RESOLVING DISPUTES ARISING OUT OF SUPPLY CHAIN DISRUPTION
CD: Could you provide an overview of how supply chains have been impacted by the COVID-19 pandemic and related economic conditions?
Harrison: Following decades of increased globalisation, the coronavirus (COVID-19) pandemic has had an unprecedented impact on global supply chains. Widespread government lockdowns and national restrictions on movement, frequently implemented across jurisdictions at different stages depending on the spread of COVID-19 outbreaks, have resulted in depleted workforces and output of manufacturing and production. Critical markets such as China, upon which many global supply networks rely, have been particularly hit, causing further backlog to supply chains. This has, in turn, caused major disruption to the delivery and transportation of goods and services – both in terms of availability of supplies, quantities and timing – impacting the performance of contracts across sectors and jurisdictions. Businesses have therefore been forced to adapt and navigate a range of challenges to mitigate their losses in the short term and implement protocols to improve resilience in the long term.
Dowling: The primary impacts we are seeing are delays in delivery and production up and down the supply chain, particularly in sectors heavily dependent on foreign markets and international shipping. We are also seeing disputes over quality, quantity and payment. Unfortunately, the COVID-19 pandemic has had a disproportionate impact in some critical markets, due to fewer resources to stop the spread, such as vaccinating and treating workers. But most of all, it has become evident just how vulnerable ‘just-in-time’ supply chains can be. It has been a bit of a wakeup call in terms of the need to build in more resilience. The patterns and impacts we are seeing are also giving us a preview of the sorts of serious disruptions that may arise as the physical and transitional impacts of climate change on supply chains become more pervasive.
Jan-Mar 2022 issue
Ashurst
Boies Schiller Flexner LLP
Norton Rose Fulbright Canada LLP
Walker Morris LLP