The group of judges and lawyers, from independent research centre, the British Institute of International and Comparative Law (BIICL), predict a wave of litigation as parties trigger default clauses in contracts and counterparties maintain they are excused from performance. They have developed recommendations to minimise the risk of a deluge of disputes.
In a ‘concept note’ published last week, ‘Breathing Space’, the lawyers warn: ‘The effects of the pandemic are magnified by supply chains which over the past three decades have become increasingly global. This has implications for disputes as well, since the disruption of a single contract can disrupt the entire chain. One dispute can set off a chain reaction of disputes.’
They argue that the best approach in the case of breached contracts is for the law ‘to support negotiated solutions to make viable contracts blighted by the pandemic work; to bring contracts made unviable by the pandemic to an end in an equitable manner’.
Where negotiation fails, the lawyers suggest parties be encouraged towards mediation or other alternative dispute resolution methods and, where court proceedings are needed, that they take place online to avoid clogging up the courts.
Sir William Blair, a former judge of the London Commercial Court, said: ‘Faced with an unprecedented crisis, the law must provide a solid, practical and predictable foundation for the resolution of disputes and the confidence necessary for a recovery.
‘New thinking is required, and there is every reason for optimism that we can succeed.’
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