By Antariksh Anant*
The novel coronavirus, which broke out in 2020 in the Wuhan province of China has, in some way or the other, affected individuals almost across every horizon. The total number of cases reported has crossed the 10 million mark globally within six months of the spread of the virus. The pandemic has created an unprecedented and unexpected upheaval in business circumstances, affecting every possible transaction. The legal arena also has succumbed and has not been successful in escaping the black hole of restraint caused by the notorious virus.
Anticipating the future of litigation is a difficult and somewhat dystopian task. Global supply chains have been impacted gravely; the majority of law firms are relying on suspending contractual performance or force majeure provisions.[i] With the implementation of global lockdowns and social-distancing measures, delivering justice by the gavel seems to be a utopian task.
With the incessant spread of the virus, businesses are encountering heavy instability and uncertainty due to the weakened markets and hindrances in financial pipelines and workplaces. It is correct to assume that such disruption and instability will give rise to rampant growth in the number and kinds of disputes. The already existing contracts will become dysfunctional, and businesses will be forced to adjust to new pressures on their operations and economy.[ii]
A New Kid on the Block
Recently, courts have started the online filing and hearing of cases, but one can still not do away with the judiciary being overburdened and hindered by a plethora of cases. Hence, Online Dispute Resolution (ODR) comes handy in providing an efficient solution to ease the burden of the court. ODR is a novel mechanism of settling the disputes outside the court, a portmanteau of technology and alternative dispute resolution (ADR). Lately, various ODR platforms, such as Centre for Alternative Dispute Resolution Excellence (CADRE), SAMA and AGAMI, have eased the process of dispute resolution.[iii]
An instrument in the dispute resolution arsenal – which is resistant to COVID-19, and perhaps even conducive for thriving on it – is Mediation. Being polar opposite to the procedures of the court, it emphasises on reaching an amicable agreement with the aid of a confidential agreement between parties and mediator. Conventional litigation – finding its roots back to more than a hundred years ago – involves complex and taxing procedures. Thus, Online Mediation by-passes the cruel processes and grants relief to the parties through the means of computer screens which are, perhaps, stationed hundreds of miles away.[iv]
With fewer handshakes, the reliance on documents and paper contracts sent via mail or courier is dying, seeing as digital signatures and e-contracts – intended to avoid the spread of contagions – have overtaken the conventional methods. Moving beyond the virus, optimistically, we may come across a surge in online international arbitration, as international disputes have come to a standstill due to the sealed borders, forcing the parties to resolve the dispute out of the court. ADR options are diverse: ranging from short, off the record telephonic conversations, to authorized settlement agreements, thus making them not only convenient but also being helpful in saving tons of time and expenditure.[v]
In a post-Covid-19 and Brexit world, the world can reap the benefits of ADR over court litigation. It is already on the rise, allowing many arbitral centres to adopt video conferencing techniques for efficient agreements. According to a survey held by Queens Mary University, 66% of arbitration users had seen a surge in virtual methods being adopted, and ICSID reported that 60% of the total hearings in 2019 were conducted by video conferencing.[vi] ADR is also known for the easy enforceability of awards when compared to judicial judgments.
Arbitration, Construction Contracts and Force Majeure
With projects being suddenly stopped, the supply chain has been disrupted, thus forcing the government to implement shut-down orders at every level (construction industry, inspection and manufacturing). “Force Majeure” may exist of an event that is outside the control of the contractor. Coronavirus certainly seems to be that. The matter of fact remains that, whether or not the judiciary or arbitration panel agrees to the same. The determination of COVID falling under the ambit of force majeure will depend on (a) whether the language of the clause containing force majeure includes an event beyond the reasonable control of parties; (b) whether the event could be foreseen; (c) whether the non-performance of parties was attributed to the causing of the event.[vii]
While analysing the language of the contract, if the force majeure clause includes the specific terms (e.g., pandemic, epidemic, an outbreak of disease), then the pandemic would check these boxes. Certain courts have observed that the notions of force majeure in Common Law – such as the likes of unforeseeability – should be taken into consideration when either party has failed to protect itself by individually getting an event listed in the clause regarding force majeure. The contract might also include the reference of “Act of God” as a justifiable delay. The interpretation and meaning, though, is subject to the jurisdiction of the state. Some jurisdictions have included riots, floods, natural disasters and epidemics; COVID-19, thus, is most suitable to fall under the ambit of this category. However, some other jurisdictions have given a narrow description to an “act of god”: an act that is caused by nature. Therefore, it becomes difficult to determine the scope of the definition, leaving it to the subjective interpretation.[viii] The Apex Court in the case of Energy Watchdog v. Central Electricity Regulatory Commission and Anr.[ix], was of the view that when the event of Force majeure occurs de hors the contract, then the ability to perform the act may not be impossible factually, but it may fall under the ambit of being impracticable and redundant, knowing the objective and purpose of the involved parties.[x]
The question of whether COVID-19 constitutes a justifiable occurrence under construction contracts can be understood by standard construction contracts- such as ConsensusDocs and AIA- where no specific clause for force majeure is listed. However, they do enlist excusable delay, under which COVID-19 could fall. In a particular case where no specific clause is presently addressing an “act of god”, the common law doctrine of commercial impracticability comes into play.
The Other Side of the Coin
ADR can be the perfect substitute for mainstream litigation and a conducive approach for resolving disputes out of the court in the times of COVID-19. However, it bears some cautioning: during the occurrence of video conferencing, the confidentiality of the parties can be compromised, as the proceeding can be recorded easily. Taking this into consideration, service providers have to be vigilant, implementing penalties for the breach of contract. Further, the occurrence of technical glitches also hinders the process of a smooth agreement. Most importantly, we have to consider the exclusion of the underprivileged, who are unable to afford internet access or do not have the required know-how of using the technology. Such exclusion will be tantamount to justice not being accessible to the underprivileged. To curb this, weaker parties must be provided with aid and assistance from the government so that they do not stand discriminated.
The occurrence of an online process may cocoon the party in a safe zone, creating this virtual barrier of screens. In scenarios where emotions run high and the agreements turn confrontational, this method can prove to be detrimental. This usually takes place in matrimonial and custody cases, and in disputes regarding family property, when tempers and emotions take over logic and understanding.[xi]
Conclusion
The current pandemic presents various unknown unknowns. To predict whether it will be subdued is a difficult and far-fetched task. As people meander in the dark to discover what the new normal is, they may come across the silver lining that comes in the form of Online Dispute Resolution. The only precaution we can take is planning ahead. And ODR should be an integral part of it, for not only does it provide numerous advantages, but it also ensures the quick settlement of disputes bypassing the cumbersome integrities of litigation. With ample precautions – and a bit of luck – the COVID-19 pandemic will be history. No matter what the outcome is, one thing is certain: that it will flip over the world of international arbitration and ODR as we know it.
* The Author is a student at Rajiv Gandhi National University of Law, Punjab.
REFERENCES :
[i]Gary Benton, How Will the Coronavirus Impact International Arbitration? KLUWER ARBITRATION BLOG, (Jul. 10, 2020, 9:47 AM), http://arbitrationblog.kluwerarbitration.com/2020/03/13/how-will-the-coronavirus-impact-international-arbitration/?doing_wp_cron=1594289474.9555981159210205078125.
[ii] COVID-19: Implications for the future of Dispute Resolution, BAKER McKENZIE, (Jul. 10, 2020, 9:47 AM), https://www.bakermckenzie.com/-/media/files/insight/publications/2020/04/covid19-implications-for-the-future-of-dispute-resolution_v5.pdf.
[iii] Karan Singh, Online Dispute Resolution (ODR): A Positive Contrivance To Justice Post Covid- 19, MONDAQ (Jul. 10, 2020, 9:58 AM), https://www.mondaq.com/india/arbitration-dispute-resolution/935022/online-dispute-resolution-odr-a-positive-contrivance-to-justice-post-covid-19.
[iv] Sriram Panchu, Mediation in the age of COVID-19, THE HINDU, (Jul. 10, 2020, 10:08 AM) https://www.thehindu.com/opinion/lead/mediation-in-the-age-of-covid-19/article31863358.ece.
[v] Caroline Watson, Coronavirus: Alternative Dispute Resolution in a Covid-19 Context, THRINGS, (Jul. 10, 2020, 10:18 AM) https://thrings.com/coronavirus/coronavirus-alternative-dispute-resolution-in-a-covid-19-context.
[vi]Mark Davison, Dispute resolution in a post coronavirus and Brexit world – should you be considering arbitration? MILLS & REEVE, (Jul. 2, 2020, 8:18 PM), https://www.mills-reeve.com/insights/publications/dispute-resolution-in-post-coronavirus-and-brexit.
[vii] M. Turrini, I. Hakim, H. Rahman & S. Hudson, COVID-19: Considerations for Future Construction Contracts, WHITE & CASE, (Jul. 5, 2020, 1:23 PM), https://www.whitecase.com/publications/alert/covid-19-considerations-future-construction-contracts.
[viii] W.Shaughnessy, W. Underwood & C. Cazenave, COVID-19’s Impact on Construction: Is There a Remedy? — Time Extension, Force Majeure, or More? NATIONAL LAW REVIEW, (Jul. 5, 2020, 5:48 PM), https://www.natlawreview.com/article/covid-19-s-impact-construction-there-remedy-time-extension-force-majeure-or-more.
[ix] Civil Appeal Nos.5399-5400 of 2016.
[x] V. Rana, T. De, Supreme Court Examines the Ambit Of Force Majeure Clause in Agreements, MONDAQ, (Jul. 6, 2020, 7:55 PM), https://www.mondaq.com/india/contracts-and-commercial-law/614324/supreme-court-examines-the-ambit-of-force-majeure-clause-in-agreements.
[xi] D. Kinhal, T. Jain, The Impending Judicial Crisis Post COVID-19, VIDHI CENTRE FOR LEGAL POLICY, (Jul. 10, 2020, 10:11 PM), https://vidhilegalpolicy.in/2020/04/27/the-impending-judicial-crisis-post-covid-19.
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