We live in extraordinary and uncertain times. Any prediction about the state of the global economy, or indeed the European litigation market, in the years to come is tentative at best, at this time. The serious level of uncertainty across all industries and jurisdictions has not, however, stopped many from making bold statements about commercial disputes in the English courts. There are, for example, predictions of a ‘litigation tsunami’ in London, to rival that which occurred in 2009. The prospect of English law disputes turning upon force majeure provisions, and whether the COVID-19 pandemic is a force majeure event, has been mooted for some months now. Lord Neuberger, the former president of the Supreme Court, stated, in April 2020, that “the legal world has a duty to the rest of the world to prepare itself” for the morass of claims arising from the pandemic, and that some forms of “breathing space”, including early mediation, should be considered by all commercial parties, to avoid a deluge of litigation.

However, we are not convinced that force majeure disputes will necessarily lead to a surge of court disputes. Litigation turns upon factors other than just the substantive law. Reputational considerations must be considered. It will be testing, for example, for UK retail banks, acting as lenders, to insist upon strict contractual performance against borrowers, when the UK government has been repeatedly vocal about the need for the banking community to assist small businesses. Strategic issues are also relevant. It will not always be attractive for parties to rely upon force majeure provisions in long-term litigation, in order to avoid contractual performance for a significant period of time, when the consequences of failing in such an argument will be severe. It may well be the case that force majeure disputes will be ripe for settlement, with each side affording the other some ‘breathing space’.

We would be delighted to answer any questions you may have about any of the articles. Please feel free to speak to Nick Brocklesby, Ben Summerfield or to your usual Reed Smith contact.