19 August 2020

Baker McKenzie informs about the implications of COVID-19 for the future of Dispute Resolution

The outbreak of the global COVID-19 pandemic led to an increase in economic instability and uncertainty, which is likely to result in a growing number of disputes. International law firm Baker McKenzie provides the firm´s view on the types of disputes that will arise from the COVID-19 crisis on the short and on the long term. 

Some issues that trigger disputes in the short term involve: 

- Force majeure, frustration and impossibility: these dispute issues are on the rise, for example in response to quarantines, business closures, lack of staff able to work, cancellation of events and travel restrictions.

- Supply of goods: this issue arises due to problems with the supply chains for reasons such as transport delays, lack of staff or business closures.

- Compliance and investigations area: this key area is impacted strongly, regarding for example the monitoring of employees, with some possible risks that might arise in this area being anti-trust compliance, anti-bribery and fraud.

- Insurance disputes: disputes between insured and insurers are on the rise as well, regarding liability for COVID-19 related losses.

- Courts and arbitrations: various procedural changes to dispute resolution are noted resulting from the crisis, for example, a rise in “virtual hearings” or online trials.

In the medium term (referring to the next 6-12 months), a number of other dispute issues are expected to arise, including the following areas: 

- Insolvency litigation: financial disputes, including insolvency, are likely to increase as a result of the economic slowdown.

- Mergers & acquisitions: it is likely that many unfinished deals will not be terminated due to the uncertainty caused by the pandemic.

- Consumer claims and enforcement of consumer protection laws: companies have to face a huge number of consumer claims, especially within the travel and events industries.

- State support for companies, industries and economies: various EU member states consider support packages to limit the impact of the crisis on the economy.

- Claims arising from our reliance on technology: as the educational and working environment depends more than ever on the IT infrastructure, more claims might arise regarding the use of technology.

- Employment and pensions: possible dispute issues in this area concern sick leave or potential wage and hour violations.

- Export bans, e.g. of medical equipment: Some governments have implemented measures such as restrictions on certain kinds of protective personal equipment leaving their countries.

On the longer term, the impact of the COVID-19 pandemic could be noted in the following areas: 

- Courts and tribunals: there might be an increase in online courts and tribunals, as well as online mediation.

- Force majeure: there might be a rethinking regarding the force majeure concept, with changes in business contracts.

- Governing law and jurisdiction: very likely, contractual parties might also reflect on their governing law and choice of jurisdiction for agreements in light of COVID-19.

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