International Commercial Arbitration in the Aftermath of the Pandemic – A Law & Economics Account

– Carolina Arlota

This essay researches the main consequences of the pandemic caused by the COVID-19 virus in the field of international commercial arbitration through an economic analysis of law. This essay conceptualizes international commercial arbitration as an alternative mechanism for dispute resolution, focusing on how the pandemic may modify the incentives for parties in a different set of circumstances.

In such a context, this essay discusses how the pandemic may impact current contracts which are silent regarding international arbitration agreements. It further contrasts this legal scenario with the one in which parties have already contemplated international commercial arbitration as a final and binding dispute resolution mechanism in their original contract. In addition, this essay discusses which incentives parties may have to include arbitration agreements in their future contracts after the pandemic and related considerations on force majeure (and general clauses on excuse of performance). This essay concludes that, in the aftermath of the COVID-19 pandemic (and it inducing an increased likelihood for contracts to be cancelled/excused) and related uncertainties in different court systems, it is likely that international commercial arbitration will be even more popular among international business parties as a choice for resolving international legal disputes.

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