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BIICL guidance for contractual disputes

two men shouting at each other in dispute

The British Institute of International and Comparative Law (BIICL) have released its third note in its ‘Breathing Space’ series. Its first note expressed a concern that the courts could be overwhelmed with a surge of litigation and arbitration due to parties strictly enforcing their legal rights in response to the current pandemic, which could disrupt supply chains and slow economic growth. Concept Note 1 proposed that the problem could be partially resolved at a private law level.

Concept Note 2 examined a private law response to the pandemic from the perspective of contractual disputes. It looked at how existing legal principles could be applied to Covid-19 related disputes and how current alternative dispute resolutions could be used to effectively negotiate solutions.

Concept Note 3 had provided a set of practical guidelines which could be used to support a more appeasing approach to contractual disputes that could arise. The guidelines seek to prevent and/or minimise lengthy legal disputes without harming or modifying parties’ legal rights. The guidelines include the following:

  • Contractual parties should behave ‘fairly and responsible in maintaining contractual performance.’ They should consider: The potential ‘wider business impact of their actions. The financial position of all parties. The disruption related to continued performance versus the potential disruption caused by a ‘change, suspension, delay, or termination. Any possible impact on stakeholders, shareholders, lenders, employees, and contractual counterparties.
  • Contractual parties should ‘adopt a mutual without prejudice and confidential cards on the table approach, sharing information relevant to the continued performance under the contract.’
  • Parties should discuss possible solutions for problems.
  • Parties should look at methods to ‘balance the impact between all parties.’
  • If early dispute resolution cannot be achieved, parties should consider whether the dispute can be ‘ring-fenced’ to allow other contractual performance to be continued.
  • Parties should seriously consider alternative dispute resolutions (ADR) before resorting to proceedings. Consider agreeing extensions to contractual or statutory limitation periods to prevent proceedings having to be issued. Avoid tactics that aim to put other parties under unreasonable financial pressure or time pressure.
  • Use early neutral evaluation, mediation, or other pre-action ADR methods with a view to avoid legal proceedings or reduce the issues in the dispute.
  • If proceedings are unavoidable, work together to agree litigation/arbitration procedures and timetables intended to manage the proceedings in a time-appropriate and efficient way. Consider the possible cost of proceedings proportionate to the dispute amount. The tribunal/court resources available and the importance of the issues in the context of wider factors, which includes the economy and its recovery.
  • Continue to use ADR during legal proceedings with the aim to resolve the dispute or specific issues within the dispute.

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