INTERNATIONAL ARBITRATION 1/3LY
MARKET COMMENTARY 11
CLYDE & CO ’ S TOP T EN LEGAL T IP S : DI SPUT E RESOLUT ION
The financial pressures caused by the low oil price has led to a significant increase in the number of disputes in the industry, at all levels in the contractual chain. Set out below are some key points to keep in mind when considering litigation/arbitration.
01 PRE CONTRACT – carry out extensive credit checks and, if possible, obtain security 02 BE V IGIL ANT – keep a constant eye on unpaid 03 KEEP C AREFUL RECORDS – document all phone calls and meetings and preserve all emails and documents 04 REVIEW CONTRACT TERMINATION PROVISIONS – in particular termination for cause – and follow the contractual notification process to the letter 05 DON ’ T DEL AY – consider the choice of law and dispute resolution clauses and escalate the dispute resolution process sooner rather than later 06 ADR – make sure you closely follow any contractual alternative dispute resolution procedures before commencing litigation/arbitration invoices and the changing financial status of the debtor
07 LOOK C AREFULLY AT ENFOR CEMENT BEFORE SPENDING A LOT OF MONE Y ON L I T IGAT ION / 08 IF THE COUNTERPART Y I S IN SERIOUS F INANCI AL DIFF I CULT Y, L I T IGAT ION/ARBI TRAT ION SHOULD BE COMMENCED A S QUI CKLY A S POSS IBLE – it may be possible to obtain a judgment in default and enforce that (eg by a third party debt order or a charge over property or shares). Once enforcement is complete this may allow you to keep the recovery, as a secured creditor. However, if you do not complete enforcement before an insolvency process commences, you are usually part of the general body of unsecured creditors (and may make only a minimal recovery) ARBI TRAT ION – there is nothing worse than a Pyrrhic victory 09 CONS IDER US ING EXPEDI TED PROCEDURES WI THIN THE RELE VANT ARBI TRAT ION RULES OR RULES OF COURT – consider interim remedies, such as freezing of assets and security for costs 10 MANAGE THE LITIGATION/ARBITRATION CAREFULLY – through cost control and consideration of innovative litigation funding, such as third party funding or insurance backed products. Don’t throw good money after bad
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