Bypassing Courts in a Global Shutdown: Can you Save Time and Money on Resolving Legal Disputes Post-Corona?

28 Jun 2020

As the global health crisis lingers, courts across the world continue to grapple with ongoing changes to legal proceedings: Israeli courts only resumed near-full activity recently; in the UK and US unprecedented laws have been passed to enable hearings and trials to continue via video link or even be postponed altogether. As lock-downs start to lift, judicial systems will start sifting through a backlog of cases from pre-pandemic days. Simultaneously a tsunami of litigation, related to the fallout of COVID-19, is expected to flood the courts.

Around the globe, disputes over contractual agreements, investments and business insurance policies, to name a few, are on the rise. International crises tend to spawn fraud, which in turn produces litigation. Innovation in Israel has been bubbling with countless new patents in response to the pandemic, but this increased activity may well lead to IP disputes further down the line. With lawsuits set to rise in a weakening global economy, many will be searching for a more cost and time-effective solution through Alternative Dispute Resolution (“ADR”), catalyzing an already growing trend for avoiding litigation where possible.

In contrast to ordinary courts, ADR is characteristically hailed for its flexibility and pragmatism. Cases resolved through ADR can theoretically continue with relative ease, speed and seamlessness, despite a global shutdown, thanks to ADR’s adaptation of procedural rules to suit parties. As the world emerges from lock-down at varying rates of speed, a dependency on communication technologies to administer justice is likely to continue – ADR methodologies are well-equipped to handle this, due to its longstanding utilisation of technology in previous years. Even in the pre-COVID era, most jurisdictions encouraged ADR before litigation in court – in the UK, for example, ADR is actively encouraged by Judges, and in Israel several laws have been passed which permit the national courts to transfer cases to mediators or arbitrators.

In Arbitration, disputing parties select an independent third party to consider the facts and set a final, binding decision out in writing.

A 2018 survey on international arbitration indicated that 97% of respondents preferred this method of dispute resolution to litigation or other forms of ADR. This is hardly surprising – among some of arbitration’s more enticing qualities are the ability to select the judge and confidentiality. Whilst the arbitral process is similar to that of a traditional court, arbitration offers a degree of control for disputing parties over proceedings, often ensuring that a resolution is reached more quickly and cheaply. However, it is the enforceability of arbitral directives in foreign jurisdictions which bolsters its popularity. The New York Convention renders arbitral awards immediately enforceable in 164 countries around the world, thus obviating the need to navigate often complex domestic regulations regarding foreign judgments. As Tomer Treger, dual qualified Israeli and English litigation lawyer, explains: “The choice of international arbitration, therefore, promises a good measure of procedural economy”.

Arbitration is overseen by institutions such as International Court of Arbitration of the International Chamber of Commerce (“ICC”) and the London Court of International Arbitration (“LCIA”). Although both sit in London, they are not bound strictly to English law. This poses a significant advantage to Israeli parties, as they are not disadvantaged by trying to resolve a dispute in another country’s unfamiliar legal system.

Mediation also leverages a third party (typically a lawyer) to negotiate. However, in this process, the mediator does not pass a judgement on a case. Rather, mediators assist parties with identifying issues, assessing options and agreeing on a suitable resolution to a dispute. This makes it especially constructive for those seeking a solution to an issue with a business partner without necessarily destroying the long term business relationship.

Those who want to assess the merits of their case before appearing in court should consider Early Neutral Evaluation (“ENE”). This consists of an independent evaluation given by an industry expert or a lawyer – often a retired judge which aims to predict the judgement which would be received in Court. A heavy dose of reality early in the process can assist in reaching a solution. Since this is often done on the basis of written submissions, it is highly suitable for parties still in lockdown.

Baseball – There are a host of other methods of ADR – one of the less well used being a baseball mediation, when each of the parties to a dispute gives the mediator a number. The closest to the figure the mediator thinks correct gets an award at the number they proposed.

With an increased reliance on video conferencing technologies and a need for disputes to be resolved with minimal time and money, the Coronavirus pandemic is likely to promote alternatives to litigation which may well outlast the crisis and permanently transform how we handle future disputes. Asserson Law Offices, a leading international arbitration firm in the commercial heart of Tel Aviv, has seen a surge in attempts to resolve disputes through ADR in England and expects these numbers to climb over the next months. Israel, a rising star in international business in an increasingly globalized climate, is likely to be impacted by the positive statistics on the uptake of ADR.

Article Written by: Syvanne Aloni