Expedited Arbitration and Party Autonomy Are Key Solutions to Resolving COVID-19-Related Supply Chain Disruptions
The equation is immutable: disruption of supply chains + intervention by governments to manage noncommercial priorities = dramatic increase in disputes among private business entities. COVID-19 has brought much production, transport and commercial activity to a near halt.
The damage to business enterprises will be compounded by the diversion of financial and human resources into dispute processes not designed for exigent, and in certain cases existential, circumstances. Court systems are as impacted as commercial enterprises by public health closures. Depending upon one’s arbitrator(s) and governing rules, traditional arbitration can be no more efficient and expeditious than court proceedings.
Fortunately, in many, if not most, disputes arising from COVID-19 disruptions, it will be in the best interests of all parties to achieve a resolution as quickly as possible, and there are powerful mechanisms available to help accomplish that goal. There are two points in particular that parties should consider.
First, the rules of certain arbitral institutions expressly provide for expedited arbitration. The JAMS Comprehensive Arbitration Rules and Procedures (Rules 16.1 and 16.2) and the JAMS International Arbitration Rules and Procedures (Article 22) contain expedited procedures designed to move cases from appointment of the arbitrator to final award in approximately six months. Both sets of rules give the arbitrator authority to shorten that time frame even further after consulting with the parties. The international expedited procedures can be triggered under certain circumstances, even over the objection of one of the parties, and the domestic rules provide a mechanism for encouraging a reluctant party to reconsider.
Within the context of JAMS’ culture of efficient case management, expedited procedures represent an attractive and powerful tool for both clearing individual disputes and expanding portfolios caused by COVID-19 disruptions so that management time and other corporate resources can be focused on business priorities.
Second, it is important that commercial parties recognize that party autonomy is the foundation of any non-court dispute resolution process. If the parties agree, their agreement is enforceable even if that agreement is reached long after the underlying contract was signed. Whether among themselves or with the assistance of a skilled arbitrator or mediator, parties can quickly craft a bespoke process that serves their business interests under current circumstances that were impossible to foresee at the start of their relationship.
Prematurely locked into positions, parties too often lose sight of their real interests. As the COVID-19 pandemic escalates, the commercial imperative will increasingly be one of mitigating rather than exacerbating disruption in business activity, which means using available tools to clear disputes portfolios as efficiently as possible.
We don't know when business as usual will return or what form it will take. However, we do know that there will be commercial crises and chaos as a result of this extended global shutdown. Disputes will arise, and in some cases an enforceable decision will need to be made. Therefore, it is essential that parties consider a range of ADR solutions, including a streamlined arbitration process.
This is an extraordinary time for all—unparalleled in scope and impact—so the primary focus should be on achieving an effective and efficient decision that will meet the immediate commercial and legal needs of the parties.
Amb. David Huebner is a neutral with JAMS. He joined JAMS following 25 years of arbitration and intellectual property practice.
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