ONLINE DISPUTE RESOLUTION

INTRODUCTION – IMPORANCE OF ARBITRATION

The worldwide spread of the COVID-19 virus has affected commercial operations, logistics and
finances across industry sectors. The social, health and economic uncertainty caused by the
pandemic puts pressure on the limited resources and budgets of individuals and businesses alike.
In such circumstances, we can expect the number of legal disputes to increase now and into the
future.

Unfortunately, just as the number of legal disputes rises, the capacity of the court system to
resolve those disputes has diminished. In virtually all Provinces and federally, courthouses are
hearing only the most urgent and time-sensitive matters. Non-urgent matters may ultimately
proceed “virtually”, but the necessary systems must first be developed, vetted and implemented.
Once courts re-open fully, parties can expect a backlog of cases, in addition to a wave of new
claims arising from the COVID-19-related closures, which may contribute to further delays.

Given these challenges, now may be the time to consider alternatives including the arbitration of
disputes that are presently in court.

Referring part or all of an existing court dispute to arbitration can offer a number of
opportunities:

 Timely hearing of pressing interlocutory or other procedural issues (e.g. injunctive relief
or discovery issues);
 Hearing of key substantive issues, such as a limitations defence, to narrow the dispute;
 Immediate flexibility in hearing locations, virtual meetings, or “documents-only”
procedures;
 A broad roster of arbitrators, many of whom may now have more availability; and
 The opportunity to return the dispute to courts when the crisis lifts.

Litigation vs. arbitration

Arbitration and litigation share many similarities. In both settings, a third-party adjudicator (the
judge or the arbitrator) administers a structured legal process, considers submissions from all
parties, and renders a binding decision on the issues in dispute. Unlike mediation, these
litigations and arbitrations result in binding judgments (or awards), rather than negotiated
agreements. In the case of arbitration, these rulings are often final.

Arbitration is dissimilar from litigation because it is a form of private dispute resolution. Once
parties consent to arbitration, the dispute moves to a private setting where parties can control the
legal procedure, including timelines, submissions, confidentiality, exchange of evidence and
meeting locations. Where parties are unable to agree on procedures, an arbitrator (or tribunal of
arbitrators) selected by the parties determines the applicable process. In essence, the parties have
greater control over their own proceedings, which take place before a dedicated tribunal and
without requiring court resources.

The private nature of arbitration makes it attractive in the current circumstances. As set out
below, arbitration offers parties the opportunity to move part or all of their disputes into a private
setting, where they can more easily advance their disputes toward a timely resolution.

Role of arbitration during the COVID-19 crisis

Arbitration can help parties manage, or avoid entirely, the substantial delays currently facing
courts.

1. Resolve key procedural issues: parties can use arbitration to resolve time-sensitive
procedural issues. For example, if a party requires immediate injunctive relief, both the
domestic and international arbitration acts of the Canadian provinces grants arbitrators
the power to make such orders. In other words, if the broader substantive dispute is not
urgent and can proceed in court notwithstanding the delays, but there is an immediate
need for injunctive relief, an immediate and focused arbitration offers an option.
2. Resolve key substantive issues: while the parties wait for the courts to re-open and clear
backlog, certain disputes may benefit from a prior narrowing or resolution of key
substantive issues. For instance, an otherwise meritorious claim may be the subject of a
limitations defence. In an effort to advance the dispute, the parties may choose to refer
only that limitations issue to arbitration during the period of court closure. Having this
issue determined immediately could determine whether litigation (once available) is even
necessary.
3. Ensure timely dispute resolution: though dependent on party conduct, the nature of the
claim, and tribunal orders, arbitration can result in a more streamlined and efficient legal
process. Arbitrations typically involve narrowed discovery rights (and in the case of
international arbitration, no oral discovery at all), flexible timelines, as well as dedicated
and available tribunals. In the current conditions, many arbitrators likely have greater
availability while judges and courts have less. As a result, parties may consider moving
their entire dispute from litigation into arbitration in order to advance the proceedings and
potentially set it onto an accelerated timeframe for resolution.
4. Flexible forms of dispute resolution: arbitral tribunals can render their decisions based
on an evidentiary record that is proportionate to the nature of the proceedings. In
Desputeaux v Éditions Chouette (1987) Inc, Supreme Court of Canada confirmed that, in
arbitration:

“The methods by which evidence may be heard are flexible and are controlled by the arbitrator,
subject to any agreements between the parties. It is therefore open to the parties, for example, to
decide that a question will be decided having regard only to the contract, without testimony
being heard or other evidence considered.”

For smaller matters, and in circumstances where it is difficult for the parties to meet in person, a
“documents-only” arbitration may be sensible. Alternatively, a tribunal may choose to hear
certain key evidence “virtually”, while treating less central issues or less valuable claims on a
“documents-only” basis. In brief, the option to conduct hearings and hear witness evidence
virtually (or not at all) has always been available in arbitration. With an experienced tribunal and
cooperative counsel, parties can anticipate particular flexibility in the arbitral process.

Practical steps for considering arbitration

Any decision to proceed with a claim in arbitration requires an arbitration agreement between the
relevant parties. Most arbitration agreements are “pre-dispute” agreements, found in underlying
contracts. Few arbitration agreements arise “post-dispute” and fewer still are drafted “mid-
dispute”. However, preparing an arbitration agreement to move a dispute from litigation to
arbitration is possible. Like a pre-dispute arbitration clause, a mid-dispute arbitration agreement
should consider, at a minimum, (i) the scope of the intended arbitration; (ii) the seat (or legal
situs) of the arbitration; (iii) the applicable procedural rules; and (iv) a method for selecting the
arbitrator(s).

While the domestic and international arbitration acts of the Canadian provinces grant parties
significant freedom to structure their arbitral proceedings, parties should also remain conscious
of non-derogable terms of these Acts. In particular, parties are entitled to an equal opportunity to
present their case. For this reason, any mid-dispute arbitration agreement should ensure that steps
already taken by one party in litigation are equally available to the other party once in arbitration.
Additionally, the selection of the arbitrator should involve party agreement or a fair and balanced
process.

With these precautions in mind, arbitration should provide a viable alternative for many parties
seeking to advance their dispute during the COVID-19 crisis1.

B-B AND B-C AGREEMENTS- challenges faced

COVID-19 has had a major impact on contractual obligations all across the globe. The Pandemic
has brought the world to a standstill. With nation-wide lockdowns being imposed in countries
across the globe, the world is facing an economic crisis.

Parties have been unable to fulfil their Contractual obligations. The Pandemic has proven as a
true test of the effectiveness of contracts. Sub-standard contracts have rendered a lot of parties
remediless and have caused not just financial but reputational loss to businesses.

In the wake of the COVID-19, various elements of contracts have gained significance. These are
the same aspects which were not even given a second glance. The essence and prominence of
contractual clauses such as the Force Majeure Clause, the Termination Clause, the Suspension of
Obligations Clause, the Notice Period Clause, etc have been brought to light.

Agreements are the heart and soul of any business arrangement. They define and categorically
lay down the terms and conditions governing the obligations of the parties to the Contract. This

1
https://www.lexology.com/library/detail.aspx?g=1f7ea96d-6c6f-449b-b844-7dd67d1f27bc
article attempts to highlight the impact that COVID-19 has had on Contracts. We have also tried
to identify existing ambiguities in contracts and their possible solutions.

IMPACT OF COVID19 ON CONTRACTS

1. Suspension of existing Contractual Obligations

Due to the spread of COVID19, the entire country has been in a lockdown from 25.03.2020. It is
an unprecedented situation that has taken the entire world by shock. Contractual obligations have
either become impossible to fulfill or their performance has been delayed indefinitely.

In this situation, a lot of contracts have been 'suspended'. The rights and obligations of the parties
have been brought to a sudden halt. Most contracts fail to provide for an exit route or a
recovery mechanism when faced by such a scenario. In such a case, the parties choose to
merely suspend the obligations under the contract for the time being, till the situation improvises.
Hence a status-quo is imposed on the performance of the contract, until further notice whereby
parties mutually agree to shift or terminate the existing paradigm.

In extremely rare scenarios, the contract provides for the suspension of the obligations of the
parties under contract. The suspension clause usually specifies the procedure to be followed
by the parties in the event that such suspension is unavoidable. The clause also lays down
the maximum time period for which the contract may be suspended. In the current COVID-
19 scenario, it has been observed that very few contracts provide for suspension of a contract and
most of them provide for termination instead.

2. Termination of Contracts

Consideration the disruption of the supply chain caused by the pandemic, it is very likely that
performances under many contracts will be delayed, interrupted, or even cancelled. Most
Contracts provide for an exit mechanism to parties in the event that the parties are unable or
unwilling to fulfil their obligations. However, the ambiguities present in such exit mechanisms
can prove to be detrimental to the rights of the parties governed by the contract.

Often times, the termination of a contract can be initiated only by a specific party to the contract.
Certain contracts require that the request of termination of a contract may be approved by a
specific party to the contract at their sole discretion. Furthermore, certain contracts also
necessitate a mutual agreement of parties for the termination of the Contract.

3. Force Majeure Clause

This is probably the most talked about clause in COVID-19 times. From being the least used
clause in a contract, it has now become the most scrutinised and the most invoked clause of
recent times, in any contract. Often times, contract did not even incorporate a force majeure
clause. Its presence was limited to a small, three-four line paragraph which was the result of the
same paragraph from an initial contract which may not even be related to the current contract.
A force majeure clause basically relieves the parties to the contract from carrying out their
obligations upon the occurrence of a certain specific set of events, which are beyond the
control of the parties. Most contracts specify a particular specific set of events that qualify as
force majeure events. A force majeure clause may provide for immediate termination of a
contract without any legal consequences. It may also provide for the termination of the contract
if the force majeure event continues for a specified period of time.

The nature of a force majeure clause is determined by the nature of the contract and the
obligations of the parties therein. The current COVID19 pandemic may or may not be considered
as a force majeure event depending on the force majeure clause in a contract. There is no straight
jacket formula that can be applied to determine a force majeure event. However, it is settled law
that:

 A force majeure clause cannot be assumed to exist under a contract. It is pertinent for the
clause to explicitly be specified in the contract for its application.
 Force Majeure and the doctrine of frustration are both concepts of the law of Contract but
they are not the same thing. Their applicability and basic framework vary from one another on
a large extent.
 Force majeure clause will not apply if alternative modes of performances are available.

This Pandemic Business Cycle is absurd and unprecedented since it is unique to the Pandemic
scenario being faced by the entire world for the very first time. This has increased the probability
of uncertainty in various contractual transactions and obligation hence it is the need of the hour
to understand the importance of including a Force Majeure Clause in our contracts and
agreements.

CONTRACT MANAGEMENT IN THE POST COVID19 ERA

It is pertinent to note that after the lockdown is lifted and the whole Pandemic situation subsides,
the repercussions of it shall continue to stay with us. We can never go back to life like it used to
be. We will have to adapt to a new, post-COVID19 world. The post-COVID19 era shall
necessitate the implementation of certain Pandemic Legal Intelligence strategies by businesses.
This will include implementation of certain new risk analysis and risk identification measures in
commercial contracts. Certain steps that can be taken by businesses and industries in the post-
COVID19 era include:

1. Periodic and thorough implementation of policies that incorporate contract vetting and risk
assessment of legal obligations. This will improve the quality of contracts and ensure that a
steady and contemporary safeguard mechanism exists in contracts. This will also ensure that
contemporary risk management and damage control strategies can be implemented in time to
anticipate contractual shortcomings.
2. Incorporation of an 'inclusive' force majeure clause instead of the dated, force majeure clause
that is being used in contracts from the past many years. Businesses must refrain from
incorporation of a force majeure clause that is too rigid. Having an inclusive force majeure
clause that specifies a certain force majeure events, in addition to other unspecified event leave
a scope for protection against unanticipated events in the future. The Pandemic is a classic
example of a force majeure event that could not have been anticipated by anyone, by any
 stretch of imagination. Inclusive force majeure clauses have served as a blessing in disguise for
the concerned parties.
3. Incorporation of fair and practical exit mechanisms in a contract is a very important aspect of
any commercial contract. The first and foremost thing that must be assessed by any party
entering a contract must be the termination clause of the contract. It is imperative to weigh the
pros and cons of the procedure laid down in a termination clause and its repercussions. Most
parties fail to understand the importance of this clause.
4. Contracts must be analysed to assess the rights and obligations of a party from time to time
and there must be sufficient scope for amendment in the contracts depending on the changing
times. Uncertainty in fulfilment of business and professional obligations is why the COVID-19
has proven to be such a big setback factor for businesses around the globe.
5. There is an incessant need to encourage incorporation of mediation and alternate dispute
resolution clauses in the event that disputes arise from such contracts. This is necessary to
safeguard parties from incurring major expenses on litigation and dispute resolution between
parties. Time is equivalent to money in this era and precious time is lost in litigation. Hence,
incorporation of alternate dispute resolution mechanisms is the need of the hour 2.

The unfolding, global COVID-19 pandemic is a human crisis of historic scale and complexity. It is straining
health care systems, government fiscal capacity, and the ability of many organizations to cope with the
changes wrought by the virus and the response to it. The level of uncertainty for most leaders is
unprecedented, and most of our frameworks for planning and problem solving are unable to manage
the geographic variability, uncertainty, and the exponential change brought by the COVID-19 crisis.

We cannot predict the future. But we can seek to understand what the future might hold, and what that
means for nations, industry sectors, and individual companies. We need scenarios to bound the
uncertainty, to help us understand the underlying drivers of outcomes, and for some understanding of
how we can shape those outcomes.

CHALLENGES FACED WHILE APPROACHING ADR METHOD

The challenges faced by any party to a contract in embracing ADR instead of the traditional & time consuming civil litigations

The worldwide spread of the COVID-19 virus has affected commercial operations, logistics and
finances across industry sectors. The social, health and economic uncertainty caused by the
pandemic puts pressure on the limited resources and budgets of individuals and businesses alike.
In such circumstances, we can expect the number of legal disputes to increase now and into the
future.

Unfortunately, just as the number of legal disputes rises, the capacity of the court system to
resolve those disputes has diminished. In virtually all Provinces and federally, courthouses are
hearing only the most urgent and time-sensitive matters. Non-urgent matters may ultimately
proceed “virtually”, but the necessary systems must first be developed, vetted and implemented.

2
https://www.mondaq.com/india/litigation-contracts-and-force-majeure/956942/contractual-agreements-during-
and-post-covid-19
Once courts re-open fully, parties can expect a backlog of cases, in addition to a wave of new
claims arising from the COVID-19-related closures, which may contribute to further delays.

Given these challenges, now may be the time to consider alternatives including the arbitration of
disputes that are presently in court.

Referring part or all of an existing court dispute to arbitration can offer a number of
opportunities:

 Timely hearing of pressing interlocutory or other procedural issues (e.g. injunctive relief
or discovery issues);
 Hearing of key substantive issues, such as a limitations defence, to narrow the dispute;
 Immediate flexibility in hearing locations, virtual meetings, or “documents-only”
procedures;
 A broad roster of arbitrators, many of whom may now have more availability; and
 The opportunity to return the dispute to courts when the crisis lifts.

CONCLUSION:

Damage-control and Pandemic Legal Intelligence is the need of the hour.

Commercial contracts can have major repercussions for businesses if these contracts are not
analysed diligently. It is important to engage in professional risk analysis of commercial
contracts in the post-COVID era to continue working as a profit making organisation.

Contemporary business practices need to be incorporated which cannot be done without

engaging in a mechanism of proper checks and balances with regard to the legal obligations of
the parties to a contract.

Commercial contracts form the basis of any business deal. If the groundwork is not laid
appropriately, it is impossible for the commercial strategy to succeed.

The world has already witnessed the shortcomings of sub-standard and open-ended contracts that
has led to huge financial losses to businesses around the globe due to the pandemic. The Post-
COVID era must be welcomed with contemporary strategies. We must learn from our mistakes
and be well prepared to face the post-COVID era.
DUE DILIGENCE of existing contract is the starting point for Arbitration

ARBITRATION FEE LIMIT AFTER THE NEW AMMENDMENT

PRE NUP AGRREMENT- the mandatory pre-nup requirements if a disputing party intends to go for a Mediation/ADR

ADR AND ODR MECHANISM

CONTACTING AND CONNECTING PEOPLE REGARDING THE CHALLENGES FACED

the ground perception of the stake holders on alternate dispute resolution mechanism

Enumerating the process & the procedure