there were critical difficulties posed by mergers and acquisitions involving listed or unlisted target companies throughout 2002-2006. Following the implementation of Sarbanes-Oxley in 2002[32], standards for trading on stock markets became increasingly stringent for firms worldwide—particularly those from countries with inadequate legal structures and institutional supervision. The authors suggest that if the target firm is from a nation with higher legal and institutional settings, then there may be fewer chances to discover undervalued companies. This can lead to an increased cost of the deal which could adversely affect acquired shareholders. I agree with the authors because if the firm being targeted is from a country with higher institutional and legal settings, it would mean that the regulatory and legal environment is more efficient and transparent which results in few undervalued firms available for either merger or acquisition as the market portrays a true reflection of their values. The same scenario could also result in a decline in effectiveness for the corporate governance system of the target company. Results show that cross-border M&A’s are valued positively by acquiring-firm shareholders but can destroy value if there are negative differences in legal and institutional environments between the acquiring and target firms. The findings highlight the importance of economic freedom for firms to access and compete in international markets[33].

The study article by Xie, Reddy, and Liang[34] is a comprehensive review of 250 studies on the factors that affect cross-border M&As. They found that the host country's laws regarding finance, taxation, and corporate governance have a positive impact on inward acquisitions. The influence of geopolitical, regulatory, and cultural differences is moderated by the target country's market size, resources, and weak institutional laws (especially taxes). This article adds to the understanding of the factors that drive cross-border M&A’s around the world. The authors[35] suggests that taxation influences cross-border M&A deals and can influence the type of FDI (horizontal or vertical). To illustrate, growing the statutory corporate tax rate by just 1% is likely to decrease inflow of foreign direct investment in America.[36] The article implies that established tax reform can lead to a significant increase in the taxation burden when acquiring an enterprise with foreign tax credits within its home market.

Further, the authors argues that alterations in the exchange rate can have an impact on cross-border M&A transactions. When there is a decrease compared to other international currencies, such as the United States dollar, more capital is likely to flow into acquisitions while if it increases outward capital flows gain greater appeal for investors. In this manner, changes in exchange rates affect how tempting these deals are for market participants. In agreement with Feito-Ruiz and Menéndez-Requejo, Xie, Reddy, and Liang[37] noted that institutional and regulatory framework of two countries is a major determining factor when it comes to cross-border M&A deals. I do agree with this conclusion because of the differences between nations in relation to their regulatory frameworks that guide establishment of these merger and acquisition deals. Furthermore, having an understanding of country-specific criteria which may affect such transaction outcomes poses as one obstacle in this area. In addition, cultural discrepancies between both parties involved along with regulations governing each respective region and any political instability existing can greatly influence the success or failure of cross-border merger activity.

Further, Xie, Reddy, and Liang[38] found that there are other various official factors, such as government intervention, political conditions, and improper or unlawful actions (corruption) on cross-border M&A activity which can best be viewed by breaking them down into six components. First, countries with stronger good governance practices and more stable politics welcome inward investments unabashedly and tend to accept corporate change without opposition. Secondly, when organisations hailing from the Developed Economies (DE) target less developed nations, the measure of involvement from the prevailing political force will be substantial. This implies that agreements are more likely to be manipulated by bureaucratic corruption and unpredictable measures taken by public authorities.

Thirdly, and as observed by Dikova, et al.,[39] firms with higher degrees of dishonesty in their home country tend to aim for acquisitions in regions where such violation is commonplace as well — mostly because investors select high-equity control when operating within corrupted states which share similar characteristics with what they are used back at home. Fourth, as noted by Graham, Martey, and Yawson[40] firms from countries with a more honest business climate purchase target assets in nations where corruption is rampant and legal boundaries are fewer, particularly regarding tax avoidance techniques, the displacement of profits to other locations, and tax havens agreements.

Fifthly, higher levels of corrupt behaviour as well as political turmoil draw considerable investments through mergers due to brighter market prospects caused by abundant natural resources. Sixth, similar to observations made by Reddy, Xie, and Huang,[41] when the government intervenes and is motivated by one ruling political party or has a higher level of bureaucratic corruption, it can have an array of negative results including reducing the incidence and chances that cross-border deals will be completed.

Thus, governments in areas with instability and rampant corruption tend to interfere more often with foreign investment policy decisions. This can lead to two negative outcomes: longer wait times for deals to be completed and the risk of abandonment of purchases altogether. Over the past few years, Wan and Wong[42] noted that multiple cross-border transactions have been prevented from reaching completion due to stringent merger regulations, governmental interference, and capricious actions taken by regulatory officials. Very few research efforts analyse how political atmosphere impacts the presence of officially announced international mergers as well as their likelihood of effectively concluding. Previous research by Schöllhammer and Nigh[43][44] (1984, 1986) reveals that German companies invest in underdeveloped countries. However, it is observed that investments from these firms are hindered due to prevailing internal political tensions in the less-advanced countries they're investing in. Additionally, intergovernmental ties as well as economic environment variables hold significant sway over where Japanese enterprises decide to make their investments. Kim[45] discovered that due to politicians being elected, the business administrative divisions were more likely to be influenced when deciding changes for M&A regulations and acquisition process guidelines. They found this was particularly true in countries which had a majoritarian electoral system because these countries not only passed stricter merger control laws but also rejected suggested offers much more frequently than those with proportional electoral systems.

Lee, Hemmert and Kim[46] found that in the 111 developing countries analysed, better political institutions - as determined by rule of law stability, democracy and multiple veto players - resulted in increased levels of M&A activity. Furthermore, these measures had a positive impact on the completion rate for publicly announced deals. An example would be that a one unit rise in the rule of law (such as democratic stability or having multiple veto players) causes an elevation of 39% total FDI mergers and acquisitions when compared to 38% or 16%.[47] Cao and Liu[48] discovered that 58,507 transactions across 47 countries indicated an augmented rate of acquisitions in the year prior to national elections. This growth was marked by a continuous rise during seven to twelve months before Election Day due to wariness over political instability. The level of government involvement is likely to be considerable when businesses from Developed Economies (DEs) initiate deals with governmental entities and politically affiliated organisations in Emerging Economies (EE) (e.g., India; Reddy et al.). Similarly, significant political input may manifest if firms from EE put forth investments concerning resource-based enterprises situated in the United States which belong to DEs (Wan and Wong)[49]. Conybeare and Kim suggest that when the target of mergers is related to government, financially distressed or defense firms in countries with large marketplaces subject to tight merger regulations; those transactions come under greater scrutiny.

The article by Goldstein[50] compares the ways in which the US, the EU (with focus on the UK), and China review cross-border mergers and acquisitions for both competition and national security. In the US, the antitrust review is separate from the national security review conducted by CFIUS, while in Europe, large mergers are notified to the EC but individual Member States can raise national security concerns within the competition review process. In China, comprehensive competition review began with the Antimonopoly Law in 2008 and the State Council has recently introduced a national security review system for foreign mergers and acquisitions.[51] The article highlights the impact of the definition of "national security" on which cross-border mergers are approved. While the US and EU have limited their definitions to defense, China's definition covers military defense, strategic economic security, and cultural security. According to the Goldstein[52], the American system is often criticised for its politicised nature, with Congress and CFIUS being the main targets of complaints. This has fortunately left bureaucratic bodies such as the FTC and DOJ unscathed, however. The EU in contrast runs a well organised M&A verification process that cannot be emulated due to their particular political circumstances; there lies no possibility of replicating this by either America or China. Chinese merger reviews are still in development currently. It does not seem likely that the national security evaluation will prevent political agendas from impacting foreign investments, but it can still provide considerable advantages.[53]

Cross-border M&A’s globally are also affected by geographical environment and Green, and Meyer, noted that it is logical to study its associated factors. According to Chapman[54], the traditional idea is that the farther apart two countries are physically, the lower likelihood of FDI/M&A flows (from West to South) taking place. Recent studies have shown this may not be completely accurate; East European companies tend to go for full-equity control in larger distances than previously thought - and they are often doing it not just for raw materials or other assets like that, but rather strategic purposes as well. Deng, and Yang[55] noted that although the evidence is inconclusive regarding whether Emerging Economies (EE) acquisitions are beneficial, a country's market potential and natural resource base will likely reduce the impact of extended distance between two territories. Second, the presence of local industrial clusters, urban centres and external influences all have a beneficial effect on inward foreign investment. Additionally, countries with better access to sea transportation networks and interior waterways often receive significant incoming funds from DEs according to Anderson, and Sutherland. Generally, Cassidy, and Andreosso-O’Callaghan[56] notes that companies are more likely to complete cross-border transactions if a country has adequate market opportunity coupled with good transport links that can be augmented by tax incentives where appropriate. Despite the immense growth in globalised institutional structures over the last two decades, geographical location still holds influence over whether or not a cross-border acquisition is possible.

Cross-border M&A’s are also largely affected by cultural environment.[57] The influence of cultural environment on the prevalence of cross-border transactions is divided into three sections. Initially, different societies have distinct customs and beliefs embedded in their economies which can adversely affect negotiations for (full or partial equity control) transnational arrangements from inception to public announcement, regulatory filing and conclusion. Nevertheless, Malhotra, Sivakumar, and Zhu[58] noted that research results regarding this topic are inconclusive. Essentially, the extent to which cultural distance affects a firm's acquisition ownership decision can vary depending on factors like market potential, natural resources and strategic assets of the target country. While some research has shown that acquiring firms tend to take full-equity control in countries with seemingly little similarities culturally, studies involving European companies indicate this connection may be influenced by certain economic elements such as those previously mentioned.

Second, Amighini, et al.,[59] states that there is the issue of cultural proximity. For example, firms from China are drawn to foreign direct investment due to the presence of Chinese citizens abroad. Home country individuals in other countries make it easier for acquirers to bridge the cultural gap between their home and target nation, which fosters large financial investments through acquisition. The effect is based on making familiar cultures more accessible via a diaspora sharing similar language or characteristics with its origin state. Third, although firms may be more reticent to acquire full equity stakes due to greater linguistic differences between countries, technological advancements and improved communication methods can help soften this barrier according to Hattari, and Rajan.[60] Still, cultural distance is likely to influence M&A negotiations and could potentially derail a deal. Nonetheless it would take an extreme event for a company to suddenly reverse course on an already announced transaction.

At the same time, cross-borders mergers and acquisitions are largely affected by accounting standards and valuation guidelines as they are critical in matters valuation. The accounting regulations and standards adopted by various countries have an important effect on the assessment of a target firm and its buying premium when it comes to international acquisitions. This is because there are often significant differences in how different nations administer their accounting systems, creating disparities in valuation across borders which would otherwise not be seen. Studies such as that by Maksimovic, Phillips, and Yang[61] have revealed that companies commonly pay extra to shareholders involved in foreign transactions compared with those based domestically. Rossi, and Volpin[62] showed a tendency for firms from EE countries, considered national champions, to give higher premiums than domestic bidders when they bid on shares owned by DE investors. Therefore, according to Bertrand, De Brebisson, and Burietz[63] a nation with reliable international accounting practices (for example IFRS/GAAP) and strong regulation when it comes to financial reporting will attract plentiful capital inflows from not just other countries that have equivalent standards but also those who lack substantial enforcement. This is because consistent financial reporting and listing requirements between the home country and host country help to minimise the faces of transaction costs related to financial information.

Louis and Urcan[64] determined that implementation of the 2005 International Financial Reporting Standards guidelines brought a substantial increase in cross-border investments into IFRS countries through acquisitions, relative to previous years and non-IFRS adopters. Even higher levels of foreign capital injection is expected when governments reinforce regulations related to this field. Similarly, nations that are close to attaining IFRS regulations or with more established IFRS rules gain higher capital inflows, while countries not following such guidelines closely have experienced a notable growth in infusions of capital according to Chen, Ding and Xu.[65] Furthermore, such harmony in regulations fosters transparency throughout regulatory procedures, making it possible for investors to experience beneficial market returns following a public announcement.

In this instance, potential investors from DE may tend to focus on countries that have comparable or weaker regulations and partial acceptance of international accounting standards; however, while having similar financial reporting expectations can help mitigate matters related to asymmetrical information, it could lead acquirers not to overly recompense target shareholders. Francis, Huang and Khurana[66] discovered that countries which follow generally accepted accounting principles (GAAP) observe a considerable number of mergers and acquisitions due to the competent adoption of international financial reporting standards by their host nations, thus establishing that subtle discrepancies between GAAPs have an influence on upsurges in M&A activities.

As previously noted by Xie, Reddy, and Liang[67], tax and the tax environment can be a major barrier to cross-border M&A’s. The taxation approaches adopted by a country, along with the tax relief available and incentives employed will largely influence how frequently cross-border acquisitions occur. Firms tend to target countries with weak taxation laws, reduced corporate tax rates, and treaties involving tax havens or offshore financial centres even though double taxation regulations generally have an inhibiting effect on cross-border capital movements. If a nation and another state have an arrangement such as a free-trade deal or some other form of special agreement, the resulting taxation can either be single or double depending upon each respective country's tax system and policies. Usually, Becker and Fuest[68] notes that double taxation entails nonresident dividend withholding taxes along with parent countries' corporate income taxes on repatriated dividends. Countries that impose heavier foreign double taxation become less desirable for the origin companies of newly created multinational enterprises (MNEs). According to Huizinga and Voget[69], the removal of worldwide taxations by the U.S. government has seen a positive effect, as indicated by an upsurge in parent firms participating in overseas acquisitions (53-58%). It is posited that additional international taxes lead to minimised takeover bid premiums.[70]

Additionally, there is increased evidence of tax dodging when existing double levy conventions are in place, or the latter include higher top tier business taxes. As Jones and Temouri[71] observe, the percentage of tax evasion has been estimated to be around 16%, indicating that even when firms are publically listed there is no reduction in incentives for evading taxes. What's more, cross-border revenue problems such as profit shifting, and taxation avoidance have become vital topics for policy makers throughout a large number of countries due partly to the financial crisis post 2008.[72] This was highlighted by Kourdoumpalou and Karagiorgos’s research.[73] In short, due to major discrepancies in regulatory, enforcement and institutional structures both developing and developed nations are losing out on economic earnings from taxes such as withholding taxes imposed by the host country or a home county’s tax of foreign source income. Thus, despite the large amounts of foreign direct investment (FDI) entering countries, governments commonly fail to benefit from taxes such as capital gains or those collected in cash deals.

Tax havens and offshore financial centres are integral parts of many outward and inward flows for cross-border mergers and acquisitions that involve firms originating in emerging economies. According to Sutherland and Anderson[74] offshore financial centres facilitate the conduct of cross-border M&A deals by providing a framework that reduces taxes and other costs related to international business transactions. Furthermore, these jurisdictions play a key role in structuring multinational company investments with respect to taxation regulations based on the analysis done by Hansen and Kessler.[75] Consequently, tax havens and offshore financial centres are critical for deciding where profits should be registered when carrying out mergers or acquisitions internationally.

An interesting research paper about the likelihood of certain countries being considered tax havens by Dharmapala[76] and Hines showed that those nations tend to be situated near large capital-exporting places, lacking landlocked borders and often existing as islands; most inhabitants stay close to their coastlines, employ English in official settings and have an open economy. In addition, these regions normally exhibit a British legal heritage with parliamentary systems plus considerably lower natural resource endowments. On the other hand, for Chari and Acikgoz[77], certain countries and territories with respective small economies and limited populations can be considered tax havens due to their low or non-existent corporate taxation rates. These areas offer an array of beneficial characteristics such as unobtrusive regulation, complete secrecy, plus the aforementioned minimal taxes which make them allure for businesses seeking out financial advantages as noted by Jones and Temouri.[78]

Understanding these roles is essential when examining investments like M&A across borders by businesses based in EE nations. Therefore, countries with tax agreements and high levels of corruption are prime targets for foreign direct investments from businesses based in offshore financial centres and fiscal paradises. Indeed, a considerable portion of the FDI made to EE is believed to be related to round-trip investing due these associations. In their 2009 study, Coeurdacier et al.[79] discovered that a 10% decrease in corporate income tax between the target and bidder countries yields an increase of 68% for outflows associated with manufacturing sector. Another finding revealed by Hebous, Ruf and Weichenrieder[80] is that bigger distinctions concerning corporate income taxes spur foreign investment into those markets. Taxes are not likely to be a major factor in the decision-making process of an acquisition, but with Greenfield investments it really matters.

According to Phillips and Ahmadi-Esfahani,[81] the amount of corporate tax compared to other elements is more important for judgments about these deals. This was shown by Hebous et al.,[82] who argued that differences between taxes matter less when discussing acquisitions versus what they can mean when looking at greenfield investments. Nagano[83] discovered that places with lower corporate tax rates tend to acquire more Japanese investment capital. Baccini, Li and Mirkina[84] have demonstrated that Russia can get more foreign direct investments by being impartial in taxing profiting from such ventures. Overall, the central idea is that despite increased corporate tax rates and alterations in provincial-level taxes reducing inward cross-border investments, a potential market size for investors and regulations which are not strongly enforced will temper the negative relationship between taxation legislation and mergers.

According to Peng[85], the institutional and regulatory environment appears to be the primary factor determining whether or not a cross-border M&A deal succeeds. Studies such as the one by Rossi and Volpin[86], point to this being especially relevant for both US and UK bidders, who tend to prefer targeting companies in nations with compatible levels of development as well as reliable corporate governance structures meant to ensure investor protections. This can all be grouped into six distinct categories. Second, due to globalisation and liberalisation programs which were implemented by several MNEs from Western states, there has been considerable growth into developing countries that do not employ strong laws, possess inadequate regulatory procedures and provide limited shareholder safeguards. This is because of the weak institutional frameworks (e.g., legal systems) are unable to cover various regulation issues in regard to cross-border company acquisitions deals - particularly capital gains tax on target worth (for instance cash purchases).

Thus, Peng, Wang, and Jiang[87], notes that the absence of regulatory enforcement and controls in countries with weak governance structures can provide an advantage to MNEs from nations with well-established economic laws. The amount of time required for a proposed transaction to obtain necessary approval will vary depending on how large the gap is between institutional frameworks or cultures of the two countries involved. It should be noted that this process may take longer when there is considerable difference in practices between them. Therefore, the closer the institutions involved in a deal span different nations, the quicker it will be approved.

Fourth, as noted by Xie, Reddy, and Liang, multinational enterprises from emerging economies investing abroad through outbound acquisitions and other global market expansion strategies were driven by institutional foundations in their home country that shifted during the 1980s policy reforms and responses to the 2007–2009 financial crisis. This shows how changes in institutions as well as capital markets within an EE affects firms’ strategic decisions which have had a profound impact on building up Institutional-based view of these businesses. However, due to a lack of government oversight or regulatory barriers and the need for bureaucratic administration, people have chosen to seek out capital elsewhere (such as making large investments). This often causes bidders to pay dearly in order that shareholders will be willing to part with their shares.

Lastly, although there is generally more distance between Developed Economies' businesses and those situated within Emerging ones', firms from EEs still seem able to acquire full control over companies located in mature countries such as: The United States, Canada & UK etc. This viewpoint departs from the commonly held idea that multinational companies originating in developed economies usually opt for partial ownership stakes in countries where institutional distance is significant. Moreover, prior experience with international acquisitions or any past involvement of business activities within the target country can influence how much institutional distance affects a company's decision to finalise an equity investment.

2.2 Literature Analysis

I agree with the authors such as Chapman[88] in the literature review that the notion that physical distance alone determines the level of cross-border M&A activity has been traditionally accepted, but this has significantly changed or overtaken by time. There are other variables such as a nation's market size and capabilities may bridge gaps between nations physically located far apart.[89] Elements like access to natural resources or industrial clusters near big cities, together with dependable transportation networks have profound effects on negotiations regarding mergers and acquisitions despite geographical separation of two countries involved in them. Moreover, I concur with Alimov[90] who observed that the cultural framework of two countries involved in a cross-border M&A can have an effect on the transaction's outcome. Different societies may possess distinct values, beliefs and etiquette that could affect negotiations and any potential success derived from overseas dealings. There are inconclusive results regarding how greatly culture matters for mergers or acquisitions between different nations; some elements such as natural resources, market size and strategic assets within that country might influence decisions to proceed with such deals despite potentially differing cultures. It is definite that having people from the buying country in the other nation can assist in overcoming cultural barriers and smoothing international deals.

There is also no doubt that the variations in accounting policies and standards among nations can lead to varying estimations of the value of an acquisition target company across boundaries as was noted by Bertrand, De Brebisson, and Burietz.[91] As a result, those involved with foreign transactions often receive larger sums than similar domestic deals; therefore, countries that practice solid international accounting practices and enforce strong fiscal reporting requirements generally have higher levels of incoming capital investment. I believe that it is true, the use of worldwide accounting conventions, for example International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP), can result in a rise in cross-border investments into countries that apply these protocols.

The literature review through Alimov draws attention to the impact of employment regulations in making countries more attractive for foreign investors. I agree with this review, as nations with fewer limitations on labour are typically seen to be desirable destinations for international acquirers. Notably, this applies especially within industries which contain a high level of ability and efficiency; allowing foreign buyers an opportunity to opt for local organisations with enhanced aptitude and productivity levels. It is critical for companies partaking in international mergers to evaluate the disparities between labour market laws across countries and discern how they can affect the joining of forces. Furthermore, I concur with the observations of Feito-Ruiz, et al.[92] that legal and institutional matters are critical factors when it comes to cross-border mergers & acquisitions. In addition, the disparities between regulatory regimes where both firms involved in M&A operations reside can create problems which pose negative effects on shareholders after deals close. This is illustrated by such guidelines as Sarbanes Oxley Act[93] whose application may increase operational costs, while yet adversely impacting acquired stakeholder interests. The research underscores the necessity of economic freedom for businesses to have access and be able to compete in global markets, emphasising the need to align legal and institutional structures for effective international mergers.

Moreover, different authors such as Xie, Reddy, and Liang[94] have suggested that laws related to finance, taxation and corporate governance can significantly impact cross-border mergers and acquisitions. I concur with them on the point that tax policies shape foreign direct investment activity as well as how attractive an opportunity is for participants when exchange rates fluctuate. The prospect of lower tax rates and more advantageous taxation policies can stimulate companies to pursue cross-border investments. Furthermore, the benefit of engaging in mergers & acquisitions (M&A) is greater when countries have signed a treaty with international financial centres or offshore havens that provide added incentives for foreign businesses. Tax havens and offshore financial centres have a system in place that decreases taxes and expenditures associated with international business ventures as was noted by Dharmapala.[95] These places commonly feature reduced to no corporate taxation rates, as well as lax rules or even complete confidentiality laws. Companies may decide on structuring mergers or purchases utilising these so-called "havens" in order to reduce the amount of their taxes owed while also boosting their income potentials at the same time. It is noteworthy that cross-border M&A involving the utilisation of tax havens and offshore financial entities has been met with greater scrutiny by legislators due to suspicions regarding possible attempts at tax dodging and moving profits abroad. In order to tackle this problem, many world governments have collaborated in developing tighter regulations so as to discourage any initiatives which abuse taxes when conducting cross-border transactions.

Consequently, the literature review is on point in emphasising the significance of manifold geopolitical, regulatory and cultural distinctions that are rectified by a target nation's market proportions, assets as well as institutional regulations. It is true that governments with better governance frameworks and more settled political climates usually welcome foreign investments, whereas countries in which corruption is rampant can interfere more often in decisions related to outside investors. This may cause obstacles such as delays or even the end of mergers; therefore, democratic systems plus adherence to laws and regulations play a major role in making sure M&A activities are carried out properly and their completion rates are increased.

Having reviewed the various findings from different authors in relation to the challenges faced in cross-border mergers and acquisitions, the next chapter will provide an analysis of global case laws that also offer insights into these challenges. The case laws have been sourced from different jurisdictions across the globe to provide an extensive overview of legal issues that a number of organisations have experienced when seeking cross border M&A.  

Chapter 3: CASE ANALYSIS

In the last few years, energy firms have looked to benefit from globalisation by partaking in frequent cross-border mergers and acquisitions. Despite this being a viable move for growth, it is not without its difficulties as organisations must face many challenges such as conflicting regulations, cultural gaps and strategic issues. In this chapter, the difficulties resulting from cross-border acquisitions in the energy industry are examined and studied closely through examining relevant case studies that have affected cross border M&A practices.

This chapter takes a close look at numerous well-known cases that have been watched intently by government authorities, business professionals, and the public. Through examining these cases we can observe the legal, financial and bureaucratic issues involved in M&A agreements within the energy market. This research offers fruitful insight into understanding what is entailed with cross-border M&A transactions. Notable cases to be examined include Commission v. General Electric/Alstom, Commission v. EON/RWE, Commission v. Gaz de France/Suez, and Chevron Corporation and Texaco Petroleum Corporation v. Ecuador.  In addition to these significant cases, this chapter also delves into other noteworthy examples of M&A across borders in the energy industry. One prime instance is that of CNOOC/Unocal which effectively illustrates how geopolitics can bring added complexities and security apprehensions, as well as require intense negotiations between major international corporations over essential resources.

In selection of these cases, a certain criterion was followed. First, there was the issue of relevance. It is critical to select cases or scenarios that pertain directly to the topic or quest for answers being sought. The chosen instances should relate specifically to cross-border mergers and acquisitions, offering insights into how competition laws and regulatory entities may affect those transactions. The second criterion was that of significance. There is need to put the emphasis on cases which possess considerable influence in terms of industry, market or legal environment; those that have garnered extensive attention, established judicial precedents and gave rise to noteworthy findings could prove highly beneficial for interpretation and assessment. Another issue which influenced the selection of these was diversity. It was imperative to choose examples from different industries, locations, and regulatory environments. This will make sure the assessment is thorough and impartial; it also prevents biases or shortcomings connected to looking only at samples from one sector or area. Finally, availability of information was a significant influencing factor in selection of these cases. It was of essence to take into account cases wherein ample data and evidence is available. Examining court filings, legal papers, regulatory conclusions, and intellectual research may drastically improve the calibre and breadth of evaluation.

3.1 Case Analysis of Commission v. General Electric/Alstom

In this case, the primary legal question concerned whether Ansaldo Energia S.p.A can be allowed to acquire the divested businesses of General Electric Company and Alstom in accordance with the Conditions set by GE when they merged or acquired each other's companies, as requested by the European Commission.

The Council Regulation (EC) No 139/2004 rule governing the control of mergers and acquisitions between companies is applicable to this scenario. The Merger Regulation calls for those involved in such transactions to provide notice and receive approval if said merged entity could have a major impact on competition within the European Union. The Commission could make acceptance of GE's offer to sell the Divestment Business contingent upon certain conditions that would remove major barriers preventing effective competition. When these conditions are fulfilled, and get approval from the Commission, then those remedies can be carried out by GE.

To analyse this case law, the Commission granted the merger of GE and Alstom conditional upon GE's agreement to part with its Divestment Business. Ansaldo was identified as the potential buyer for this business, while a formal outline concerning the Proposed Transaction had to be presented by GE to gain full approval from the Commission. GE submitted an initial version of the Proposed Agreement and Reasoned Proposal, which was later altered before being presented in its finalised form. Ansaldo is a company based out of Italy that specialises in designing, constructing, and maintaining energy production technology with over 35KMW of gas-powered turbines to their credit.

The Commission conducted an assessment of both Ansaldo and the Proposed Transaction to determine if they would be appropriate for the Divestment Business. They looked at various factors such as financial stability, operational capabilities, technical expertise, familiarity with energy sector operations, and whether or not it could play a role in replicating Alstom's performance producing HDGTs. The effects on competition within relevant markets was also considered before answering their investigation questions.

The Commission determined that Ansaldo met the criteria necessary to be a suitable buyer of the Divestment Business, and that their purchase would not damage competition in relevant markets. They also remarked that although they were satisfied with this fact, Ansaldo must first agree to conform to certain aspects as stated in the Proposed Agreement before moving forward with implementation. The Commission insisted that GE present them with consistent updates on the adherence to their obligations, and they kept in reserve the ability to appoint a surveillance trustee as an assurance of agreement.

In conclusion, the case depicts the issue of competition in cross- border mergers and acquisitions as there are legal aspects in terms of regulations that have to be adhered to by respective parties. the Commission granted permission for GE to move forward with the agreement they had made with Ansaldo Energia S.p.A., declaring that their proposed sale of parts of the Divestment Business could not be shown to significantly reduce competition in its respective markets concluding that the transaction would not influence effective competition in relevant markets negatively. The execution of the pledges would need to be green lit by Ansaldo, the Purchaser, and in order for oversight the Commission allowed itself to select a monitoring administrator who will make sure that all terms are met.

3.2 Case Analysis of Commission v. EON/RWE

In this case, the inquiry was whether E.ON's proposed buying of Innogy’s distribution and customer services division, together with several electricity generating assets, would drastically diminish rivalry in related markets; and if the proffered commitments by E.ON are sufficient enough to assuage the European Commission's apprehensions.

The European Commission, through the EU Merger Regulation, is responsible for reviewing and granting permission to mergers or acquisitions that may have an effect on competition in the Europe Union market. To determine whether a proposed merger would lead to a substantial decline in competitive forces within relevant markets, they use the "substantial lessening of competition" assessment.

To analyse the case, E.ON and RWE, two German energy companies, entered into an intricate asset exchange agreement. After the trade is complete, E.ON was to concentrate on delivering power and gas to customers as well as retail operations; meanwhile RWE was to focus on upstream electricity production along with wholesale activities connected to it. The European Commission examined in detail the plan of E.ON acquiring Innogy's distribution business together with certain electrical generation assets at a greater degree of scrutiny. The Commission received input from competitors, customers, and other stakeholders during the inquiry. The Commission voiced worries that the proposed transaction would drastically decrease competition in several areas. This included Germany's electric heating market where both merging companies were already dominant players, making it difficult for smaller retailers to enter or expand their foothold in the industry. Furthermore, the Commission uncovered worries in Germany relating to electric vehicle charging facilities on highways due to there being hardly any organisations operating or intending to run in that particular sector. Additionally, anxiety was visible with regards to the Czech market for retailing gas as well as electricity where both merging companies were powerful opponents. Lastly, a similar concern came up regarding Hungary's market of providing unregulated businesses with electricity supply services.

However, the Commission did not perceive any significant impact on competition in the retail electricity market of either Germany or Slovakia. In Germany, numerous suppliers and constant entry of new ones indicates a highly diverse marketplace. Similarly, merging companies from Slovakia typically served separate areas instead competing each other, making it unlikely that they would have been more competitive had the merger gone through. E.ON proposed commitments as a response to the Commission's worries about competition. These included selling the major part of E.ON's electricity customers in Germany that are provided with heating, stopping the use of 34 electric charging sites on German highways (a separate company was to operate these) getting rid of E.ON's business handling energy sales to ungoverned clients in Hungary and divesting Innogy’s total gas and power dealings at retail level for consumers in Czechia.

In conclusion, the European Commission judged that the assets spun off, and the charging stations which were closed down constituted viable entities that buyers could use to compete with E.ON effectively in pertinent markets. Due to this ruling, they concluded that the purchase transaction being proposed would not be anti-competitive anymore if E.ON abided by their commitments completely; thus granting approval for it but as a prerequisite of obedience towards those terms from its part. To sum up, the European Commission gave its go-ahead to E.ON's buyout of Innogy's distribution and consumer solutions business plus some electricity generation assets, with measures imposed by E.ON to ensure that competition within these markets remains unharmed.

3.3 Case Analysis of Commission v. EON/RWE

The primary concern being disputed in Commission v. EON/RWE was if the European Commission accurately gauged how long the alleged agreement of market sharing between E.ON and GDF Suez lasted, as well as whether or not it violated the equality principle by taking penalties against both companies.

This case was governed by Article 101 of the Treaty on the Functioning of the European Union, which forbids agreements that restrict competition within Europe. The length to which a company has broken this prohibition will be taken into account when determining its culpability and imposing a penalty; furthermore, it's essential that similar issues should be subjected to consistent treatment.

In analysing the case, the General Court largely agreed with the Commission's ruling but decreased the penalties placed on E.ON and GDF Suez by almost 40%, mostly as a result of misjudging how long the infraction had lasted for. When deciding upon this matter, they looked into two aspects: when it began and ended. The Commission originally stated that GDF's monopolisation of the market initiated in 2000, while E.ON had been infringing since 1980. The General Court found this to be incorrect; rather, it determined that GDF was not able to prevent competition until 1998 and thus their infringement began in August 2000 when liberalisation occurred. For E.ON, though, they were culpable starting January 1980 with full operation of their pipeline taking place at around this time. The Commission's assertion that the infringement lasted until September 2005 was rejected by the General Court. According to a deal struck between E.ON and GDF in August 2004, any anticompetitive aspects of their agreement were declared null and void; thus, resulting in the duration of illegal activity on French market being shortened from 2000-2005 to only 2000-2004. However, it was discovered by the Court that the terms of the contract still had an effect on Germany's market until September 2005. The General Court looked into the subject of equal treatment and found that there was no infringement on this principle in comparison to earlier cases concerning limitations based on territory within the gas industry, since they differed substantially in terms of their characteristics as well as because both parties had operated honestly.

In conclusion, the General Court verified the European Commission's judgement to charge fees on both E.ON and GDF Suez but decreased those charges from €553 million down to €320 million due to mistakes in computing how long their infringement had lasted. The ruling enforced that EU competition laws affect services provided by energy suppliers; reaffirming an uncompromising enforcement of these regulations in this sector. The ruling illustrates the gravity that market allotment and comparable methods are given. This judgment is likely to provoke the European Commission on carrying out its inquiries into potential violations in this area, with a view of advancing deregulations in the energy sector.

3.4 Case Analysis of Chevron Corporation and Texaco Petroleum Corporation v. Ecuador

In this case, the primary dispute focused on whether Ecuador had broken the terms of its Bilateral Investment Treaty with America in granting continued legal proceedings against Chevron for purported ecologic harm caused by Texaco's oil drilling operations within the Amazon basin.

Under the UNCITRAL Arbitration Rules, Chevron maintained that Ecuador's violation of its obligations under the BIT could be established by demonstrating they failed to follow through on their agreement in 1993 which should have released Texaco and affiliates from any further liability.

To analyse this case, prior to its acquisition by Chevron, Texaco had managed oil fields in Ecuador. In 1993, the firm and the country's government arrived at a settlement deal that required environmental clean-up efforts along with $40 million paid out to Ecuador. Subsequently, local indigenous populations suggested that these solutions were not satisfactory and demanded additional payment for recompense. Chevron, succeeding Texaco, asserted that the settlement agreement completely settled disagreements and freed it from any future responsibility. Chevron argued that Ecuador's inaction to prevent lawsuits advancing further went against its duties under the Bilateral Investment Treaty (BIT). In 2009, Chevron took Ecuador to the Permanent Court of Arbitration (PCA) – utilising UNCITRAL arbitration rules – seeking defense from a violation of their Bilateral Investment Treaty (BIT). The tribunal determined that by allowing the lawsuits against them to continue, Ecuador had broken this treaty. As an interim decision, PCA mandated Ecuadorean lawmakers halt any and all judgments resulting from previously ongoing legal action.

In 2018, a concluding award determined Ecuador had to compensate Chevron with the sum of $9.5 billion dollars due to its liability. The ruling serves to illustrate the invaluable role of Bilateral Investment Treaties (BITs) in safeguarding investors' rights and creating remedies for companies facing disputes with their host countries. It reveals how awards from mediations can be influential as Ecuador has contested resolutions reached over litigation. Additionally, this legal decision highlights the difficulty related to enforcing arbitral decisions. In addition, this situation has raised larger matters concerning environmental duty and corporate responsibility. The claims of ecological contamination and the present legal conflict emphasise that there should be solid regulatory structures as well as effective practical solutions in place to deal with the harms caused by multinational companies on local environments and ecosystems.

In conclusion, the ruling ascertained that Ecuador had breached its duties outlined in the Ecuadorean-American Bilateral Investment Treaty. The tribunal determined that a pact made between Texaco and Ecuador dismissed any additional liability of Chevron's; therefore, they ordered for Ecuador to dodge or halt implementation of rulings regarding ongoing litigation related with Chevron as well as reimburse them conspicuously.

3.5 CNOOC/Unocal Case

The facts of this case were that in 2005, China National Offshore Oil Corporation (CNOOC) and Unocal Corporation held a significant M&A case with an offer of $18.5 billion from CNOOC for the latter's acquisition in cash[96]. The Chinese company was owned by the state unlike its American counterpart but both dealt in oil and gas operations. CNOOC was keen on acquiring Unocal because it wanted to gain access to the latter's energy resources and increase its international oil and gas holdings. The large reserves of oil and gas accessible in Asia through Unocal provided an ideal opportunity for CNOOC's growth objectives.

Nonetheless, the proposed takeover faced many obstructions during the process. Of particular worry was the issue of security on a national level; allowing a Chinese government-controlled business to acquire control over essential resources caused alarm in the United States? People in charge of making decisions and legislators voiced their reservations concerning granting foreign rule, especially from an entity owned by the state, regarding strategic infrastructure facilities. In addition, the acquisition faced hurdles due to regulatory protocol. Acquiring approval from both the US and China was necessary for completion of the deal; this process included examining effects on competition and national security as well potential other relevant factors. The complicated nature of these reviews added difficulty onto overcoming obstacles needed to conclude negotiations successfully.

In particular, political resistance emerged as a significant hindrance. Different people with an influence, including legislators, industry organisations and trade unions spoke up about their apprehension of the suggested purchase. Questions arose such as potential job losses, technology exchange and securing national financial concerns which caused this opposition to grow against the agreement. The story of CNOOC's attempted acquisition of Unocal was highly publicised, sparking conversations about outsourcing, safety and economic patriotism. As the public became more engaged in this debate it had a deep effect on how politicians handled it which eventually led to CNOOC dropping their offer for Unocal. Ultimately Chevron Corporation ended up purchasing the company instead after hurdling through many complications brought forth due to all that publicity around the transaction.

The CNOOC/Unocal case illustrates the intricacy and difficulty of international mergers and acquisitions, particularly regarding industries with a strategic purpose. In such situations in which national security issues must be considered as well as public opinion taken into account, navigating to meet regulatory requirements and managing stakeholder response is essential for success.

In conclusion, these case studies have highlighted the difficulties inherent in international Mergers and Acquisitions. The complexities of negotiating between disparate legal systems, varied regulatory frameworks and divergent political ideals are laid bare by examining Commission v/ General Electric/Alstom, Commission v. EON/RWE, Chevron Corporation and Texaco Petroleum Corporation v. Ecuador as well as CNOOC/Unocal's transactions respectively; which shed light on the obstacles faced when attempting cross-border acquisitions or mergers.

One of the biggest problems for M&A transactions is meeting the standards set by regulatory bodies. In Commission v. General Electric/Alstom, Europe's anti-trust authorities had to place stipulations upon both sides in order to keep competition healthy within those industries where they were operating together. Similarly, in Commission v. EON/RWE, the European Commission undertook a thorough examination of potential competitive effects on affected markets and imposed commitments from both merging parties to mitigate any negative impact. Such regulatory requirements mean that acquiring clearance by relevant authorities is an arduous and complicated undertaking for stakeholders involved in asset or stock exchanges.

Additionally, dealing with political opposition and public opinion are two important difficulties when it comes to cross-border M&As. A good example of this is the CNOOC/Unocal situation, which saw widespread security fears along with worries about economic allegiance leading to protests and discussions that persuaded CNOBC's withdrawal from pursuing the takeover offer. This situation illustrates how powerful people’s views can be in such situations as well as demonstrating a need for companies engaging in international mergers and acquisitions to consider any potential objections or implications early on. Issues regarding culture and law variations, as well as integration problems can also affect cross-border mergers and acquisitions. A good example of this is the Chevron Corporation/Texaco Petroleum Corporation vs Ecuador case in which a disagreement on how to interpret a Bilateral Investment Treaty with respect to environmental damage caused by one company was at stake. These types of disputes emphasise the value of being aware of cultural distinctions, various laws involved, necessary for successfully handling such situations arising from M&A’s across borders.

In addition to financial considerations, market conditions and strategic purposes are also major influences on cross-border mergers & acquisitions. The CNOOC/Unocal episode points to the great impact of accessing energy sources and broadening one's international presence as objectives for such business activities. Furthermore, certain issues concerning finance like valuation methods, funding levels or economic unsteadiness could greatly interfere with succeeding in these kinds of global deals.

To sum up, these case laws depict that cross-border mergers and acquisitions come with a wide range of challenges such as legal considerations, regulatory requirements, politics implications, cultural dynamics and financial issues that must be taken into account. Companies should carefully manage these risks in order to stay compliant while getting the most out of their investments. Consequently, the next chapter provides for an analysis of the primary legal challenges that emerged from the case laws and literature review in relations to cross border mergers and acquisitions as well as potential strategies that organisations in the energy sector can adopt to improve the chances of deals going through.

CHAPTER 4: ANALYSIS

The purpose of this chapter is to provide answers to the research questions based on the analysis of cases done in chapter 3 as well as the reviewed literature in chapter 2. The primary questions of the study were:

a)     What are the major legal challenges facing cross-border mergers and acquisitions in the energy sector?

b)     What are the best practices and strategies that companies can adopt to mitigate the legal risks and challenges in cross-border mergers and acquisitions in the energy sector?

4.1 Legal Challenges in Cross-Border Mergers and Acquisitions in the Energy Sector

Cross-border mergers and acquisitions (M&A) in the energy sector present unique legal difficulty due to differences between countries' laws, regulations, and politics. The case studies and literature reviewed demonstrate various problems confronted when uniting two distinct entities that may include conflicting regulatory guidelines or political goals. This response seeks to provide adequate answers to the most prominent issues associated with these transnational business deals within this energy sector.

4.1.1 Differing Regulatory Requirements

One of the biggest difficulties faced when merging or acquiring assets between countries is wading through different regulatory requirements. Agencies such as Europe's antitrust bodies have restrictions in place to ensure that companies from separate jurisdictions operate within a level playing field. Working out how to comply with these policies can be taxing and laborious, necessitating comprehensive work both before submitting an application for approval and complying once clearance has been given. Every country has its own unique set of rules and policies that companies must comply with if they wish to operate within their territory. This means that businesses have to spend significant amounts of time researching and understanding these laws prior to submitting an application for approval from relevant agencies across the globe. Once permission is granted, firms then need ongoing compliance with any terms imposed by regulators - this could involve making sure all accepted processes are followed correctly each step along the way during acquisitions/mergers implementation periods across nations so no unfair advantage arises between participant entities involved; plus monitoring market trends closely post-consolidation phase – analysing reactions & behavioural changes where necessary accordingly. Ultimately failure in following required regulation will lead into further action being taken against parties attempting a merger/takeover transaction alongside potential financial penalties etcetera thus almost nullifying completion achieved beforehand entirely.

4.1.2 Political Opposition and Public Opinion

Political opposition and public opinion can both have a big impact on international mergers and acquisitions. Political parties, for instance, may oppose deals that involve potential national security issues or major investments overseas — such as when an American-based company acquires a foreign competitor in another country. Public opposition from citizens could also be strong if they disagree with the terms of the deal or perceive it to negatively affect their local economy in some way (such as loss of jobs). Either case would present obstacles that companies should take into consideration before making any kind of international merger agreement. CNOOC/Unocal[97] is an example of this, as the potential political implications surrounding security, economics loyalty to a particular region or nation all became areas of worry for citizens protesting against it. It's therefore important that companies plan out how they address these issues at the beginning stages so those involved are aware before making their decision on whether to proceed with such agreements. Cultural and legal distinctions, in addition to integration issues, can make such international mergers and acquisitions more difficult. To illustrate this challenge there is the instance of Chevron Corporation/Texaco Petroleum Corporation versus Ecuador[98]; recognising cultural differences along with various laws connected are essential for overseeing contested M&A that occur between countries comprehensively.

4.1.3 Diverse Features of the Involved Markets

Cross-border Mergers and Acquisitions are highly impacted by several facets, including but not limited to legal regulations, financial circumstances, market trends as well as strategic ambitions. Obtaining access to new energy sources, expanding global presence, and procuring vital assets can all actuate these deals; however fiscal elements such as assessment approaches, capital levels along with economic turbulence have the potential of compromising their effectiveness. Because of this it is important that exact budgetary arrangements together with risk management procedures be thoroughly planned in order for cross border M&A's chances of success increase. In regard to the financial aspects, it is important that both companies involved have a deep understanding of their respective countries regulations and laws when forming a merger. It may also be necessary for certain businesses to acquire investment capital in order to purchase shares in another company or retain resources from outside investors. In relation to market trending, cross-border M&A's will need to analyse customers’ needs as well any current shifting trends within different markets across geographic borders. Companies must thoroughly assess all potential risks associated with pursuing an outbound transaction due diligence process before proceeding with acquisitions abroad by studying industry trends and competitor moves carefully can mitigate risk factors greatly. Moreover, strategic ambitions are significant elements since they bring clarity regarding desired tactics which guides how culturally diverse teams create innovative solutions while adapting fresh ideas into older processes and methodologies simultaneously eliminating existing performance gaps between two disagreeing cultures.

4.1.4 Cultural Factors

The examination of literature indicates that physical remoteness is no longer the only factor influencing cross-border mergers and acquisitions. Market size, aptitude, availability to natural assets, transport systems transcend geographical divides amongst countries located at great distances from each other. Furthermore, though difficult to determine precisely in many cases - cultural environment of the involved nations also can play a role when it comes to M&A outcomes. For instance, literature depicts those cultural factors influences the bargaining positions of two firms originating from dissimilar continents such as North America, Europe and Asia. Among the notable factors from the literature are differences in language, customs and norms which created difficulties during negotiations among executives from both countries as well as external stakeholders like shareholders or banks. Additionally, research points out risk aversion associated with cross-border transactions may also cause complications along the way when attempting an M&A deal due to different corporate governance standards between nations involved in these ‘cross border’ mergers & acquisitions.

4.1.5 Accounting Policies and Standards

The literature in chapter 2 also revealed that the variance in accounting policies and standards among nations can result in different evaluations of targets being acquired. As a result, foreign transactions may be costlier than domestic ones. On the other hand, countries that have strict international accounting regulations and clear fiscal reporting conventions tend to receive more capital investments from abroad. Adoption of internationally accepted accounting conventions, like International Financial Reporting Standards (IFRS)[99] or Generally Accepted Accounting Principles (GAAP)[100], can help drive cross-border investments into countries that comply with these norms. Different accounting policies and standards can have a major impact on the financial data used for valuations. A foreign acquirer must understand how to reconcile differences in reporting measures from different countries, or they may miscalculate earnings potential of target companies leading to poor M&A outcomes. Keeping track of internal controls within cross-border settings is also key as international subsidiaries might adopt separate accounting systems that complicate auditing processes if not properly tracked and monitored by headquarters. Lastly, organizations should implement global initiatives into their existing structures so that transitioning between jurisdictions remains cost effective without sacrificing quality of work, while still minimizing balance sheet discrepancies when conducting business overseas.

4.1.6 Labour Legislations

Labour legislation is also critical in enticing foreign investment. Countries with relaxed employment laws are often seen as attractive choices for overseas investors, particularly those involved in professions that rely on advanced skills and productivity. Companies looking to go global through merger need to take a close look at the differences between labour regulatory frameworks of various nations they may be considering doing business with. Legal and institutional components are essential for successful cross-border mergers and acquisitions to occur. Any differences in regulatory standards between nations could cause issues that negatively affect the end result, such as shareholders losing value after a merger has been completed. Labour legislation can dictate what types of benefits or pay structures need to be applied in international transactions which involve hiring additional staff as part of an acquisition process. It is also important for national authorities that foreign investments comply with local requirements regarding gender discrimination, unionization rights and environmental standards; all these are regulated under domestic labour legislations. Ultimately, meeting Labour Legislation obligations will help reduce complications associated with cultural discrepancies such as work ethic differences between employees across differing borders – making successful integration easier post completion. Thus, the importance accorded where compliance is required from both acquiring and target entities alike during any pre /post-Merger & Acquisition activities cannot be overemphasized.

4.1.7 Taxation and Corporate Governance

The laws of finance, taxation and corporate governance profoundly affect cross-border mergers and acquisitions (M&A). Tax rules determine the extent to which foreign direct investment takes place, with advantageous levies offering a significant incentive for businesses to pursue international business deals. Though often attractive due to lowered taxes or minimised expenses, utilising tax havens as well as offshore financial centres has become more heavily regulated in recent years in an attempt against any potential abuse from those parties engaging in such activities.

Corporate governance frameworks and regulations set out the terms of how businesses structure their operations, its ownership foundations and conduct. As such they can heavily influence financial decisions – particularly hostile takeovers - between parties operating in more than one jurisdiction thus allowing bid premiums or special dividend payments to be attractive factors for investors when acquiring a business by M&A activity.  Furthermore, those same rules act as protectionary guardrails preventing companies from using preferential incentives that could render other potential bids uncompetitive while ensuring adequate risk management protocols are being monitored during any large-scale transaction activities across borders. Last but not least these principles also enable shareholders seeking out opportunities where an organisation benefits from growth through commercial links with foreign trading partners without exposing itself to undue vulnerabilities too often associated with global expansion initiatives gone wrong before them due to inadequate contingency plans having been put into effect beforehand.

In the next final chapter, conclusions of this research are provided in addition to potential recommendations that can be considered for utilisation as well as suggestions for future research.   

CHAPTER 5: CONCLUSION AND RECOMMENDATION

5.0 Conclusion

In conclusion, cross-border M&A have become an attractive option for energy companies looking to grow and expand their reach. International laws such as TRIPS[101] and the ECT[102] safeguard intellectual property rights, promote technological exchange between countries involved in trades, and establish procedures for resolving disputes that may arise out of transactions across borders. Further safety is provided by international arbitration courts like ICSID[103] to help ensure a secure trading environment when conducting these investments worldwide. The legal issues surrounding energy-focused cross border mergers and acquisitions can be complex and far reaching. This includes coming to terms with different regulatory requirements, conforming to both national as well as international laws, dealing with cultural variances on either side of the transaction, plus having an eye for how antitrust legislation may affect it – leading in turn to maintaining a balance between competitors. Additionally, companies must take into account any applicable free trade agreements such as NAFTA[104] or regional ones designed towards promoting open competition along with aiding the neutral passage of services/goods being provided.

This study endeavoured to explore the legal difficulties energy organisations face with international mergers and acquisitions. Through assessing national laws and regulations, examining pertinent examples of past cases, analysing government documentation related to the topic, as well as discovering tactics that work successfully in lessening legal risk; this research hoped to bring greater clarity into these complicated situations while furthermore providing recommended courses of action for those aiming for successful outcomes within such transactions. The research included a combination of primary and secondary sources. Scholarly articles, textbooks, case studies as well as legal documents were all consulted in order to answer questions posed in the study. The data collected was then reviewed critically before being discussed for its relevance to the investigation at hand resulting in conclusions drawn or implications identified.

In regard to the first question, it was established that cross-border mergers and acquisitions (M&A) within the energy sector present many legal complexities that must be addressed, such as different regulatory frameworks, friction from politics, dissimilar cultural contexts and laws among countries involved in the transaction. Adherence to antitrust criteria is essential for businesses to stay competitive while seeking approval of M&As. Political backlash should also be expected since it could potentially influence opinions concerning a merger or acquisition; therefore, adequate preparations are necessary when entering into negotiations. To ensure success with cross-border deals there must be careful consideration given to varied cultures across jurisdictions along integration issues. Moreover, a comprehensive approach to analysing financial factors such as capital flows, taxation processes and economic conditions is essential for effective M&A’s that cross national boundaries. Market size, resources accessible and transportation networks are just some of the external aspects which influence choices in this area. Accounting standards, labour laws also play an important part not only when assessing a deal but also when making decisions regarding foreign investment infusions. Taxes have an impact on how much outside funding can be brought into any given country while corporate governance policies help keep corruption at bay during these sensitive negotiations. At last, geopolitical circumstances along with culture-specific norms and democratic systems will together define its success or failure.

5.1 Recommendations

To answer the second question of the thesis, recommendations are provided below providing for some of the best practices and strategies that can be utilised by companies seeking cross-border mergers and acquisitions in the energy sector. These recommendations focus on mitigating the legal risks and challenges identified in the previous analysis chapter.

5.1.1 Regulatory Compliance

When engaging in international mergers and acquisitions, organisations must bear in mind a complicated set of regulations. It is essential to comprehend these rules and abide by them so as to reduce legal challenges. Companies should carry out exhaustive research to detect any prospects for regulatory delays or complications and ascertain that the intended exchange abides with antitrust statutes, foreign investment laws, and industry-oriented directions. By obtaining the expertise of legal professionals and compliance specialists, enterprises have the means to put together a comprehensive approach in order to regulate their activities based on their target region's laws. This often requires procuring official permits, notifying proper regulatory bodies as necessary and maintaining compliant practices once deals are complete.

5.1.2 Political and Public Relations Management

Political and public opposition can drastically influence cross-border mergers and acquisitions, especially with regards to delicate areas such as energy. Companies must take proactive steps while managing potential legal risks by making contact with key parties - this could range from governmental figures throughout to regional neighbourhoods or industry organisations - in order to address any fears, present whilst also providing support for the activity at hand. Companies should create a sound communication plan that communicates the advantages of the arrangement, speaks to any fears or misunderstandings, and spotlights how it fits with national or regional objectives. Through creating an atmosphere for frank dialogue, openness, and proactive engagement with stakeholders' inquiries, businesses can manage public affairs issues and prevent potential legal opposition or harm to their reputation.

5.1.3 Cultural and Legal Considerations

Cross-border M&A transactions can be risky due to the various cultural and legal issues that must be considered. To reduce this risk, companies should consult with knowledgeable advisors from both countries – advisers who understand not just local laws but also relevant cultural differences in business practices and communication styles. This effort helps create smoother negotiation processes, better integration of partners post-M&A, and more effective conflict resolution over time if it arises. Furthermore, companies should do a thorough assessment of legal matters to spot any discrepancies or possible risks involving contracts, intellectual property rights, labour laws and disputes handling. By managing cultural and lawful components ahead of time, it is likely for businesses to facilitate an efficient merger process while cutting the potential dangers of misunderstandings or breach in regulations.

5.1.4 Strategic Planning and Risk Management

Cross-border mergers and acquisitions in the energy field demand careful strategic preparation and risk control. Companies must carry out detailed due diligence to assess the target firm's financial status, operational strength, market trends, as well as possible risks. This evaluation should take into account matters like regulatory transformations, geopolitical instability, commodity price volatility or environmental problems. By recognising and evaluating potential hazards companies are able to create strategies that adhere both with their attitude towards risk taking but also long-term objectives concurrently. Companies can better prepare themselves to navigate complex legal challenges and get the most out of their cross-border merger and acquisition (M&A) transactions by integrating risk management into their strategic planning. This includes putting contingencies in place, obtaining suitable insurance coverage, possibly modifying agreement stipulations as well as verifying that they have sufficient financial strength and operational capacities for blending both businesses successfully with any surprises taken care of along the way.

5.1.5 Financial and Tax Planning

Financial and tax aspects are of great importance in cross-border M&A operations. Companies must take into account the monetary considerations that accompany a deal, including how it is priced, where funds shall be sourced from and what kind of taxes may result from it. Acquiring expert consultants with knowledge on foreign deals becomes necessary to find an ideal economic arrangement as well as arriving up at suitable taxation solutions when needed. To protect itself legally while also remaining untarnished by any allegations or blunders made; firms have no choice but to conform with all overseas levies rules plus transfer costs regulations & filing demands placed upon them accordingly. It is essential to be aware of all tax ramifications both in the buying and selling companies' countries. Careful financial and taxation planning will enable companies to optimise their finances, reduce any tax liabilities, as well as confirm they are adhering to existing laws or regulations.

5.1.6 Labour and Employment Regulations

It is essential for companies engaging in cross-border M&A to be thoroughly informed of the labour and employment regulations within each country affected by the transaction. A comprehensive review should take place that considers laws, contracts, collective bargaining agreements and benefits related to workers; this would help identify risks or liabilities associated with workforce integration, employee transfers, possible redundancies as well as consultation processes in these transactions. Companies should seek legal advice and include employee representatives at an early stage to prevent legal problems or violations of labour regulations. Furthermore, they must create a detailed communication plan and guide change management processes in order to ease issues that may arise with staff members, cultivate a positive working environment, then afterward guarantee conformance with the law. Establishing these measures will lower potential risks as well as secure team morale while making sure all guidelines are followed appropriately.

5.1.7 Legal and Institutional Alignment

Successful cross-border mergers and acquisitions depend on the compatibility between the legal structures, systems of government rulings, corporate governance norms and dispute resolution mechanisms in both countries. Companies need to carefully review any differences that may exist with respect to matters such as shareholder rights, obligations placed upon directors for companies concerned, protecting minority shareholders' interests along with transparency protocols so mandates are met. Hiring lawyers who understand the laws of both countries can help identify what needs to be done in order to bring them in line. Companies may need to set up different legal entities, enforce good governance methods and use international regulations so that they comply legally with local law and minimise any complications during merger integration. Adequate preparation will ensure a safe process for shareholders, reduce risks associated with misalignment and promote successful post-merger transition.

5.1.8 Corporate Governance and Transparency

Ensuring that corporate governance practices and transparency are upheld throughout every stage of a cross-border M&A activity is critical for managing potential legal risks. Adherence to international standards such as financial reporting, disclosure requirements, and accuracy in financial statements must be observed by companies involved in the process. Furthermore, these entities should also set up clear guidelines regarding accountability, ethics regulations or rules regulating behaviour within the company plus internal checks/procedures which can stop any cases of fraudulence or other kinds of unlawful activities from occurring. By emphasising corporate governance and transparency, companies can reinforce their legitimacy in the eyes of stakeholders. They also mitigate legal risks, safeguard interests, and conveniently address any concerns that arise. Additionally, effective communication channels should be implemented to ensure a culture of accountability prevails. By taking such measures seriously from the outset; businesses improve their ability to negotiate complex legislation and gain credibility with those who matter most—the stakeholders they serve.

5.2 Suggestions for Future Research

Future research efforts in cross-border mergers and acquisitions specifically within the energy space can expand our perspective. Analyses of how advances such as renewable energy and blockchain technologies impact this type of activity could inform us about trends, implications for legislation, diligence expectations and the prospectus risk matrix involved. Such insights would likely be beneficial to any firm undertaking transactions across international borders in this area. Furthermore, investigating the consequences of geopolitical transformations and adjustments in legislation on international mergers & acquisitions in energy could be worthwhile. This study can investigate the legal obstacles arising from alterations to trade pacts, tariffs, accords as well as political volatility within different regions. Apprehending how corporations can adjust their strategies and work through regulatory matters amidst geopolitical conflict will provide value for decision-makers along with government officials. Additionally, examining how international organisations and agencies contribute to facilitating or obstructing cross-border Mergers & Acquisitions (M&A) can lend critical insight. Investigating the proficiency of entities such as the World Trade Organisation (WTO), International Chamber of Commerce (ICC), and other official bodies in unifying legal principles, while also discovering solutions for disagreements between parties involved in M&A’s, may be useful information for companies getting ready to expand into global structures. Doing this kind of research will likely lead towards perfecting conventions across borders within energy sectors resulting from streamlined operations due to these approved methods which are connected with M&As.

Finally, research can go further in exploring the cultural and ethical implications of cross-border M&A within the energy sector. Examining how cultural variations affect negotiation, integration initiatives, and measures for managing stakeholders is instrumental for establishing effective strategies that address issues and enhance successful partnerships. Additionally, investigating moral aspects including environmental sustainability as well as social consideration on a global scale when analysing international mergers or acquisitions could be beneficial to assuring companies are working towards sustainable objectives.

FOOTNOTES

[1] Malik, Muhammad Faizan, Melati Ahmad Anuar, Shehzad Khan, and Faisal Khan. "Mergers and acquisitions: A conceptual review." International Journal of Accounting and Financial Reporting 4, no. 2 (2014): 520.

[2] Chakravarty, Vikram, and Soon Ghee Chua. Asian mergers and acquisitions: Riding the wave. John Wiley & Sons, 2012.

[3] Wu, Ning. "The Role of Cross-Border Mergers and Acquisitions in Energy Security." Available at SSRN 2190051 (2006).

[4] Ward, Andrew, Paul Exley, Paul Philips, and Simmons Simmons. “European Energy Regulatory Policy and Its Impact on M&a in the Energy Sector | Practical Law.” Practical Law, 2023. https://uk.practicallaw.thomsonreuters.com/3-280-7952?transitionType=Default&contextData=(sc.Default)&firstPage=true.

[5] Leal-Arcas, Rafael, ed. Commentary on the energy charter treaty. Edward Elgar Publishing, 2018.

[6] UNCITRAL, PCA Case No. ‎2005-04/AA227

[7] Parra, Antonio R. "The development of the regulations and rules of the international centre for settlement of investment disputes." ICSID Review 22, no. 1 (2007): 55-68.

[8] ICSID Case No. ARB/01/3

[9] ICSID Case No. ARB/00/4

[10] Hufbauer, Gary Clyde, and Jeffrey J. Schott. "NAFTA Revisited: Achievements and Challenges." Peterson Institute Press: All Books (2005).

[11] Jamasb, Tooraj, and Michael Pollitt. "Electricity market reform in the European Union: review of progress toward liberalization & integration." The Energy Journal 26, no. Special Issue (2005).

[12] Özgür, Şevkat, and Franz Wirl. "Cross-border mergers and acquisitions in the oil and gas industry: An overview." Energies 13, no. 21 (2020): 5580.

[13] Cairney, Paul, Aileen McHarg, Nicola McEwen, and Karen Turner. "How to conceptualise energy law and policy for an interdisciplinary audience: The case of post-Brexit UK." Energy Policy 129 (2019): 459-466.

[14] Energy Policy Act of 2005

[15] Investment Canada Act (R.S.C., 1985, c. 28 (1st Supp.))

[16] Gas Directive Directive 2009/73/EC

[17] Cardwell, Ryan, and Pascal L. Ghazalian. "The effects of the TRIPS agreement on international protection of intellectual property rights." The International Trade Journal 26, no. 1 (2012): 19-36.

[18] Council Regulation (EC) No 139/2004 of 20 January 2004

[19] Foreign Acquisitions and Takeovers Act 1975

[20] Chakravarty and Chua, pp.13-14

[21] Antonio, 55-68

[22] Commission v. General Electric/Alstom, Case No. COMP/M.7278, [2015] O.J. L 194/1 (EU Commission Feb. 19, 2015).

[23] Commission v. EON/RWE, Case No. COMP/M.5799, [2010] O.J. L 148/1 (EU Commission Mar. 10, 2010).

[24] Commission v. Gaz de France/Suez, Case No. COMP/M.4439, [2008] O.J. L 133/1 (EU Commission Sept. 23, 2008).

[25] Chevron Corporation and Texaco Petroleum Corporation v. Ecuador (II), PCA Case No. 2009-23

[26] Alimov, Azizjon. "Labor market regulations and cross-border mergers and acquisitions." Journal of International Business Studies 46 (2015): 984-1009.

[27] Ibid 1008

[28] Ibid

[29] Ibid

[30] Ibid

[31] Feito-Ruiz, Isabel, and Susana Menéndez-Requejo. "Cross-border mergers and acquisitions in different legal environments." International review of law and economics 31, no. 3 (2011): 169-187.

[32] Ibid, 170

[33] Ibid, 185

[34] Xie, En, K. S. Reddy, and Jie Liang. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions." Journal of World Business 52, no. 2 (2017): 127-183.

[35] Ibid

[36] Ibid

[37] Reddy, K. S., En Xie, and Yuanyuan Huang. "Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies." Journal of Policy Modeling 38, no. 6 (2016): 1147-1170.

[38] Ibid

[39] Dikova, D., A. Panibratov, A. Veselova, and L. Ermolaeva. "The joint effect of investment motives and institutional context on Russian international acquisitions." International Journal of Emerging Markets 11, no. 4 (2016): 674-692.

[40] Graham, Michael, Emmanuel Martey, and Alfred Yawson. "Acquisitions from UK firms into emerging markets." Global Finance Journal 19, no. 1 (2008): 56-71.

[41] Reddy, K. S., En Xie, and Yuanyuan Huang. "Cross-border acquisitions by state-owned and private enterprises: A perspective from emerging economies." Journal of Policy Modeling 38, no. 6 (2016): 1147-1170.

[42] Wan, Kam-Ming, and Ka-fu Wong. "Economic impact of political barriers to cross-border acquisitions: an empirical study of CNOOC's unsuccessful takeover of Unocal." Journal of Corporate Finance 15, no. 4 (2009): 447-468.

[43] Schöllhammer, Hans, and Douglas Nigh. "The effect of political events on foreign direct investments by German multinational corporations." Management International Review (1984): 18-40.

[44] Schollhammer, Hans, and Douglas Nigh. "The effect of political events on Japanese foreign direct investments." Asia Pacific Journal of Management 3 (1986): 133-156.

[45] Kim, Dong‐Hun. "Making or breaking a deal: the impact of electoral systems on mergers & acquisitions." Kyklos 63, no. 3 (2010): 432-449.

[46] Lee, Youngwoo, Martin Hemmert, and Jongsoo Kim. "What drives the international ownership strategies of Chinese firms? The role of distance and home-country institutional factors in outward acquisitions." Asian Business & Management 13 (2014): 197-225.

[47] Ibid

[48] Cao, Chunfang, Xiaoyang Li, and Guilin Liu. "Political uncertainty and cross-border acquisitions." Review of Finance 23, no. 2 (2019): 439-470.

[49] Wan, Kam-Ming, and Ka-fu Wong. "Economic impact of political barriers to cross-border acquisitions: an empirical study of CNOOC's unsuccessful takeover of Unocal." Journal of Corporate Finance 15, no. 4 (2009): 447-468.

[50] Goldstein, Kevin B. "Reviewing cross-border mergers and acquisitions for competition and national security: A comparative look at how the United States, Europe, and China separate security concerns from competition concerns in reviewing acquisitions by foreign entities." Tsinghua China L. Rev. 3 (2010): 1-52.

[51] Ibid

[52] Goldstein, 51

[53] Ibid

[54] Chapman, Keith. "Cross‐border mergers/acquisitions: a review and research agenda." Journal of Economic Geography 3, no. 3 (2003): 309-334.

[55] Deng, Ping, and Monica Yang. "Cross-border mergers and acquisitions by emerging market firms: A comparative investigation." International Business Review 24, no. 1 (2015): 157-172.

[56] Cassidy, John F., and Bernadette Andreosso-O’Callaghan. "Spatial determinants of Japanese FDI in China." Japan and the World Economy 18, no. 4 (2006): 512-527.

[57] Hajro, Aida. "Cultural influences and the mediating role of socio-cultural integration processes on the performance of cross-border mergers and acquisitions." The International Journal of Human Resource Management 26, no. 2 (2015): 192-215.

[58] Malhotra, Shavin, K. Sivakumar, and PengCheng Zhu. "Curvilinear relationship between cultural distance and equity participation: An empirical analysis of cross-border acquisitions." Journal of International Management 17, no. 4 (2011): 316-332.

[59] Amighini, Alessia, Roberta Rabellotti, and Marco Sanfilippo. "China’s outward FDI: An industry-level analysis of host-country determinants." Frontiers of Economics in China 8, no. 3 (2013): 309-336.

[60] Hattari, Rabin, and Ramkishen S. Rajan. "India as a source of outward foreign direct investment." Oxford development studies 38, no. 4 (2010): 497-518.

[61] Maksimovic, Vojislav, Gordon Phillips, and Liu Yang. "Private and public merger waves." The Journal of Finance 68, no. 5 (2013): 2177-2217.

[62] Rossi, Stefano, and Paolo F. Volpin. "Cross-country determinants of mergers and acquisitions." Journal of Financial Economics 74, no. 2 (2004): 277-304.

[63] Bertrand, Jérémie, Hélène De Brebisson, and Aurore Burietz. "Why choosing IFRS? Benefits of voluntary adoption by European private companies." International review of law and economics 65 (2021): 105968.

[64] Louis, Henock, and Oktay Urcan. "The effect of IFRS on cross-border acquisitions." Available at SSRN 2164995 (2014).

[65] Chen, Charles JP, Yuan Ding, and Bin Xu. "Convergence of accounting standards and foreign direct investment." The International Journal of Accounting 49, no. 1 (2014): 53-86.

[66] Francis, Jere R., Shawn X. Huang, and Inder K. Khurana. "The role of similar accounting standards in cross‐border mergers and acquisitions." Contemporary Accounting Research 33, no. 3 (2016): 1298-1330.

[67] Xie, En, K. S. Reddy, and Jie Liang. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions." Journal of World Business 52, no. 2 (2017): 127-183.

[68] Becker, Johannes, and Clemens Fuest. "Taxing foreign profits with international mergers and acquisitions." International Economic Review 51, no. 1 (2010): 171-186.

[69] Huizinga, Harry P., and Johannes Voget. "International taxation and the direction and volume of cross‐border M&As." The Journal of Finance 64, no. 3 (2009): 1217-1249.

[70] Ibid

[71] Jones, Chris, and Yama Temouri. "The determinants of tax haven FDI." Journal of world Business 51, no. 2 (2016): 237-250.

[72] Ibid

[73] Kourdoumpalou, Stavroula, and Theofanis Karagiorgos. "Extent of corporate tax evasion when taxable earnings and accounting earnings coincide." Managerial Auditing Journal 27, no. 3 (2012): 228-250.

[74] Sutherland, Dylan, and John Anderson. "The pitfalls of using foreign direct investment data to measure Chinese multinational enterprise activity." The China Quarterly 221 (2015): 21-48.

[75] Hansen, Nico A., and Anke S. Kessler. "The political geography of tax h (e) avens and tax hells." American Economic Review 91, no. 4 (2001): 1103-1115.

[76] Dharmapala, Dhammika, and James R. Hines Jr. "Which countries become tax havens?." Journal of Public Economics 93, no. 9-10 (2009): 1058-1068.

[77] Chari, Murali, and Senay Acikgoz. "What drives emerging economy firm acquisitions in tax havens?." Journal of business research 69, no. 2 (2016): 664-671.

[78] Jones, Chris, and Yama Temouri. "The determinants of tax haven FDI." Journal of world Business 51, no. 2 (2016): 237-250.

[79] Coeurdacier, Nicolas, Roberto A. De Santis, and Antonin Aviat. "Cross-border mergers and acquisitions and European integration." Economic Policy 24, no. 57 (2009): 56-106.

[80] Hebous, Shafik, Martin Ruf, and Alfons J. Weichenrieder. "The effects of taxation on the location decision of multinational firms: M&A versus greenfield investments." National Tax Journal 64, no. 3 (2011): 817-838.

[81] Phillips, Shauna, and Fredoun Z. Ahmadi‐Esfahani. "Inbound Cross‐border Mergers and Acquisitions in Australian Agrifood Manufacturing: Macro and Industry Determinants." Economic Papers: A journal of applied economics and policy 31, no. 3 (2012): 337-345.

[82] Hebous, Shafik, Martin Ruf, and Alfons J. Weichenrieder. "The effects of taxation on the location decision of multinational firms: M&A versus greenfield investments." National Tax Journal 64, no. 3 (2011): 817-838.

[83] Nagano, Mamoru. "Similarities and differences among cross-border M&A and greenfield FDI determinants: Evidence from Asia and Oceania." Emerging Markets Review 16 (2013): 100-118.

[84] Baccini, Leonardo, Quan Li, and Irina Mirkina. "Corporate tax cuts and foreign direct investment." Journal of Policy Analysis and Management 33, no. 4 (2014): 977-1006.

[85] Peng, Mike W. "Institutional transitions and strategic choices." Academy of management review 28, no. 2 (2003): 275-296.

[86] Rossi, Stefano, and Paolo F. Volpin. "Cross-country determinants of mergers and acquisitions." Journal of Financial Economics 74, no. 2 (2004): 277-304.

[87] Peng, Mike W., Denis YL Wang, and Yi Jiang. "An institution-based view of international business strategy: A focus on emerging economies." Journal of international business studies 39 (2008): 920-936.

[88] Chapman, Keith. "Cross‐border mergers/acquisitions: a review and research agenda." Journal of Economic Geography 3, no. 3 (2003): 309-334.

[89] Ibid

[90] Alimov, Azizjon. "Labor market regulations and cross-border mergers and acquisitions." Journal of International Business Studies 46 (2015): 984-1009

[91] Bertrand, Jérémie, Hélène De Brebisson, and Aurore Burietz. "Why choosing IFRS? Benefits of voluntary adoption by European private companies." International review of law and economics 65 (2021): 105968.

[92] Feito-Ruiz, Isabel, and Susana Menéndez-Requejo. "Cross-border mergers and acquisitions in different legal environments." International review of law and economics 31, no. 3 (2011): 169-187.

[93] Ibid

[94] Xie, En, K. S. Reddy, and Jie Liang. "Country-specific determinants of cross-border mergers and acquisitions: A comprehensive review and future research directions." Journal of World Business 52, no. 2 (2017): 127-183.

[95] Dharmapala, Dhammika, and James R. Hines Jr. "Which countries become tax havens?." Journal of Public Economics 93, no. 9-10 (2009): 1058-1068.

[96] Casselman, Joshua W. "China's Latest Threat to the United States: The Failed Cnooc-Unocal Merger and Its Implications for Exon-Florio and CFIUS." Ind. Int'l & Comp. L. Rev. 17 (2007): 155.

[97] Wan, Kam-Ming, and Ka-fu Wong. "Economic impact of political barriers to cross-border acquisitions: an empirical study of CNOOC's unsuccessful takeover of Unocal." Journal of Corporate Finance 15, no. 4 (2009): 447-468.

[98] Chevron Corporation and Texaco Petroleum Corporation v. Ecuador (II), PCA Case No. 2009-23

[99] Louis, Henock, and Oktay Urcan. "The effect of IFRS on cross-border acquisitions." Available at SSRN 2164995 (2014

[100] Francis, Jere R., Shawn X. Huang, and Inder K. Khurana. "The role of similar accounting standards in cross‐border mergers and acquisitions." Contemporary Accounting Research 33, no. 3 (2016): 1298-1330.

[101] Cardwell, Ryan, and Pascal L. Ghazalian. "The effects of the TRIPS agreement on international protection of intellectual property rights." The International Trade Journal 26, no. 1 (2012): 19-36.

[102] Leal-Arcas, Rafael, ed. Commentary on the energy charter treaty. Edward Elgar Publishing, 2018.

[103] Parra, Antonio R. "The development of the regulations and rules of the international center for settlement of investment disputes." ICSID Review 22, no. 1 (2007): 55-68.

[104] Hufbauer, Gary Clyde, and Jeffrey J. Schott. "NAFTA Revisited: Achievements and Challenges." Peterson Institute Press: All Books (2005).