The global changes encountered by us all inevitably change a vast number of our personal and professional habits, opinions and considerations. With the everchanging nature of our global circumstances, our well-regarded knowledge on how things must proceed and operate ceases to assist the new hurdles we confront. Nevertheless, as we continue our existence, we must adapt and reconsider certain matters in-depth; therefore, we are left with the only option to broaden our perspective and consider alternative methods that may lead us to the results sought.

The speed under which the 2019 novel coronavirus disease ("Covid-19") spread across the world and its financial and economic effects on the global economy not only demonstrated how interconnected and fragile the global market is but furthermore how the current economic systems, capitalist or not, are dependent on their links with different persons, entities and services on an international level. In this respect, a vast number of global and local corporations, investors and banks slowed down their ongoing operations and are carefully conducting their search for potential business opportunities until they are able to regain a sense of stability and insight.

In addition to the matters above, the particular effects of the Covid-19 crisis on national and international dispute resolution procedures utilised to uphold ones' interests and rights are unprecedented. Above and beyond the present restrictions on movement and travel, most international, regional, ad-hoc and national courts and/or tribunals have limited or temporarily suspended their official activities. Some examples of current restrictions on a number of courts of law include the following:

  • The International Court of Justice, the principal organ of the United Nations, has suspended all meetings and hearings until the 31st of May 2020.
  • The Court of Justice of the European Union and the General Court of the European Union have temporarily changed their working arrangements and are prioritising particularly urgent matters such as urgent proceedings, expedited proceedings and interim proceedings.
  • Jury trials and oral hearings have been suspended in a number of countries. Whereas courts in France were closed as of 16th of March 2020 (with the exception of essential dispute resolutions), the German Federal Administrative Court restricted its activities as of 18th of March 2020 (with the exception of matters that cannot be postponed), and no jury trials are underway, and family courts and civil courts are listing priorities in the United Kingdom.

Recognizing the exceptional and wide-spread effects of the Covid-19 crisis, one must also consider the effects of another potential global or regional crisis and examine the potential ways to overcome such a scenario during this period. Nevertheless, once this pandemic is over or managed to be kept under control, legal entities will continue to pursue their business operations with the thought that another crisis may, once again, potentially affect their business dealings and ongoing dispute resolution methods.

On this point, corporations, investors and all other commercial entities that intend to continue their business dealings must reconsider and re-evaluate their position on alternative dispute resolution procedures and the benefit that they may acquire from such procedures with respect to their commercial and proprietary interests and rights as a part of their risk analysis process. Although whether the term "alternative" should be used is still under debate, alternative dispute resolution methods are particularly helpful in resolving disputes with the opportunity of selective flexibility. In this respect, it is important, more than ever, for a party to consider some of the core differences between the two widely available adversarial procedures, litigation and arbitration, before having to accept the risks attached to commencing a dispute resolution forum.

Litigation: Litigation, as known by all, is the default dispute resolution process administered and fulfilled by a national court. The powers of the respective court and its working arrangements rely on the procedural rules and regulations adopted by the respective country. Accordingly, all matters concerning the litigation process including the manner through which the litigation procedure is conducted, the selection of the judges, the competence and authority of the court and the rules of evidence are clear-cut and obligatory (more so in countries which have adopted the Civil Law System). While a party with a specific type of dispute may benefit from the obligatory nature of these procedural rules, others will not. Some general obstacles to bear in mind with respect to litigation are as follows:

  • Litigation is a procedure that is generally open to the public,
  • Specialist courts required for the fair management and resolution of particularly complex and/or technical disputes may not be available in some countries,
  • Attaining a finalised judgement may take longer due to various reasons such as the judicial infrastructure and cultural approach of a country, mandatory steps that must be complied with prior to commencing litigation or the appeal process of the respective country,
  • The enforcement of a judgement given by a foreign court is usually subject to lengthy recognition and enforcement proceedings. In addition, a risk that these foreign judgements will not be enforced, even after the completion of such proceedings, also exists.

Arbitration: Arbitration may generally be defined as a private adversarial process based on the mutual agreement of the contracting parties. Unlike litigation, the private nature of arbitration provides the contracting parties with the opportunity to form a customised dispute resolution administration system. Certain matters to be considered by commercial entities whilst choosing arbitration as a dispute resolution method are as follows:

  • Party Autonomy: The principle of party autonomy may be defined as the parties' right to choose and/or omit any procedural or substantive law within certain parameters and exceptions (such as public policy). Accordingly, this widely accepted principle allows parties to retain control over the procedures adopted during the administration of the arbitration process to achieve a desired speed and/or flexibility depending on the demands of their business practices. Thereby, the parties record their consent to arbitration with an appropriate set of rules in their arbitration or submission agreements. Moreover, the parties also possess the power to decide on matters such as the scope of their evidentiary disclosure, the arbitrator selection procedure and the time frame for the performance and completion of the arbitration. Accordingly, the parties may choose to utilise generalist (examples include International Chamber of Commerce, American Arbitration Association, Singapore Arbitration Centre and Istanbul Arbitration Centre) or specialized institutional arbitration (examples include International Centre for Energy Arbitration, Shanghai Aviation International Court of Arbitration or the Panel of Recognised International Market Experts in Finance) or ad-hoc arbitration. Depending on their needs, the contracting parties may also adopt expedited procedures to speed up their resolution process, adopt procedures whereby the parties are required to refer their disputes to mediation prior to or alongside arbitration, or decide to dispense with the oral hearing due to costs.
  • Selection of impartial arbitrator(s): The appointment of a sole arbitrator or a panel of arbitrators by the contracting parties or by their desired institution for the resolution of a dispute is of particular importance when the nature of their respective business and dispute is complex and/or technical. The right to choose the arbitrator(s) is invaluable when an arbitrator possesses the professional qualification, experience and insider knowledge in a particular business area and/or the types of disputes that may arise within a respective sector. Likewise, the choice of an experienced arbitrator who is familiar with the resolution of complex disputes arising from international business relations may result in the parties attaining a decision in a swifter manner. Contracting parties have a wide variety of choices for arbitrators and may utilise the services of specialized institutions and associations such as the Panel of Arbitrators for Intellectual Property, the Society of Construction Arbitrators and London Maritime Arbitrators Association.
  • Confidentiality: Another deciding factor on the method of a dispute resolution procedure is confidentiality. Therefore, a business entity that would like to keep its sensitive information and disputes private from the press and the general public may consider arbitration as a confidential forum that would achieve a level of confidentiality concerning the subject matter of the dispute and the information submitted to the arbitrator(s).
  • Enforcement: When a business is particularly contracting with parties who possess assets in other countries, the enforcement of the decision is another matter that must be considered with great attention. In principle, the enforcement of an arbitration award is generally simple by virtue of the New York Convention 1958 whilst the enforcement of judgements handed by a national court are usually subject to complex procedures based on national legislative systems.

Apart from the control that is provided to contractual parties with arbitration, the beneficial and flexible nature of arbitration was also demonstrated during the Covid-19 crisis. Most arbitration institutions are fully operational (save for oral hearings) and have adopted additional measures (such as electronic filings) or checklists for the uninterrupted continuation of ongoing arbitration cases. In contrast, and as mentioned above, most courts of law have suspended or temporarily ceased their works which will unquestionably lead to an unavoidable accumulation of work, disruptions and delays. Additionally, although certain judicial authorities are able to benefit from electronic mediums in conducting cases or handing down judgements, this is not a universal method utilised or available to each country.

Although the above information consists of general matters that must be considered by each and every commercial entity in evaluating the advantages of arbitration, the nature of the business conducted, the potential disputes, and the aims of the business owners or stakeholders must also be evaluated for the sake of conducting a successful risk analysis and management procedure. Unlike litigation, the choice of arbitration usually requires the consideration of additional issues prior to the creation of a business relation. Therefore, all matters, including the negotiation and formation of the arbitration or submission agreement or the costs involved must be discussed and considered with a knowledgeable and experienced lawyer or law firm before a choice of method is made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.