IMPACT OF CORONAVIRUS ON INTERNATIONAL ARBITRATION

Updated: Mar 21

*Asmita Singh


Coronaviruses are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome.[1]In December 2019, a new strain was discovered in humans, and it impulsively spread over the globe since then, to the extent that it has been declared as a pandemic by the Word Health Organization.[2]

Coronavirus’s impact on Arbitration Centers and Institutes


Though Coronaviruses started with China, but it spread to London, Singapore, Zurich, Paris, Geneva, Washington D.C., and also in Germany, Spain, Iran and India. While a vaccine is still being worked on, to prevent the virus from spreading any further, cities are going in a lockdown, trade movements are being restricted, daily life altered, most of private sector is encouraging its employees to work from home (the effectiveness of which is still in question).


The pandemic certainly has dealt a solid blow on the global trade and commerce, with stock markets tumbling all over the globe. With trade and commerce being affected severely, the same is also not good news for the arbitration community. As the situation continues to unfold, here are some of the precautionary measures that have been taken by various Arbitration Institutions and prominent arbitration centers of the world.


- The Indian Arbitration Forum (IAF) has requested the Arbitral Tribunals nationwide to consider restricting the conduct of proceedings for the next eight weeks to guard against the spread of the novel Coronavirus (COVID-19).[3]


- The London Court of International Arbitration (LCIA) has advised the parties and the arbitrators to avoid meetings as much as possible, and to send and answer queries / or even render awards through emails.[4]


- Hong Kong (China) where lies the headquarters of The Hong Kong International Arbitration Centre (HKIAC) has mandated all travelers from mainland China entering Hong Kong are required to go into quarantine for 14 days.[5]


- Singapore which has The Singapore International Arbitration Centre (SIAC) has denied entry (or even transit through Singapore) to visitors who recently travelled to mainland China.[6]Additionally, Singaporean citizens and permanent residents who recently travelled to mainland China are advised to not go to work, observe a 14 day.[7]


- Australian Centre for International Commercial Arbitration (ACICA), and The American Arbitration Association (AAA) have also taken similar approach as Singapore.


- Arbitration institutions in mainland China (such as the China International Economic and Trade Arbitration Commission (CIETAC), the Beijing International Arbitration Center (BAC), the Shanghai International Arbitration Center (SHIAC) etc) have all postponed arbitration hearings and recommended parties (and legal representatives) to abstain from attendance in person.[8]The institutions have also advised the parties to apply for extension of deadline as per the applicable arbitral rules.


Compliance to the advisory issues by health agencies, and arbitral institutions, would affect both the ongoing and upcoming international arbitrations. Conducting arbitration proceedings in such times is unfeasible as neither the attendance of parties nor the arbitrators, or even witnesses or experts can be mandated or even possible in some cases. This not only affects the pre scheduled timeline of the matter but also the quality and the total cost of the proceedings.


Although the parties are encouraged to make submissions online, conduct meetings via video links, and present evidences during such meetings, but such arrangement at the eleventh hour may not be pragmatically feasible. Ongoing proceedings seem to have been delayed until an effective antidote to the virus can be found. While this health crisis might come in handy for parties aiming to delay the completion of arbitration proceedings, it will cost the other party heavily. For parties entering into contracts, the coronavirus cases will undoubtedly be a consideration when negotiation clauses regarding arbitral seats, choice of law, institutions and procedures.


Coronavirus giving rise to new arbitration claims


In addition to that, a plethora of new international arbitration claims are expected to emerge as a result of the coronavirus, involving pharmaceutical, biotech, other healthcare industries, and also in almost all other sectors: construction, fashion, transport, and technology to name a few. For example, India, alone counts for around 20 percent of the world’s generic drug supply[9]has restricted the export of certain pharmaceuticals because of the scarcity concerns (possible in the near future) due to the corona outbreak [10]India obtains most of its core ingredients for these pharmaceuticals from China. Currently, the import from China is in turn effected by the diverted attention of Chinese government and health care industry tackling coronavirus cases in the country, rather than the export industry.[11]


The pandemic, has not only disordered daily lives but has also damaged the global supply chain balance. Most cross-border contracts, especially in the pharmaceutical industry refer the disputes to be resolved through international arbitration. This disruption in the global supply chain of drugs, will now result in a number of arbitrations claims particularly because of contractual breaches. This is only one example of the possible international arbitration claims that might emerge in various industries due to the coronavirus outbreak. Contractual claims of similar nature will surely arise in every sector where cross border transaction, transport or delivery has been impacted.


Time to shift to ODR (Online Dispute Resolution) Mechanisms?


As of now, none of the arbitral institutes have specific rules or guidelines pertaining to online dispute resolution. With the coronavirus outbreak, and disturbance in almost every sector, including that of dispute resolution, it drives us to develop (and adapt) the online dispute resolution mechanism better. Its time that arbitral institutions aim to cultivate and formalize online dispute resolution mechanism with specific rules and reference to it in the arbitral rules. The technology to conduct hearings online, present arguments, submit and seek documents, already exists, but the same needs to be formally acknowledged by the arbitral institutes, or the community at large.


They must craft an institutional framework that allows for multiple separation screens; the appearances of counsel, arbitrators, witnesses and parties simultaneously around the world; and the easy exchange of information [12]During the creation of the framework, the business community and the very essence of arbitration must be the bedrock of the dialog. Allowing technological advances in online dispute resolution will not only save the party’s logistics cost, time, effort of rescheduling, but also ensure continuity of the proceedings even when physical presence cannot be ensured.


As for the pandemic is concerned, it is not just for arbitration community to contemplate over its course from here forward, but also for us society as a whole to formulate better strategies for circumstances similar to these.

* Asmita Singh is working as a Research Associate in Jindal Global Law School, O.P Jindal Global University. She has a BA.LLB (Hons.) from Jindal Global Law School and a Master’s in International Dispute Resolution from the Humboldt University of Berlin, Germany. She wrote her master thesis on Harmonizing Investor & State Interests in Bilateral Investment Treaties and its impact on the ‘ease of doing business’ index of a country. She was also an Arbitrator at the Berlin Pre-Moot for the 26th Willem C. Vis Moot Court. While working in Germany, she has dealt with matters relating to maritime arbitration, investment arbitration, and commercial arbitration. She has also worked on matters to be filed at the European Court of Human Rights. She believes in a multi-dimensional approach in terms of research and hence works on issues related to law and society; and feminist jurisprudence in addition to international commercial arbitration and international investment arbitration. On the sides, she is also exploring the possibilities of ‘soft skill’ training especially in the legal market. She can be reached at asmitasingh@jgu.edu.in.


[1] World Health Organization: WHO (2020). Coronavirus. [online] Who.int. Available at: https://www.who.int/health-topics/coronavirus [Accessed 20 Mar. 2020]. ‌ [2] Who.int. (2020). WHO Director-General’s opening remarks at the media briefing on COVID-19 - 11 March 2020. [online] Available at: https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020 [Accessed 20 Mar. 2020]. ‌ [3] Aishwarya (2020). Coronavirus: Indian Arbitration Forum urges Arbitral Tribunals to view requests to adjourn proceedings leniently to minimise health risks. [online] Bar and Bench - Indian Legal news. Available at: https://www.barandbench.com/news/coronavirus-indian-arbitration-forum-urges-that-requests-to-adjourn-arbitral-proceedings-be-considered-to-minimise-health-risks [Accessed 20 Mar. 2020]. ‌ [4] Lcia.org. (2014). LCIA Services Update: COVID-19. [online] Available at: https://www.lcia.org/lcia-services-update-covid-19.aspx [Accessed 20 Mar. 2020]. ‌ [5] Coronavirus: Hong Kong to quarantine all arrivals from abroad. (2020). BBC News. [online] 17 Mar. Available at: https://www.bbc.com/news/world-asia-china-51921515 [Accessed 20 Mar. 2020]. ‌ [6] Stb.gov.sg. (2019). Advisory on COVID-19 (Coronavirus Disease 2019) | STB. [online] Available at: https://www.stb.gov.sg/content/stb/en/home-pages/advisory-on-covid-19.html [Accessed 20 Mar. 2020]. ‌ [7] Ibid. [8] Yang Ernest, Chen Xiaoshan, Zhao Terry (2020). Novel coronavirus (2019-nCoV) – potential effects on international arbitration, sale of goods, shipping and shipbuilding (AsiaPac) | Insights | DLA Piper Global Law Firm. [online] Available at: https://www.dlapiper.com/en/uk/insights/publications/2020/02/novel-coronavirus-potential-effects/ [Accessed 20 Mar. 2020]. ‌ [9] Diwanji Sanika (2019). Topic: Pharmaceuticals in India. [online] Available at: https://www.statista.com/topics/5456/pharmaceuticals-in-india/ [Accessed 20 Mar. 2020]. ‌ [10] Reuters (2020). Global supplier India curbs drug exports as coronavirus fears grow. [online] CNBC. Available at: https://www.cnbc.com/2020/03/04/global-supplier-india-curbs-drug-exports-as-coronavirus-fears-grow.html [Accessed 20 Mar. 2020]. ‌ [11] Reedsmith.com. (2019). India restricts drug exports over Coronavirus fears and international arbitration claims are likely to follow | Perspectives | Reed Smith LLP. [online] Available at: https://www.reedsmith.com/en/perspectives/2020/03/india-restricts-drug-exports-over-coronavirus-fears [Accessed 20 Mar. 2020]. ‌ [12] Benz Jeff (2020). What The Coronavirus Means For Arbitration And Mediation - Law360. [online] Available at:https://www.law360.com/articles/1249725/what-the-coronavirus-means-for-arbitration-and-mediation [Accessed 20 Mar. 2020].


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