Partners at Hogan Lovells, a law firm with headquarters in London, have advised businesses to be prepared for possible litigation in the aftermath of the COVID-19 pandemic around the world.
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Noting that the pandemic had occasioned great disruptions in commerce and contractual obligations around the world, the lawyers advised companies to maintain best practices in terms of document retention, keeping a good track record of chain of events and decision making trees.
These, they said, would come in handy as evidence in the event of litigation in the aftermath of the COVID-19 pandemic.
The lawyers – Valerie Kenyon, Christelle Coslin and Jamie Rogers – gave this advice in a joint opinion piece, titled, “COVID-19: A quick recap of key considerations for products companies.”
While noting that the exact length and severity of the COVID-19 crisis remained uncertain, the lawyers said one of the things that businesses, particularly products companies, must do was to “be prepared for potential litigation risks down the road.”
They said, “In times of crisis, thinking ahead is challenging, yet with deteriorated market conditions, one can expect a surge in both supply chain and product litigation.
“Do your best efforts to maintain best practices in terms of document retention, keeping a good track record of chain of events and decision making trees as this evidence may become useful later.
“Your usual practices to prevent and mitigate litigations risks may need to be adapted in a world where a number of employees are working from home.”
Apart from this, the lawyers said companies might also need to review their insurance policies to responds to COVID-19-related losses; as well as review their “force majeure clauses.”
They said, “Force majeure clauses offer relief to a party, should an event occur which is out of the party’s reasonable control and which prevents the party from performing its contractual obligations. Check your clause for relevant references, such as to ‘disease’ or ‘pandemic’, or for generic sweeper language. A force majeure clause will be judged on its terms and the specific context it becomes applicable to COVID-19 or its ramifications may qualify.”
They further advised, “Keep your eye on product safety. This could be a more challenging time to focus on information in the supply chain about product safety and related issues, but cutting corners creates risk. Placing unsafe products on the market can lead to regulatory action and possible fines, litigation risk, criminal sanctions and reputational harm that is hard to fix.
“There are likely to be difficulties within the supply chain and it may be necessary to switch suppliers. Take the time to conduct appropriate due diligence on anyone you plan to work with. If you wouldn’t have worked with the supplier before COVID-19, make sure you’re working with the supplier for all the right reasons now.
“Is your business considering manufacturing or selling a new product range for the first time, or moving into new markets? At this stage in time, the usual product due diligence and safety standards apply – as do the potential product liability risks.
“Disrupted supply chains may impact your ability to meet statutory and contractual obligations to consumers and other end-users. Consider how you plan to meet this challenge and whether suitable alternatives can be put in place.
“Be pragmatic. This may be the time for tough, but mutually beneficial, conversations. Review your supply chain contracts to assess the level of risk. If a commercial relationship is under strain, open a constructive dialogue about how to manage the situation.”
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