Impact of Coronavirus (COVID-19) on Arbitration Cases

In the name of God, the Most Gracious, the Most Merciful. Praise be to God, Lord of the world, and prayers and peace be upon the most honorable messenger, our master Mohammad and the seal of the Prophet and patron saint of the Ummah who has conveyed the message to us and performed the duty and recommended us to seek refuge in God from the forfeiture of his blessing and transformation of his wellness as well as his  abrupt resentment and wrath.

It’s a well-known fact that the arbitration cases are totally based upon the principle of the authority of the parties’ will, hence the Arbitration Cases most often are not held unless there is an agreed “Arbitration Clause” within the contractual relationship, subject matter of the dispute, or there is an “Arbitration Agreement” which controls the parties’ will to adjudicate their dispute through Arbitration. Accordingly, the Arbitration proceedings in Ad hoc Arbitration including its regulatory deadlines, is determined by the agreement of the parties to Arbitration or through the competent judicial authority. As for institutional arbitration, those proceedings and deadlines are set by the Reputed Arbitral Tribunal that practices Arbitration through its Rules (similar to that Arbitration Rules of the International Islamic Centre for Reconciliation and Arbitration which provides a unique global platform for settlement of dispute in compliance of Shari’ah Provisions) which aims in its entirety to conduct Arbitration proceedings with flexibility and professionalism and grant the parties an adequate time and equal opportunities to submit their arguments and pleadings.

Here arises a major discourse and confusion between the parties to the Arbitration, and sometimes that confusion affects some lawyers and arbitrators in the matter of merging the legal deadlines determined by jus cogens Rules of law applicable to the Arbitration cases and the regulatory deadlines agreed upon by the parties or determined by the reputed Arbitral Tribunal or stipulated in Institutional Arbitration Rules. Further, IICRA has recently received requests from some Claimants and competent Arbitral Tribunals that deem it to necessary to suspend their missions and extend their arbitration assignments or tasks of expertise further due to outbreak of “Coronavirus” and stringent precautionary measures put in place by the Government Agencies in order to stop the spread of the pandemic, for instance banning meetings, workshops, and training.. etc. Here, the case manager must take into account each request separately according to the stage of Arbitration proceedings, where IICRA’s decision varies as to the acceptance of requests filed in Arbitration cases for holding more Arbitration sessions or transition of tasks and expertise, and it’s the same with the rejection of requests, in the event that IICRA satisfied that the requests were only made for the purpose of procrastination since the Reputed Tribunal has already closed the door for pleadings in the Arbitration case and reserved it for the issuance of Final Award.

However, the question still remains the same as to what is the legal effect of Coronavirus on the Arbitration Cases if it is confirmed that the necessity of procedures to be suspended and the Arbitration period to be extended further? In order to answer this question, first, we must agree that this global pandemic affects the contractual obligations, the influence of force majeure that is defined as everything that happens in terms of jurisdiction, destiny, or any other cause that is not the result of error or negligence on the part of the contracting parties, and from this definition, is we monitor three conditions for the implementation of force majeure situation which are as follows:

First: This global pandemic can never be expected at all by the parties of the contractual relationship, the basis of the Arbitration Case.

Second: The impossibility of pushing this global pandemic and avoiding its consequences, whereas, the governmental stringent measures are imposed to cope with the outbreak of the pandemic prevents the arbitrator or expert from carrying out his duties, and this condition is the implementation of the rule that says: “No assignment obligation”.

Third: This pandemic is external that has nothing to do with any of the partis to the dispute in its outbreak, this is well recognized and even unimaginable in such circumstance of global pandemics declared by the World Health Organization (WHO). And by collectively fulfilling these conditions, we are assured that the spread of the “Coronavirus”, which is a global pandemic according to (WHO) is one of the forms of force majeure on contractual obligations and procedural deadlines that leads to stop or prolong the legally prescribed date for carrying out a procedure, such as stopping the calculation of projected period for hearing the case by a statute of limitations or stopping the period legally prescribed for filing an appeal against the judgment to be challenged. This position is evident in judicial principles that affirm that only force majeure alone affects legal deadlines. However, emergence of force majeure will not waive the Arbitration Clause agreed between the parties, rather it shall stop the validity of a deadline for submission of the dispute to Arbitration If it has a prescribed date. In addition, the deadline for the appeal shall not be valid if a force majeure is achieved in between. If the force majeure affects the implementation of procedural legal deadlines, then it has the same effect on regulatory actions that derive their strength from less severe sources of legislation.

Now, we can assert that the effects of “Coronavirus” have emerged at an accelerating pace in all sectors of the economy, finance, and business locally, regionally, and globally. Indeed, these effects shall extend to all contractual obligations, which in turn inevitably result in similar substantive, quantitative judicial and Arbitration cases and claims which were left behind by the global financial crisis in 2008, and even more severe than those, regardless of the extent to which each of these contractual relationships are directly or indirectly affected by the current global pandemic. Now, the matter is up to the discretion of the Judicial and Arbitral Tribunals case by case.

In conclusion, it becomes clear to everyone that the negative effects of the pandemic are significant and worsening. However, there are some positive effects of the pandemic that we must make use of at the present time, such as promoting the teachings of Islamic religion, which urges personal hygiene and avoids dangers … etc. As for Arbitration, we believe that this global pandemic has created a favorable opportunity to take serious steps towards activating electronic arbitration which shall prevent the Parties and Arbitral Tribunal from traveling, disruption and holding meeting periodically which are the same precautionary measures currently issued by the Governments with an aim to combat the outbreak of Corona Virus, in order to reduce Arbitration  expenses. Further, International Islamic Centre for Reconciliation and Arbitration (IICRA) has launched e-services, on top of which is adjudicating the disputes through institutional Reconciliation and Arbitration in a way that doesn’t contradict the provisions of Islamic Shari’ah through its official website www.iicra.com