High-level efforts to help parties resolve contractual disputes arising from the Covid-19 pandemic efficiently and without rancour have moved on to practical guidelines to achieve this.
They come in the third ‘concept note’ issued by the British Institute of International and Comparative Law’s ‘Breathing Space’ project, which grew out of a post-lockdown meeting led by two former Supreme Court presidents, Lord Phillips and Lord Neuberger.
The first note in April outlined concerns that a strict reliance by parties on their legal rights in response to the pandemic may lead to a “deluge of litigation and arbitration” which would overwhelm the courts, disrupt supply chains and potentially stunt economic recovery.
It suggested that the solution may lie partly at a private law level, with the second note in June saying the best policy approach in the case of many contracts was for the law to support negotiated solutions to make viable contracts blighted by the pandemic work. 3
The guidelines issued last week in the third note do not seek to modify or fetter parties’ existing legal rights or obligations.
“Rather, they seek to encourage parties to take practical steps to promote the efficient resolution of disputes, in a manner likely also to benefit the wider public interest,” the authors said.
“Thus, they are designed to create an opportunity for reflection and pause, helping parties to preserve commercial relationships and avoid/limit any potential impact on wider supply chains.
“Where legal proceedings are commenced, the guidelines also seek to create an environment where claims are conducted in the most proportionate manner, fostering potential for early settlement.”
The note, which strongly pushes alternative dispute resolution, was drafted by Helen Dodds, until recently global head of legal, dispute resolution, at Standard Chartered Bank, newly appointed High Court judge Mr Justice Adam Johnson (formerly a QC at Herbert Smith Freehills), and Guy Pendell, a partner at CMS Cameron McKenna Nabarro Olswang.
Among the recommendations are that, where early resolution of the dispute cannot be achieved, parties should explore whether the dispute can be ring-fenced to allow contractual performance otherwise to be maintained.
They also say that parties should agree extensions to contractual or statutory limitation periods where to do otherwise would likely result in proceedings having to be issued, and “avoid adopting tactical practices intended to place other parties under unreasonable financial or time pressure”.
Where a party seeks funding in relation to proceedings, the litigation funders should be invited to follow the guidelines too.