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Sara Nazir

Trainee Solicitor - Sevenoaks

24th December 2020

Dispute Resolution – law changes during 2020

With the advent of 2021 many are hoping for a more fruitful year with fewer references to COVID-19. Sporadic lockdowns, business closures and an impending no deal Brexit are very much now the norm but how has the law changed during 2020?

Court hearings during lockdown

Of particular interest has been the role of the courts in the way in which they conduct procedural hearings to multi-day trials whilst the country has been in lockdown. Although initially adjourning hearings, the majority of the courts are adapting to remote working utilising virtual platform technology to congregate. It suggests a paradigm shift in its operations going forward and potentially greater access to justice for all without the hinderance of location and availability of a physical venue. The same goes for alternative dispute resolution with an influx in virtual mediations and arbitrations this year offering parties greater flexibility in the timetable and saving costs.

This year has also yielded many landmark decisions and instilled procedures previously unseen and affecting all sizes of business.

We review some of our favourite developments from this year.

Force Majeure

At the start of the pandemic many turned to their contracts to check whether its operations would cover them when unable to perform their contractual obligations at the start of the first lockdown. Force majeure operates to release parties from obligations or liabilities in situations outside of their control. COVID – 19 may be such a qualifying event if the force majeure clause specifies terms such as a “pandemic” or “Act of God”. The position is less clear however if governmental guidance is just that – guidance and does not carry any implications if not followed.  For more information on force majeure and its operation please see our article How can I manage contracts during the ongoing COVID-19 pandemic?

Refunds in the travel sector during the pandemic

Early Spring and Summer saw a number of cancellations for holidaymakers and uncertainty as to their rights to refunds. The Competition and Markets Authority (“CMA”) launched a COVID-19 taskforce investigation and clarified that in respect of package holiday providers, full cash refunds may be refused on the basis of the consumer paying “an appropriate and justifiable termination fee to the organiser”. Refunds can also be in the form of partial cash refunds or vouchers to use in the future.

The Package Travel and Linked Travel Arrangements regulations 2018 confirm that holiday companies must provide refunds to consumers within 14 days. The law in this area is by no means simple and varies for different consumer facing businesses.  It is practical for any business to ensure their own cash flow is flexible in the event lots of refunds need to be issued within one period of time.

Corporate Insolvency and Governance Act 2020 (“the Act”)

The Act came into force on 25 June 2020 to deal with the ongoing financial issues that many businesses of all sizes and types have encountered due to the COVID-19 pandemic. Its effects mainly concern the insolvency regime and construction industry. Under construction contracts such as the NEC and JCT, the Act now precludes suppliers from terminating contracts subject to very limited exceptions. The Act also introduced a new free-standing moratorium, a restructuring plan process and imposed restrictions on contracts for the supply of goods and services. In addition, temporary restrictions and relaxation of wrongful trading liability, the prohibition on statutory demands and winding-up petitions to offer companies greater flexibility were introduced and are due to end by 31 December 2020. For more information please see article Corporate Insolvency and Governance Act extends temporary measures.

FCA Business Interruption insurance test case

September saw the unveiling of judgment in The Financial Conduct Authority (FCA) v Arch Insurance (UK) Ltd & Ors [2020] EWHC 2448 (Comm) interpreting the wording of many business interruption insurance policies (“BI policies”) and the extent of their coverage to the COVID-19 pandemic.

The specific clauses scrutinised in the test case were:-

  1. “Disease clauses” triggered by the occurrence of COVID-19 within a specified distance of the insured’s premises.
  2. “Prevention of access clauses” triggered by a public authority preventing access to/use of the insured’s premises as a result of COVID – 19; and
  3. “Hybrid clauses” which contain wording from both the above clauses.

The court found in favour of the FCA in holding that most of the disease clauses did provide cover however construed the majority of “prevention of access clauses” restrictively requiring a forensic review of the specific policy wordings themselves to establish whether cover would be provided.

Unless successfully appealed, the judgement from this test case is legally binding on insurers that are parties to the case though does not apply retrospectively. The judgment following an appeal by the policy holders in November 2020 is expected in 2021.

Changes to witness evidence

Witnesses will now need to list every document they have referred to (including communications with legal advisors) within their witness statement for the judge to determine how much weight they should attach to that statement. This may leave the undesirable scenario for a witness requiring a refreshment of their memory of events that have occurred many years ago finding themselves under scrutiny for how well they recall the matter when at trial. The obvious effect may be that judges could make a number of adverse inferences against the witness. For more information please see the draft form Practice Direction 57AC released in October 2020 changing the way witness evidence is collected and reviewed.

Brexit

At time of writing this article in December 2020 the UK continues to negotiate its relationship with the EU post 31 December 2020. Although the way EU law impacts on the UK is likely to change, the effect of previous EU regulations (such as EU GDPR) are likely to still apply as these have now been entrenched in UK domestic law unless repealed. There will remain however, uncertainty as to how Brexit will affect the enforcement of judgments in 2021.

Contact our dispute resolution solicitors in Sevenoaks, Ashford, Uckfield and Brighton & Hove

Rix & Kay’s dedicated Dispute Resolution team provides the full range of legal expertise to support all areas of commercial and personal disputes. For more information on any of the points rasied in this blog contact Sara Nazir, e. saranazir@rixandkay.co.uk

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