Coronavirus / Covid-19 related Commercial Disputes & Commercial Litigation
The Coronavirus pandemic and resultant lockdown restrictions imposed by the government are subjecting business and the UK economy to an unprecedented financial shock. In times like these, history shows the scope and scale of commercial disputes & commercial litigation increases dramatically hard on the heels of economic downturn and uncertainty.
Our specialist Business Dispute Solicitors are highly experienced in helping business clients take a practical, commercial approach to managing disputes. We help them to minimise the impact of disputes on their business.
Your business may have been in dispute with a customer or supplier before the full impact of the Coronavirus outbreak was felt, or you may have just started to consider seeking legal advice over a dispute which understandably, in the last few weeks, has been put on hold.
As the lockdown begins to ease, businesses across Yorkshire and the UK are wrestling with the mechanics of resurrecting their operations, taking stock of the impact felt, and considering how to get the wheels of business turning again. There will also be new, and unforeseen challenges for the business community to confront in the coming weeks and months, not least, the pressure to fulfil contractual obligations.
Across industries, companies will find ways to return to the ‘new-normal’ at different rates, while some will incur additional and unexpected costs as they explore ways to operate safely in the new business landscape. Such factors will likely put unprecedented pressures on the supply-chain across all sectors.
The number of disputes surrounding ‘breach of contract’ should be expected to see significant expansion, with opposing parties seeking to rely on non-performance or force Majeure depending on which side of the dispute they find themselves on.
In some instances, a business may wield such clauses as a sword, while, where they take a defensive position, use these clauses as a shield.
The Commercial Litigation Solicitors and Commercial Disputes team at Lupton Fawcett are available now, we are fully operational, and we continue to help business clients reach positive outcomes surrounding their needs and individual circumstances. We are still available for appointments, albeit online, or in line with social distancing measures and guidelines. Above all, we are here to help, so we encourage you to get in touch, to discuss your concerns, if you feel there are problems mounting on the horizon for your business.
The dispute management team at Lupton Fawcett really cares about getting the best results for its clients and is a delight to work with.
One thing is clear, as a country, we will come through this pandemic eventually, and any problems your business was experiencing before the crisis, will likely still be there as we emerge from it.
As the economy emerges from lockdown, disputes may also arise with customers, suppliers, distributors, lenders, insurers, indeed any commercial entity with whom your business operation is in some way someway reliant on or integrated with.
It is fair to say, that given the financial impact felt by business through the Coronavirus outbreak, notwithstanding those impacts still to come, that where disputes occur, those able to settle disputes amicably through negotiation, will save money that many businesses can, at present, ill-afford.
Revising existing agreements or entering into new agreements, may prove to be the best solution in keeping disputes out of the Courts. Protecting your business must be the prime objective, and for our commercial dispute resolution team, protecting our clients’ best interests is central to our legal advice and forward-thinking strategies.
Lupton Fawcett is an award-winning Corporate & Commercial Law firm based in Leeds, Sheffield & York. Our Commercial disputes & litigation Solicitors are renowned in their field of specialism and are recognised nationally, for our expertise by the Legal 500.
We can provide your business with both the commercial and legal acumen to find positive solutions where others may fail, or, and when necessary, we can robustly protect your business and fight your corner where litigation proves to be the only avenue.
The last few weeks have changed everything.
Toilet paper and hand-sanitizer suddenly became precious commodities, farmers have been forced to contend with millions of tons of spoilt produce (a particular problem across Yorkshire), global and national supply chains failed, and manufacturing output has fallen to its lowest ever levels.
The UK high-street will never look the same again, with household names succumbing to financial pressures and the travel and tourism industry taking an unparalleled blow, from which some players will not recover.
According to research undertaken by the Enterprise research centre, 21,000 UK businesses folded in March 2020.
The Coronavirus outbreak is exerting pressure on all parts of the UK supply chain. Now faced with exceptional strain on cash-flow and no visible light at the end of the tunnel, businesses and advisers are looking closely at contracts to explore ways to mitigate immediate risks and to relieve pressure.
Discussions with customers and/or suppliers about money or contract fulfilment can be difficult at the best of times. Added to that, a protectionist mindset that some commentators expect to envelop businesses across the coming months, then tensions between parties in contractual relationships will of course arise.
In the tough economic environment faced post-lock-down, such tensions are likely unavoidable, but they also essential if organisations are to renegotiate their way through the challenges ahead. So, how can businesses resolve disputes without litigation?
Coronavirus-related Commercial Dispute Resolution
Commercial agreements usually contain a range of clauses, certain to be given extra attention where businesses find themselves unable to operate as they once did, and therefore, potentially unable to perform contractual obligations.
‘Force Majeure’ and ‘Frustration’ provide the basis on which contractual commitments may be revised or discharged in light of ‘business-interruption’ events, with the Coronavirus outbreak certainly causing business operations to be interrupted on a scale which has never been seen before in peacetime.
Force majeure clauses are commonplace in commercial agreements and business contracts, whereas ‘frustration’, is more a general principle, applicable to contracted parties, where no provision is made within existing terms to cover those events now unfolding and having the unwanted impact on business.
Where a company finds themselves unable to honour agreements made, or unable to receive a service or product they need and expect from others, the first port of call should be to look carefully at force majeure provisions within existing agreements.
Force Majeure clauses may well discharge one or both parties in an agreement from performing contractual obligations, after all, for many, the impact of Coronavirus lockdown restrictions have made many normal business functions simply unworkable. The problem here may come if one of the parties seeks to put forward a counterargument. This could potentially lead to protracted, combative, costly legal disputes, set on a course which seems destined only for settlement by the Courts.
Benefits of ‘out of court’ settlements
When a dispute arises, positive negotiations between parties can keep matters out of court, and where an ‘out of court settlement’ can be reached, ultimately, both parties will incur fewer costs.
Seeking early legal advice and possibly business mediation services, can help build the foundation for, and facilitate a new amicable agreement to solve immediate problems and ward off the potential for commercial litigation.
Settling a dispute, perhaps with a new or revised agreement, can pay huge dividends for your business, not just in the short-term, but over the long-term as well. After all, the dispute in question may pit you against a business with whom you have been trading with for many years and ideally would want to continue trading with for many years to come.
It may be possible to negotiate a new agreement, favourable and acceptable to both parties. It may be possible to tweak the terms of specific clauses within an existing agreement. Newly agreed terms could also be time-limited, allowing for a return to the normal terms of business within an agreed timescale. Suppliers and customers could also agree to suspend clauses all together within an agreement.
There are many options, and we can help you consider what is best for your business, by talking through your situation and reviewing contracts. Finding an amicable solution to a contractual problem. could bring some welcome relief for both parties while also maintaining the integrity of a long-term business relationship.
The threat of a wave of coronavirus-related commercial litigation is a huge risk to business in the UK. The Courts are actively promoting a more conciliatory and less litigious means of settling commercial disputes at this unprecedented time, indeed, Lord Phillips (Supreme court president) has recently said
‘parties should consider mediation, and conciliation should be encouraged at an early stage of legal proceedings’.
The Courts are rightly concerned now about the potential for the country rushing headlong into an epidemic of commercial litigation, which, as well as adding to the burgeoning workload already faced by the Courts (as a significant backlog in casework builds), could also mean, the business environment continues to sustain anxiety, risks and uncertainty, which will not help businesses at all, nor the country’s capacity to recover from the financial fallout of the pandemic
Lupton Fawcett’s team have in-depth experience of commercial dispute resolution and commercial mediation services. We can provide the legal expertise to help your business find the middle-ground, helping you arrive at mutually acceptable resolutions to disputes faced, avoiding the Courts, and avoiding the potential for spiralling legal costs.
All businesses must consider the future carefully. As well as their own needs, it is sensible that business owners and directors sensitively consider the needs of their suppliers, customers, and shareholders. Where disputes arise, the actions and approach chosen and taken may well have long-term consequences for the companies involved. Businesses that display unsympathetic or aggressive tactics in the months ahead may well find that mud-sticks and future business relationships are defined for years to come.
How can we help?
If your business is already in dispute with another organisation about contractual obligations, or if you feel your business is travelling on a course where commercial disputes could arise, then please get in touch, the sooner we discuss and address your concerns, the sooner we can implement a strategy of negotiation and business mediation to help find positive solutions.
Our expert Commercial Dispute Solicitors will firstly work with you to identify your contractual issues and help to set out your options, helping you to understand what you may expect to achieve. We are then best placed to mediate negotiations with external agencies, customers and suppliers to bring about resolutions that can support your business and maintain relationships.
Get in touch with our expert Dispute Resolution Solicitors by calling 0330 404 6434 or fill in our online form, and we will get back to you as soon as possible.
Coronavirus-related Commercial Litigation
As we look to the future, it is impossible for business to anticipate the full impact that may be felt following the Covid-19 crisis. Likewise, it is impossible to predict the breadth of potential Coronavirus-related commercial litigation that may take shape across the coming years.
Based on experience from other periods economic downturn in our recent history, we can point to areas where the UK may see substantial commercial litigation activity.
The areas below are certainly not an exhaustive summary of the situation, but, such areas of commercial disputes have been prevalent in historical periods during or after a recession in the UK.
Insurance provides a vital safety net to support financial stability for business when the unexpected happens. Unfortunately, companies often discover just how comprehensive their cover is, only when they need to call on it.
Coronavirus-related insurance disputes are likely to be wide and varied. Disputes in this area will likely be hotly contested, as there will be significant consequences for the Insurance sector.
The coronavirus outbreak coupled with Government enforced lockdown restrictions have caused a serious level of distress and financial loss for businesses. At present, there appears to be an extensive concern as to the lack of positive responses from some BI Insurers in early rounds of communication.
The attention of even more businesses will soon turn to the small print of their policies surrounding business insurance and commercial property insurance. The main point of contention will be what can be argued is covered under ‘business interruption’ clauses.
The FCA intends to take a test case to the High Court to receive a court declaration aimed at resolving contractual uncertainty, so as to provide some clarification of business large and small.
Event Cancellation & Refund Disputes
Whether the event is a trade show, sporting event or corporate hospitality event. The spring & summer of 2020 has seen minor and major events cancelled the world over.
Not only have businesses spent significant sums on paying to attend or organise such events, usually there are extensive associated costs surrounding the event itself or preparations for the event. In normal times, business customers can generally count on full-refunds where an event is cancelled, but these are not normal times.
There is anecdotal evidence of companies delaying refunds or trying to pivot toward the option of re-booking events at later dates.
Problems also exist for event-organisers, who may well have taken out event cancellation insurance, but now are locked in a dispute with their insurers.
This cycle could continue in a haze of disputes, whereby organisers cannot make refunds without insurers paying out.
Education, Tuition Fee & Student Accommodation Disputes
Universities and colleges have been forced into closing campuses and where possible to make a transition toward online learning.
Where campuses are closed, there are likely to be legal challenges regarding payments made for student accommodation that now lies empty.
Questions will arise surrounding tuition fees, accommodation fees and other associated costs for services and facilities now inaccessible to those that have paid for their use.
In some cases, payments will have been made far in advance of the lockdown.
Mergers & Acquisition Deal Disputes
Acquisition Anxiety is another telling impact likely to be felt by the business community. Nervous companies may now try to back out or withdraw from previously agreed, but now unwanted merger and acquisition deals.
In a planned M&A deal, the target company’s current and projected performance is likely to be reviewed in a fresh light, as companies try to re-evaluate the opportunity and efficacy of the planned deal.
Potential trade buyers are also now far more focussed on ensuring their own business is adequately shored up.
Consumer Rights Disputes & Trade Description Disputes
Some businesses may find themselves challenged by consumers in relation to claims made under the consumer rights act, where the integrity of their products is questioned in relation to claims made in marketing material.
Certainly, products relating to health and safety, i.e. PPE (protective personal equipment) or other types of medical equipment could see the manufacturers drawn into disputes and litigation. Such firms are likely to fall under intense scrutiny, where products have not performed as expected.
Such claims could run into huge sums, especially where procurement has been made by local or central government.
Claims of profiteering or even price-fixing may also become prevalent in certain quarters.
Commercial Property Disputes & Property Development Project Disputes
There will likely be a sharp increase in disputes between commercial tenants and commercial landlords as cash-flow problems build if the economy takes time to recover rather than seeing a sharp bounce-back.
Issues surrounding a tenant’s inability to pay rent and whether, due to enforced pandemic conditions, the commercial tenant (whose business has been forced to close) can be properly held to account for the rental period in question.
Liquidity problems may arise for a business involved in, and already committed contractually to real estate deals encompassing; property development, property financing and investment, and joint ventures. All of which means the potential exists for litigation.
In the long term we would expect to see repossessions of commercial property, terminations of leases, renegotiations of existing agreements, litigation, and also corporate insolvency restructuring measures.
Banking Disputes & Financing Disputes
The banking sector and financial institutions face a variety of litigious risks. In the immediate term, there are likely to be disputes regarding businesses and consumers defaulting on loans, and attempts made by banks to collect debts.
Longer-term, banks could find themselves coming under pressure for their handling of the roll-out of business interruption schemes introduced by the government to support business. Early evidence points to some banks being extremely slow in their handling of applications for these schemes and in some cases not offering the loans at the interest rates that have been guaranteed by the government.
Such delays may have sounded the death knell for certain businesses
Healthcare Disputes & Carehome Disputes
Hospitals, nursing homes and other forms of health care providers face significant risks.
There is a broad potential range for claims to be levied against such providers. Health & safety compliance of businesses and business premises involved in the provision of care also face sharp scrutiny.
We have a nationally recognised specialist team of Solicitors for Carehome operators.
Coronavirus & Construction Law
At the time of writing, the construction industry in England has been permitted to continue trading and operating, provided that specific health safety measures, such as maintaining social distancing while on-site, are put in place.
Such measures, to stop the spread of coronavirus, as well as problems posed by the failure of supply chains and the furloughing of labourers have had a significant impact on many contractors’ ability to fulfil their contractual obligations.
Where a delay has been caused as a result of Covid-19 there may, in limited circumstances, be relief granted to those contractors who have been unable to carry out their work. Please read our blog in full here
Talk to our Commercial Disputes Resolution Solicitors
Lupton Fawcett is a leading full-service corporate & commercial law firm in Yorkshire with well-established offices of highly experienced commercial dispute solicitors in Leeds, Sheffield & York.
For over one hundred years we have supported the business community through tough economic times. Whatever your circumstance, you can count on Lupton Fawcett to help guide you. We put your interests first.
Lupton Fawcett has long been recognised for our expertise in Commercial Disputes and Litigation. Our business dispute solicitors act regularly for clients across the United Kingdom including Bradford, Birmingham, Hull, Liverpool, London, Manchester, and Nottingham.
As recognised experts in Commercial Dispute Resolution, we can support your needs wherever you live in England, Wales & Northern Ireland.
Call today or complete the enquiry form and we will get back in touch with you quickly. We will always respond promptly, and we will be happy to help.