Covid-19: what it means for courts and companies – analysis
Like other sectors, coronavirus disease (Covid-19) has the potential to impact the legal framework worldwide. It can bring rationalization of labor, closure of business units, interruptions in supply chains and breach of contracts and cancellation of projects, among other things. This will add to the existing workload in the Indian courts. This requires a proactive approach to isolate the legal system from possible collapse.
But, every crisis brings opportunities. Covid-19 can be leveraged to introduce increased use of technology to improve system accessibility and affordability for litigants. During the shutdown, some Supreme Court banks and higher courts successfully heard important cases through the virtual medium. But for it to function efficiently across the country, the process must be intensified and expanded to equip all courts with the right technology and bandwidth.
The use of technology is not a simple fruit. Considerable work needs to be done to integrate and link systems and data, harmonize procedures, and create user-friendly digital structures. For example, in the United States, the legal system began using technology more than a decade ago. Meticulous planning and implementation was required, which was sufficiently comprehensive and capable of dealing with all possible interruptions that the system could cause. Instead of reinventing the wheel, India can borrow America’s experience.
With Covid-19 closing the country, it will likely bring an avalanche of cases that will focus on force majeure, as the parties involved in the contracts can seek an escape route that invokes supply chain disruptions and other eventualities.
According to Indian and English law, force majeure does not simply mean anything beyond the control of the parties to a contract. Its meaning and applicability depend on the drafting of a contract intended to anticipate unforeseen events and remedies for that. Implicit is the possible variation in the force majeure clauses incorporated in the contracts. There are chances that some contracts have not visualized such an eventuality or have opted for a restricted narration of the clause.
In the given situation, it is important for SC to revisit the Doctrine of Contract Frustration / Force Majeure and set the conditions for the applicability of the doctrine, especially when the Indian Contract Law says nothing on the subject.
Like the legal world, Covid-19 has sparked fear among employees and employers about continued employment and business operations, which are affected in all sectors. Even if the blockade is lifted in the near future, its impact will be felt for a long time. Some commercial entities are already contemplating closure, others are reducing their size, and some, including public sector companies, have announced cut wages and reduced contract workers.
As the number of disputes is expected to increase, alternative dispute resolution mechanisms, such as mediation, should be used to resolve cases, particularly those related to tenure, employment, loan deferment, and chargeable interest. The decided cases must be final, and appeals are directed to the higher courts only in exceptional cases. To handle litigation cases efficiently, courts and special banks across the country must also be considered.
Covid-19 also needs amendments to a number of existing laws to make them contextual to change. Laws such as the Indian Contract Law, the Indian Evidence Law, Intellectual Property Rights, labor laws, the Disaster Management Law and the Epidemic Law should be revised to align with changes in the framework economic and legal.
Lalit Bhasin is president of the Society of Indian Law Firms and the Indian Bar Association, and president of the IIC Legal Services Committee and the Collegiate Institute of Arbitrators.
The opinions expressed are personal.