Resolving Business Disputes Arising from the Coronavirus (COVID-19) Crisis

The coronavirus pandemic has killed tens of thousands of Americans and disrupted every area of our society. In the business community, disruption is the “new normal”, and it is likely to be this way for quite some time. 

Nonessential businesses have been forced to temporarily close until we get through the worst of this crisis, and some of those that remain open have seen a spike in business if they sell essential supplies or provide essential services. Whatever industry you are in, there is no business that has not been impacted in some way by COVID-19.

One of numerous things we have realized (or had to pay more attention to) is just how interconnected our economy is. There is a massive supply chain with stakeholders at each link all relying on each other to maintain their viability. And when one part of the supply chain is disrupted, everyone else in the chain is affected.

Take, for example, the restaurant business. When a restaurant that had every expectation of being open and fully operational for the foreseeable future is forced to close, they suddenly have to cancel orders from food suppliers, who in turn have to cancel orders from farmers or wherever they are sourcing their food from. The same holds true for drinks, which often come from vendors who refill their soda machines.

A closed restaurant will also have to furlough their staff, putting countless employees out of work. They may also have a cooler full of food that will either spoil or they will have to give away unless they are able to quickly adapt their model to provide takeout and delivery service. 

These financial challenges will make it difficult to pay rent or mortgage payments if they own the building, as well as utilities and other monthly obligations. Consequently, those who count on receiving those payments will take a financial hit. Unfortunately, business interruption insurance policies did not account for a public health emergency like COVID-19, so most business owners are finding out that their insurer is not going to cover them for this pandemic.

How to Resolve COVID-19-Related Business Disputes

Massive disruptions to the normal flow of business have created unprecedented challenges for owners and managers to deal with. In many cases, it is simply impossible to meet contractual obligations from agreements that were signed long before anyone ever imagined that this type of crisis would arise. This has resulted in numerous contract disputes among parties who regularly do business together. 

For those involved in a business dispute, legal action is one possible option. But is this really a good way to handle issues that were created by COVID-19? Sure, you might have an ironclad contract and solid legal standing to compel the other party to pay, but is it really a good idea to bring them to court?

Even if the court rules in your favor and you win a monetary judgment for breach of contract, for example, it may not be too easy to collect what you are owed under these circumstances. A business that is closed or operating at a fraction of full capacity is not likely to have ample financial resources on hand to satisfy a legal judgment.

In addition to financial considerations, you need to also take into account the business relationship you have with the other party. If you have a long-standing relationship with someone and they have always fulfilled their contractual obligations in the past, it would most likely be much better for everyone if you try to work with them during this difficult time. And this is where business mediation can be very helpful.

Whether it is a contractual dispute, a dispute over insurance coverage, a dispute over a canceled or rescheduled project, complications from a supply chain disruption, or any other business relationship challenge, mediation can provide a format to resolve the dispute amicably. 

With the guidance of a neutral, third-party mediator, mediation participants meet to discuss the issues at hand and work together to come up with a peaceable and practical resolution. The process is entirely voluntary, and no agreement can be valid unless all parties sign onto it. When the process is successful and a resolution is agreed to, participants are able to avoid costly and protracted litigation while preserving important business relationships that will be vital for their success long after the COVID-19 crisis is behind us. 

AMS is Here When you Need Us

If you are involved in any type of business dispute arising from the coronavirus pandemic, AMS is here to help. Our business mediator Carmela DeNicola has extensive experience working with organizations of all types and sizes, and she has an in-depth understanding of how businesses operate, the challenges they face, and the best ways to resolve conflicts that may arise. AMS has also provided virtual mediation through teleconferencing and videoconferencing for many years now, and we offer remote sessions and extended hours to help accommodate schedule disruptions that have been caused by COVID-19.

Contact us by phone or email for your free consultation to discuss your needs. We look forward to serving you!