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27 March 2020

Cross-border practice and COVID-19: global lockdowns, force majeure and digital practice

Published on 27 March 2020

The unprecedented disruption brought on by the coronavirus is affecting every business and sector. With international borders closing and entire workforces at a standstill, new legal issues are emerging. We chat with The College of Law’s cross-border practice expert,
Martin Polaine, about the challenges and opportunities that international lawyers will now be facing.

How is the coronavirus impacting lawyers in cross-border practice?

On a practical level for lawyers themselves, the biggest and most immediate impacts will be due to travel restrictions and the entry bans that many countries have imposed.

Many legal activities – such as international arbitration and dispute resolution – are highly dependent on face-to-face meetings.

Singapore and Hong Kong are large hubs for arbitration hearings. It’s common to have a panel of arbitrators, all from different countries, arrive in one of these hubs to settle a dispute.

Yes, we can do a lot of preliminary work for these cases via videoconference. But, when it comes to evidence-taking and hearings themselves, you lose something through this medium. It doesn’t have the same immediacy as face-to-face interactions with witnesses or tribunals. And it’s a lot more difficult to establish rapport.

So it’s inevitable that substantive hearings will still need key players in the same room.

Will cross-border practice lawyers face shrinking workloads if they can’t travel?

Right now, everything is changing from one day to the next. It’s only over the last two weeks that we’ve started seeing travel bans and slashed airline schedules.

Things are too unpredictable to make generalisations at this point. However, there is still a significant amount of work being done. Currently, many cross-border lawyers are providing advice and consultation – and these services don’t need to be conducted in person.

Will new types of work emerge for cross-border lawyers due to the global disruption?

Undoubtedly. In many countries we’re seeing large portions of the workforce go offline from either being sick, quarantined or in self-isolation. And as we know, some entire countries are in lockdown.

This means an astounding number of businesses and organisations won’t be able to deliver on their contracts.

The big debate that’s going to take place will surround a concept known as force majeure – which literally means ‘superior force’. It’s a principle often reflected by a clause in a contract.

The clause has the effect of saying ‘If something completely unexpected and out of my control happens, there’s scope for me to be released out of my contractual obligations’.

Can you give an example of where we might see force majeure come into play?

A lot of industries depend on Chinese manufacturers for components of their work. For instance, an Australian construction company might rely on Chinese materials to complete their projects.

As you can imagine, this Chinese manufacturer may be unable to meet their contractual supply deadlines (perhaps because their workforce is not operational or there are exporting and importing restrictions in place).

This would place the Australian company in the unfortunate position of being unable to deliver their client projects.

A force majeure clause will likely be relied on by both the Chinese manufacturer (in its contract with the construction company) – and the construction company (in its contract with the end-client).

If one of the parties is able to rely on the clause successfully, their contractual obligations will be suspended, extended or even terminated.

How easy is it to resolve cases with a force majeure clause?

It all comes down to how the force majeure is defined in the contract. This means that different contracts have different obligations.

Some contracts have an inclusive definition, which gives examples of what sort of events are covered. Others will have an all-encompassing clause that spells out a closed list – which could include war, natural disasters and pandemics.

A country’s legal system also matters. For common law countries like Australia, NZ and Singapore don’t have a legal definition of force majeure. Whereas in civil law countries like China, it is defined by law.

This means there could be a lot of work involved in resolving these disputes. It will largely depend on whether parties are able to take a common-sense view in moving forward.

Given the situation, what’s your advice to legal graduates considering an international career?

We are in an unprecedented time of uncertainty. The global forces will impact every industry.

That said, there is still – and will continue to be – an overwhelming need for cross-border lawyers. The complicated issues arising from this large-scale disruption will keep lawyers very busy.

What’s more, the world is becoming increasingly small and legal practice increasingly transnational. Cross-border trade and activity will continue to grow over time, with or without this pandemic.

It’s a very exciting area for young lawyers who are looking to build up a specialisation.

What skills make a lawyer suited to cross-border work?

A tolerance to jetlag! But in all seriousness, a love of and willingness to travel is probably a great start. I have travelled to more than 80 countries over my career so far.

In cross-border practice, you will be working across many countries with different common and civil law traditions. You will also be working with international colleagues who have different ethics and codes of conduct. So it requires people who are interested in diverse cultures and can be flexible in their approach to cross-cultural issues.

It’s a great field if you want to work with different societies and legal systems – and you’re not afraid to be in a complicated arena where these two issues intersect.

Want to learn more about a career in cross-border practice?

To learn more about cross-border arbitration, watch our ‘How to become an international arbitration lawyer in Asia’ webinar.

The College of Law offers a Graduate Certificate in Cross-border Transactions with a focus on cross-border Mergers & Acquisitions, and cross-border contracts. Find out more here.

About Martin Polaine

Based in London, Martin is a practising barrister at Brooke Chambers and a Director of Amicus Legal Consultants. He also teaches and lectures at The College of Law as an international law expert – and has written a number of modules for our Master of Law courses.

His specialisations include international trade, international arbitration and cross-border issues.