Litigation Post Covid-19 lockdown
Almost 6 months have passed since lockdown and the effect on businesses is unprecedented. Business closures, whether temporary or permanent, has resulted in many being unable to fulfil their contractual obligations. This will no doubt end in an huge increase in litigation from customers, staff, contractors and suppliers to name but a few. Those people who have suffered financially because a business is unable or unwilling to fulfil their contractual obligations will rely on the Courts to find in their favour. Unfortunately, such an increase in litigation will lead to delay in the courts as they will simply not have enough time and resources to deal swiftly with the influx.
Where does that leave the small business owner who is out of pocket for unpaid invoices or the consumer who has not received their order?
These are the people who will have to wait for a resolution which is neither quick nor cheap. Even if their claim appears to have the hallmarks of success, there is still the stress and litigation risk to contend with as no doubt a company would rely on a force majeure clause or the doctrine of frustration.
What are the options?
Well the first choice is to go down the litigation route. A process that will take time and energy and many months to be concluded, if you are lucky!
However, the parties attending mediation has many benefits. Mediation is a confidential process that can be used before proceedings have been issued or during proceedings. An independent mediator is appointed by the parties to help them negotiate a mutually agreeable binding agreement. Often parties can become so entrenched in a dispute that they stop communicating. The mediator is there to facilitate that dialogue in a controlled and confidential environment. The process usually takes no more than one day and both parties leave with an agreement they are both happy with.
Ordinarily mediations are conducted in person with each party having a room and the mediator going between the rooms during the course of the session. However, with the very real prospect of a second lockdown, on a local or national leve,l that would not be possible. In that situation mediation can be conducted in the same controlled and confidential way but via the telephone or remotely using programmes such as ‘Zoom’. So despite delays in the Courts, mediations can occur at a time and date that suits the parties.
As well as reducing delay there is also a reduced cost. Mediations are conducted on a fixed fee basis which is split between the parties equally. This is the first step to demonstrate a joint intention to engage in the process to resolve the dispute amicably.
A great benefit to mediation is that businesses can continue their business relationship. By having a mediator there, the parties can focus on communicating their issues with any permanent damage to their relationship. It also gives the parties greater control over the process and outcome and can often negotiate outcomes that the Court would not have the power to do.
Finally, it leaves time for the parties to channel their energies into what they do best, running their business.
CMC Registered Civil and Commercial Mediator
Founder of ActiveADR and panel Mediator for ProMediate