BIICL publishes second note on coronavirus (COVID-19) and commercial contracts

BIICL publishes second note on coronavirus (COVID-19) and commercial contracts

The British Institute of International and Comparative Law (BIICL) has published a second concept note (Concept Note 2) on the effects of the coronavirus (COVID-19) pandemic on commercial contracts, which sets out in detail the steps that might be taken to minimise the risk of a deluge of disputes and to increase the prospect of constructive outcomes.

In its first Concept Note (Concept Note 1), the BIICL encouraged parties to negotiate rather than focus on their contractual rights when trying to deal with the disruption to commercial contracts caused by the pandemic. For further details, see: LNB News 29/04/2020 21.

Concept Note 2 develops the idea of increasing the use of negotiated solutions and methods of alternative dispute resolution (ADR) (such as mediation, med-arb/arb-med and early neutral evaluation) to facilitate the settlement of commercial disputes, to give over-stretched courts (and arbitral tribunals) time to decide those claims that cannot be settled as expeditiously as possible, as well as scaling up the use of technology and avoiding backlogs where possible in both litigation and arbitration. The note also discusses how court and arbitral processes can be maintained during and after the pandemic. The use of online hearings in place of in-person hearings is discussed, and the note recognises that some of the potential challenges of this alternative approach are likely to be less pronounced in arbitration than in litigation, due to reasonably widespread familiarity with some digital working and the routine conduct of procedural conferences and other interim hearings remotely in arbitral proceedings. The note summarises that from an arbitration perspective, overall, disruption caused by coronavirus may be minimised through use of technology and case management tools, and attention is drawn to some of the guidance produced in this regard by arbitral institutions and organisations. However, other factors specific to the pandemic may very likely cause delay in many cases, including limited ability of management to devote time to the dispute, financial pressure on parties, disruption to the work of legal teams and others and the need to maintain social distancing if and when working from offices, as well as the difficulties in accessing documentary and other evidence.

Overall, Concept Note 2 expands on Concept Note 1, providing a summary of the main substantive law considerations raised by the coronavirus pandemic and 'is intended to move forward a discussion of the need for the law to deal constructively with the effects of the pandemic, to facilitate global recovery in the interests of the whole community, and to avoid a deluge of disputes impeding that recovery'.

Arbitration team comment: the discussion of arbitration in the concept note is of interest to practitioners. It should, however, be noted that many international commercial arbitrations take place without hearings at all (for example, documents-only ad hoc arbitrations in shipping disputes), and will, largely, be unaffected by the pandemic, save for, in some cases, the 'other factors' (among others) identified. The note's comment on the potentially high costs of arbitration should also be read in a wider context: there are many expedited and low-cost arbitration options available for parties.

Sources:

BIICL Publishes Concept Note 2

Concept Note 2 on the effect of the 2020 pandemic on commercial contracts

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