I am seeing a dramatic increase in the number of companies struggling to renegotiate contracts with suppliers and customers.  The novel virus has created novel disputes, which require a novel form of resolution.  Neither party is at fault, there is no time for posturing, they need resolution now.

Until a few weeks ago the main issue was preservation of cash but now the brakes are beginning to be lifted on the lockdown, attention is switching to contracts with customers and suppliers that were negotiated on the basis of pre-Covid economics that are no longer applicable.  This is a complex equation for most businesses with many moving and interlocking contracts that all need to be realigned to the new world.

To add to the complexity no one knows how quickly the economy will recover, what the demand for their products/services will be, so they have to negotiate for the future they cannot see and, at the moment, have little foundation on which to base predictions on which important decisions will be made.  The conflicting demands on the buy/sell side will create friction that is already tipping over into legal posturing, the forerunner of full blown disputes.

Now is the time for open, frank discussions, recognising the difficulties on both sides while searching out a solution to get through this uncertain period BUT if as often happens, the parties are unable to reach agreement the intervention of a third party neutral to facilitate those difficult discussions may well be the answer.  LCAM has a panel of neutrals with experience of dealing with these issues, guiding the parties to find their own solution or, if needs must, expeditiously deciding the issues through purpose-built processes producing binding or non-binding decisions as the parties require.

Tim Hardy, LCAM Arbitrator and Mediator