BIICL issue Second Concept Note
BIICL has issued its second concept note on how contractual parties such accommodate each other taking into account the COVID crisis- punch lines below:
(1) The law should support negotiated solutions reached by parties to make viable contracts, blighted by the pandemic, work. The simplest solution will often be a short “breathing space”, until it becomes possible to resume performance. The onus at least in the first instance would be for the continuance of a viable contract rather than bringing it to an immediate end.
(2) Similarly, the law should support negotiated solutions bringing contracts made unviable by the pandemic to an end in an equitable manner. This will not be appropriate in the case of all contracts particularly those with detailed termination provisions, but it will be in the case of many others.
(3) To that end, if negotiations fail, or the solutions unravel, the law should be slow to find that the negotiations have resulted in waiver, or otherwise prejudiced the parties’ contractual rights, since this could have a chilling effect on parties’ willingness to compromise.
(4) Contractual rights are to be evaluated by applying settled legal principles to the contract in question. Legal certainty remains paramount and gives the surest basis for resolution, but there will inevitably be questions as to how existing doctrine is to be applied in such circumstances. It will take some time for this to be authoritatively settled by the courts.
(5) In some cases, applying settled principle, common law courts may be open to finding that a term implied by necessary implication into a commercial contract obliges a party to allow a short “breathing space” until it becomes possible to resume performance – whether this is so will depend on the facts. Civil law systems have wider doctrines 133 Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24. See also GPP Big Field LLP v Solar EPC Solutions SL (formerly Prosolia Siglio XXI) [2018] EWHC 2866 (Comm), [203], where the Rock Advertising decision was applied, by analogy, to a ‘no waiver’ clause. 22 potentially applicable in such circumstances: again, the outcome will depend on the particular facts, causation being one important issue.
(6) Where negotiations fail to reach a solution, and legal proceedings are brought, at an early stage the courts should encourage, and where appropriate, require, parties to undertake alternative dispute resolution. Mediation already has established procedures in many jurisdictions, and other ADR methods are available.
(7) Not all disputes can or should be settled. Where court proceedings are required, the skills and technology required for online hearings are progressing by leaps and bounds, and online hearings will have a much more important role in the future even when no longer necessary for health reasons. But remote trials of complex cases may require careful preparation on the technical side, and it will be desirable to identify what screens etc are required by judges, to develop common protocols, develop common technical standards (for example) for easily navigable electronic files of documents, establish means to assist self-represented litigants, and give proper access to the public.
(8) The avoidance of backlog will be important though difficult to achieve. With that in mind, expedited procedures should be encouraged. In common law systems, summary procedures have been standard for many years where there is no arguable defence – arbitrators should be supported by the courts when applying similar early dismissal or summary procedures where appropriate.