How to expeditiously resolve disputes in the aftermath of Covid 19 and why you need to

Covid 19 has hit the global economy hard. Around the world unemployment was up in 2020 compared to 2019. New job vacancies have shrunk and the majority of countries are in recession. Interest rates have been cut to help borrowing. Cashflow is tight and capital reserves are reducing.

Inevitably, businesses will have less resources from which to fund costly litigation. They will have less appetite to do so too, because management time is consumed by effecting change to accommodate the new normal.

But in an environment where cash is king, walking away from disputes may only worsen the economic impact and could contribute to the downfall of your business. Achieving solutions which return funds, or limit the damage of failures incurred, may aid survival.

The key is to utilise effective mechanisms to resolve disputes quickly and cheaply. Litigation is fundamental to dispute resolution, because its conclusions set the state’s expectations of societal behaviours. Bearing that in mind, there may be other forums which may be more effective, particularly in a time of crisis.

Mediation may best produce innovative solutions to diverse and evolving circumstances, such as Covid 19. Arbitration and Expert Determination are alternatives. In Construction, Adjudication is often the preferred route. It may be applied in other industries.

The first step is to identify what is really in dispute. If there are a number of issues, perhaps tackling the biggest one will unlock resolution, without the necessity of exploring the others. Then the best forum in which to ventilate parties’ positions should be carefully selected.

The contract may detail how disputes should be resolved. Ultimately, agreement will be needed. It is in the interests of your business that you achieve this in good faith. Now is not the time to take advantage of your counterpart, but to take advantage of effective dispute resolution.