Crisis Management Series- The COVID-19 Crisis: Mitigating Your Legal Exposure
The health and safety of individuals remain paramount amidst the current Novel Coronavirus (COVID-19) crisis. However, the precautionary measures taken by governments around the world are taking a toll on businesses across industry sectors and international jurisdictions. Some industries that have taken a tougher hit include the supply-chain, travel and hospitality, pharmaceutical and biotechnology, and technology industries.
In this e-briefing, we consider how the use of Negotiation and Mediation could help parties to manage their Contractual Rights and Obligations and contractual relationships in these challenging times. We also consider the impact of the situation on Employer Obligations and the Importance of Cybersecurity and Integrity of Data and Communications during this period of crisis.
Impact on Contractual Rights and Obligations
The performance of commercial contracts is being adversely affected by the COVID-19 and this has resulted in companies being faced with potential disputes. Companies must be clear of their contractual rights and obligations. Companies should consider whether the governing law of their contract or the express terms of their contract allow them to be discharged from their obligations completely. If companies foresee a possible breach of their commercial contract or are victims of a breach, swift action should be taken to mitigate their losses.
Role of Negotiation and Mediation
However, affected parties need not be fixated on adopting a “Disputes Mindset”. Instead of terminating a commercial contract and engaging in costly litigation, parties may find themselves preferring to find a way to preserve a good working relationship with their contracting counterpart and seeking a solution to get through the crisis together.
We see value in assisting our clients to negotiate with their counterparty to vary the contractual terms / obligations as a way for parties to avert contractual disputes. Parties can use the opportunity to reassess their respective abilities to fulfil their contractual obligations given the current crisis and work towards a meaningful commercial solution.
Where parties feel the need to negotiate in a confidential setting with a neutral third-party helping to facilitate the communication between parties, Mediation is a time and cost-effective dispute resolution option. In the mediation process, there is party autonomy and the parties can work towards reaching creative win-win outcomes within a short span of time.
From our experience in handling mediations conducted under the administration of institutions such as the Singapore International Mediation Centre, parties can generally reach a commercial resolution that addresses their interests within 1 day. This results in the saving of time and costs for parties.
Impact on Employer Obligations
Companies must also pay attention to their legal obligations as employers under the various jurisdictions that they operate in. For instance, employers in Singapore have a legal duty under both common law and statute (the Workplace Safety and Health Act) to provide a safe workplace.
In addition, employers may be required to comply with emergency measures implemented by government authorities. These can include notices of postponement of work or mandatory quarantine periods. Non-compliance with these regulations could result in administrative or criminal penalties.
In general, employers should demonstrate flexibility and be supportive towards their employees in this crisis. Efforts should be made to take precautionary steps to prevent the spread of the virus wherever possible.
Importance of Cybersecurity and Integrity of Data and Communication
Often overlooked amid all the activity is Cyber Risk. Companies implementing alternative work arrangements or reorganising their workforce should also take note of the potential vulnerabilities in their cybersecurity system.
The vulnerabilities can be caused by various reasons, for instance:
- Employees accessing company material remotely from home;
- Employees being allowed to use their own personal devices to access company data; and/or
- Employees using alternative means of communication to convey work instructions.
Additional safeguards are needed to ensure that the company’s information stays protected.
Two key takeaways:
- Consider negotiation and Mediation as part of your strategy; and
- Pay attention to cyber risk.
Overall, it is time for firms to conduct a quick stock-take and reassess their level of emergency preparedness as well as take active steps to minimise any potential losses caused by contractual disputes with careful crisis management.
In this respect, we help clients take a holistic approach to crisis management and we are well-equipped to guide clients through this difficult landscape.
Our team is trained to evaluate the strength and weaknesses of your contractual position as well as your vulnerability in the cyberspace. We are able to help clients in negotiations or mediations to find commercially viable solutions. Where necessary, we are able to pursue your rights in Court or through Arbitration. We are already advising clients who are being confronted by the issues highlighted above and are well-equipped to guide companies through these times of emergency and crisis.
For further information, contact:
Head, International Arbitration
Lead Partner, Cybersecurity, Data Protection and Privacy
Specialist Mediator, Singapore International Mediation Centre
Principal Mediator, Singapore Mediation Centre
Shaun Leong, FCIArb
International Arbitration and Dispute Management
Panel Arbitrator of BeiHai Asia International Arbitration Centre
Panel Arbitrator of Bangalore International Mediation, Arbitration and Conciliation Centre
K. K. Lim
Head, Cybersecurity, Privacy and Data Protection
Legal Associate, Eversheds Harry Elias
For more information, please contact our Business Development Manager, Ricky Soetikno at [email protected]