May 5, 2020

COVID-19 Disputes: Adjournments and time extensions in litigation and arbitration

Parties involved in litigation and arbitration are currently making and responding to applications for the extension of time for compliance with directions, or the adjournment of hearings, due to the ongoing effects of the COVID-19 pandemic. In this article, we outline recent orders in English High Court and Permanent Court of Arbitration proceedings which provide useful guidance on the principles that may be applied in determining such applications.

Written by Robert Lawrence & Leonard Soudagar

Municipio De Mariana & Others v (1) BHP Group PLC (formerly BHP Billiton) (7) BHP Group Ltd [2020] EWHC 928 (TCC)

The case concerns a large class action arising out of the collapse of the Fundão Dam in Brazil on 5 November 2015. The Claimants include over 200,000 individuals, over 500 private businesses or foundations and 25 municipalities.

The first and seventh defendants applied for an extension of time, due to the difficulties caused by COVID-19 and measures introduced to combat the pandemic, for service of evidence in respect of their application to stay the proceedings on jurisdictional grounds. The consequence of such an extension would be the vacation of a 7-day jurisdiction hearing listed for 8 June 2020.

Should a hearing be adjourned or should it proceed remotely?

On 20 April 2020, HH Judge Eyre QC, sitting in the Technology and Construction Court, concluded that the following principles govern the question of whether a particular hearing should be adjourned if the case cannot be heard face-to-face or whether instead there should be a remote hearing.

  • Regard must be had to the importance of the continued administration of justice. Justice delayed is justice denied even when the delay results from a response to the currently prevailing circumstances.
  • There is to be a recognition of the extent to which disputes can in fact be resolved fairly by way of remote hearings.
  • The courts must be prepared to hold remote hearings in circumstances where such a move would have been inconceivable only a matter of weeks ago.
  • There is to be rigorous examination of the possibility of a remote hearing and of the ways in which such a hearing could be achieved consistent with justice before the court should accept that a just determination cannot be achieved in such a hearing.
  • Inevitably the question of whether there can be a fair resolution by way of a remote hearing will be case-specific. A multiplicity of factors will come into play and the issue of whether and if so to what extent live evidence and cross-examination will be necessary is likely to be important in many cases. There will be cases where the court cannot be satisfied that a fair resolution can be achieved by way of a remote hearing.

Should an extension of time be granted due to the effects of COVID-19 restrictions? 

Such applications should be assessed against the following principles.

  • The objective, if it is achievable, must be to keep to existing deadlines and where that is not realistically possible to permit the minimum extension of time which is realistically practicable. The prompt administration of justice and compliance with court orders remain of great importance even in circumstances of a pandemic.
  • The court can expect legal professionals to make appropriate use of modern technology.
  • The court can expect and require from lawyers a degree of readiness to put up with inconveniences; to use imaginative and innovative methods of working; and to acquire the new skills needed for the effective use of remote technology.
  • The approach required of lawyers can also be expected from expert witnesses who are themselves professionals. However, different considerations are likely to apply where the persons who will need to take particular measures are private individuals falling outside those categories.
  • The court should be willing to accept evidence and other material which is less polished and focused than would otherwise be required if that is necessary to achieve the timely production of the material.
  • However, the court must also take account of the realities of the position and, while requiring lawyers and other professionals to press forward, care must be taken to avoid requiring compliance with deadlines which are not achievable even with proper effort.
  • The court must be conscious that it is likely to take longer and require more work to achieve a particular result (such as the production of evidence) by remote working than would be possible by more traditional methods.
  • The court must have regard to the consequences of the restrictions on movement and the steps by way of working from home which have been taken to address the pandemic. In current circumstances, remote dealings are not between teams located in two or more sets of well-equipped offices with fast internet connections and with teams of IT support staff at hand. Instead they are being conducted from a number of different locations with varying amounts of space; varying qualities of internet connection; and with such IT support as is available being provided remotely. In addition, those working from home will be working from homes where in many cases they will be caring for sick family members or for children or in circumstances where they are providing support to vulnerable relatives at another location.
  • The above factors are to be considered against the general position that an extension of time which requires the loss of a trial date has much more significance and will be granted much less readily than an extension of time which does not have that effect. That remains the position in the current circumstances and before acceding to an application for an extension of time which would cause the loss of a trial date the court must be confident that there is no alternative which is compatible with dealing fairly with the case.

Decision

The application for an extension of time was granted as the defendants had shown that even when all proper allowance was made for the use of technology and extra efforts, the exercise of preparing the reply evidence would take significantly longer than was provided for in the timetable. Justice therefore required that the defendants be given an extension of time. The hearing was relisted for 20 July 2020 for eight days rather than seven days due to the possibility of the hearing taking place remotely and the scope for that to require further time than a face-to-face hearing.

PCA Case No. 2018-39: 1. The Estate of Julio Miguel Orlandini-Agreda, 2. Compañía Minera Orlandini Ltda. v The Plurinational State of Bolivia

Bolivia applied to suspend the time limit for the submission of its statement of defence (SoD), in an investment treaty arbitration administered by the Permanent Court of Arbitration in relation to mining concessions, on grounds of force majeure arising from the COVID-19 pandemic, in particular measures implemented in France (the seat of the arbitration and location of its external counsel), Bolivia and the US. Bolivia argued that work on the submission had been rendered "virtually impossible".

On 10 April 2020, the Tribunal refused Bolivia's request and noted:

  • Bolivia had already had an extended period of time to prepare its SoD before the advent of the COVID-19 pandemic.
  • The pandemic has created a new reality. In the context of arbitration proceedings, new demands have been imposed on parties, counsel, tribunals and institutions. While there have been difficulties, practice shows that in most cases the participants in the proceedings have been able to adjust to the new reality.
  • Preparing an SoD requires interaction with witnesses and experts, between counsel and client, and within counsel’s team. Those interactions, however, could be conducted using different means of communication.
  • While adapting to the new reality may require more time and effort, the preparation of written submissions, with all the necessary supplementary materials and documentation, remains feasible.
  • Experience in other proceedings demonstrates that, while written submissions may be delayed, within reason, and hearings may be re-scheduled (or held online), the proceedings have not been suspended or ruled impossible to continue.
  • The Tribunal's social responsibility requires at a minimum that the Tribunal not take any action that would put at risk the lives and the health of the participants in the arbitration.
  • The arbitration can move forward, albeit with some delay, in a socially responsible manner by adapting to the new reality of communicating remotely.

The Tribunal determined that it did not need to rule or opine on the existence or not of force majeure in the circumstances.

Summary

These principles should serve as useful guidance for parties making or responding to time extension and adjournment applications as a result of the effects of COVID-19. Each application will turn on the particular facts of the case, but the current consensus would appear to be that: (i) general inconvenience will be insufficient – evidence of the specific difficulties should be adduced; (ii) courts and tribunals will require parties to go the extra mile to address the challenges that will be encountered in the current circumstances; and (iii) hearings should continue remotely where possible. 

If you would like any further information or advice on the subject of this article, please do not hesitate to contact Robert Lawrence or Leonard Soudagar.