"Breathing Space" - helping business to resolve disputes more effectively

Last week Rishi Sunak warned that, as a result of the pandemic, the UK economy is expected to suffer the worst recession for more than 300 years.

On Friday, the British Institute of International and Comparative Law (BIICL), one of the world’s leading independent legal research centres, discussed their recently released short simple guidelines designed to help businesses resolve commercial disputes more effectively. Three particular themes emerge:

1. While some larger organisations may be able to withstand expensive, time-consuming disputes, many smaller businesses are not going to be able to do so and may welcome these sort of practical guidelines.

2. There is likely to be an increase in parties considering different commercial approaches towards dispute resolution. This is especially true in relation to dispute prevention. One particular measure BIICL recommend, where an existing contractual relationship exists between the parties, is the introduction of commercially minded independent third party facilitators at an earlier (i.e. pre-dispute) stage. This could help parties build bridges and modify certain contractual terms in order to improve their existing working relationships and enable them to continue. Or, where that might not be fully achievable, at least to narrow and ring-fence those areas of dispute that remain contentious, while preserving the overall commercial relationship or joint venture. This can be key for instance in procurement, or on long term, multi-party projects.

3. A possible increase over the next few years of the doctrine of ‘good faith’ negotiations.

These guidelines aren’t intended as a one-size fits all. They may not, for instance, be suitable if it suits a party better to look at a dispute simply through a legal lens but they do offer what the BIICL calls a ‘breathing space’ to allow parties to consider other practical options that might suit their commercial needs. They also offer parties the opportunity, when entering into commercial contracts, to design and incorporate dispute resolution clauses along these sort of lines so that if and when problems emerge, an avenue exists to help the parties resolve them before the relationship gets de-railed.