While the English approach to break fees, considered penalties, may be daunting, substantive law in other jurisdictions, such as New York, offers a less restrictive approach and may allow for the imposition of break fees. The inclusion of break-fee agreements for UK transactions in separate New York legal documents, alongside UK sales contracts, may provide opportunities for judicial arbitration. However, this approach has not been tested. While English courts generally like to enforce documents of New York law, English public order and other rules can repeal the document of New York law and render it unenforceable. An alternative may be to document the entire transaction in accordance with New York law, subject to the jurisdiction of the New York courts. However, any New York court proceedings can be complicated if parallel proceedings resulting from the failure of the settlement can take place elsewhere and if judgments in the UK may still face enforcement problems based on public policy and other rules applied by the English courts. As a result, there are no simple solutions. Break Fees and Reverse Break Fees remain in negotiations for European private M&Ds, in particular for high-risk closing transactions. Parties considering cross-border transactions must consider cultural differences in the approach and applicability of pause fees and, in a competitive auction procedure, consider the risk that U.S. buyers capable of imposing a pause fee will grant a reverse-break fee in order to gain a strategic advantage. In 2011, AT&T wanted to take over the mobile operator T-Mobile.
However, the supervisory authorities refused and blocked the $39 billion deal on the grounds of possible violations of the agreements. As a result, AT&T had to pay separation fees totaling $US 4 billion. At&T notably had to pay a reverse break tax of $US 3 billion in cash and 1 billion $US of AT&T`s wireless spectrum, as reported by CNN. The wireless spectrum is a frequency band that passes through the waves and each mobile operator transmits its wireless signals via its own specific frequency. While buyers protect themselves against an M&A deal with separation fees, sellers protect themselves with reverse cancellation fees. . . .