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What effect does the COVID-19 pandemic have on the use of international arbitration for settling disputes?

Clementina Rolfi

The COVID-19 pandemic has greatly affected the use of international arbitration for settling disputes. With the pandemic’s rapid spread and the ensuing global lockdowns, businesses have been forced to temporarily shut down their operations or shift to remote work modalities. Consequently, commercial contracts have been adversely impacted, and disputes have arisen regarding force majeure, termination clauses, and the applicability of the law to the present exceptional circumstances.

As a user of social media, I have been constantly monitoring developments in the arbitration world as many entities have had to reconfigure the way they adjudicate disputes and how the arbitral process plays out. One effect that this pandemic has had on international arbitration is the surge in the use of virtual hearings. With travel and physical restrictions, remote hearings have become a popular and effective alternative. The use of video conferencing technologies has enabled parties to engage in arbitration without having to be physically present in the same location, which has resulted in significant cost savings on travel, accommodation and expenses previously incurred for attendance.

Another effect of COVID-19 on the use of international arbitration for settling disputes is the shift in the way parties approach dispute resolution clauses while negotiating contracts. With the outbreak of a global health crisis like the one we are currently experiencing, more emphasis is being placed on force majeure clauses and dispute resolution mechanisms that provide the parties with enough flexibility to adjust their commercial relationship in the event of a pandemic or other unforeseen circumstances. These measures aim to encourage cooperation between parties, as non-performance or termination clauses may result in litigation. This trend has necessitated the simulation of various dispute scenarios and alternative dispute clauses during contract negotiations to prepare for uncertainties.

Furthermore, the pandemic has had a spillover effect on the duration of arbitration proceedings. While ensuring the speedy resolution of disputes has always been the goal of the arbitration community, the pandemic has created significant impediments to the arbitral process, with lockdowns and social distancing norms hindering the progress of cases. As a result, extensions, delays, and the rescheduling of proceedings have become common, leading to elongated arbitration procedures and a lack of finality in dispute resolution.

In conclusion, the COVID-19 pandemic has significantly impacted international arbitration, prompting revisions to dispute resolution mechanisms, and ushering in new and innovative methods to administer arbitrations. With society coming to terms with a “new normal”, arbitration has had to evolve to cater to the ever-changing needs and requirements of the arbitration community. The rise of virtual hearings, flexibility in dispute resolution methods, and revised timelines illustrate the determination of the arbitration community to continue working through the challenges presented by the pandemic. As such, the pandemic has provided the impetus for arbitration practitioners to reinvigorate and restructure traditional arbitral practices.