The DIS Spring Conference and its traditional Gala Dinner, held in Munich on 2/3 May 2023 gathered more than 300 participants
Rouven F. Bodenheimer (DIS) introduced the conference's theme – Pandemic, war and inflation in arbitration – and expressed gratitude to Karl Pörnbacher (Hogan Lovells) and Jan K. Schäfer (King & Spalding) for their contributions to the conference's organization.
Subsequently Mr Pörnbacher provided a brief overview of the recent crises and Mr Schäfer outlined the three main topics of the conference: the disruption of the supply chain from the business’s perspective as well as substantive and procedural law aspects therein.
The first panel, moderated by Annett Kuhli-Spatschek (Kantenwein), focused on the business’s perspective on supply chain disruptions. Panelists included Max Asmuß (RWE Offshore Wind), Jörg Strümpe (Sandoz) and Djalma Goncalves (Robert Bosch), all three provided valuable insights into their respective industries.
Mr Asmuß vividly portrayed the challenges faced by the offshore industry, which extend beyond the general market dynamics, as the offshore wind sector encounters unique obstacles due to its positive growth outlook and technological advancements. Potential strategies for mitigating these challenges include adopting more global supply chains, establishing strategic partnerships with key suppliers, industrializing service and maintenance operations and diversifying the supplier base.
Mr Strümpe then shed light on the challenges confronted by pharmaceutical companies in their supply chains during the recent crises. He emphasized that – in contrast to earlier crises, such as the Covid pandemic, which were managed through amicable collaboration with suppliers – the recent rise in inflation has made suppliers more litigious.
Mr Goncalves shared the perspective of the automotive industry, which experienced significant disruptions caused by the chip crisis. Acknowledging that crises have become the "new normal", he emphasized the need for a more resilient supply chain and the implementation of new structures to ensure operational continuity.
The ensuing discussion revolved around strategies to enhance supply chain robustness, including the negotiation tactics, the importance of effective communication and supplier management. The panelists unanimously agreed that achieving a more flexible sourcing strategy to reduce dependency from suppliers is an ambitious goal, requiring substantial timeframes and investments.
The second panel, moderated by Franz T. Schwarz (Wilmer Hale), focused on the impact of crises and disruptions on contracts under different substantive laws.
Susanne Schwalb (CMS Hasche Sigle), Dorothee Schramm (independent arbitrator) and James H. Boykin (Hughes Hubbard & Reed) highlighted that in Germany, Switzerland and the US, particularly long-term supply agreements, often provide for clauses for force majeure and/or hardship. Klaus Peter Berger (University of Cologne) contributed a transnational law viewpoint and referenced the ICC model clauses on hardship and force majeure, which were – quite coincidently – published in March 2020.
The panellists emphasized that the pandemic and Russia's invasion of Ukraine, in themselves, do not automatically constitute force majeure or hardships. Instead, it is essential to evaluate the impact of these events on each individual contract since the application of force majeure and hardship clauses, despite their similar wording, depends on the unique circumstances of the case.
Notable differences among jurisdictions emerged when the panelists discussed the consequences of crises and disruptions on contracts that do not include such clauses. Ms Schwalb explained that German law expressly allows contracting parties to seek contract adaptation before courts or arbitral tribunals under specific conditions, and Ms Schramm concurred that Swiss law also impliedly accommodates such mechanism. In contrast, Mr Boykin reported that according to US law the affected party may only be released from contractual obligations under the doctrines of frustration and impracticability.
Before lunch break, Mr Bodenheimer thanked Elizabeth Hincapié (Toshiba Railway Europe), Moritz Schmitt (rothorn legal) and Johanna Büstgens (Hanefeld) for their valuable contributions as DIS40 national coordinators during their three-year term.
The third panel, moderated by Anna Masser (Allen & Overy), commenced with a presentation of the draft DIS Supplementary Rules for Third-party Notices (Ergänzende Regeln für Streitverkündungen, "Draft DIS-ERS") by Christian Borris (Borris Hennecke Kneisel) and David Quinke (Gleiss Lutz), the co-chairs of the corresponding DIS working group.
Borris pointed out the need for consistent resolution of legal questions within a supply chain, as their determination in isolated legal relationships without an extension of res judicata hampers procedural efficiency and risks inconsistent arbitral awards. Third-party notices, as foreseen by Germany procedural law (Sections 72–74 ZPO) are missing in German arbitration law, and inclusion of third parties can often not be achieved under existing rules on multi-party arbitrations (e.g. Art. 19 DIS Rules).
The Draft DIS-ERS address this issue by enabling parties to consent to the applicability of the DIS-ERS – and therefore the possibility and effect of a third-party notice – in the contract(s), i.e. before a dispute arises, akin to the concept of the DIS Supplementary Rules for Corporate Disputes (DIS-ERGeS). Mr Quinke explained that such an agreement would allow a decision in an initial arbitration conducted under the DIS-ERS to have a binding effect on subsequent disputes involving the noticed third party.
The introduction of the Draft DIS-ERS generated significant interest among the audience. The ensuing discussion focused on the cost implications of a notice and whether challenges to its validity should be raised in the initial arbitral proceedings or in the subsequent dispute. The panel favored an early objection to avoid unnecessary proceedings but entrusted the DIS to reject notices that clearly lack consent of the noticed party.
Ralf Hafner (Advant Beiten) then delivered a presentation on arbitration agreements in global supply chains. He emphasized the complexity of supply chain arbitrations and the various procedural challenges they present, such as applying an arbitration clause in a framework agreement to orders made under that agreement by different affiliates or subcontractors in different jurisdictions. Mr Hafner concluded that it is crucial to consider the circumstances in the arbitration and choice of law agreements and to avoid conflicting dispute resolution mechanisms within the different links of the supply chain.
The panel concluded with Sibylle Schumacher (Pinsent Masons) providing insights into interim relief in arbitration. While emergency arbitration (as e.g. provided for in the ICC Rules but not in the DIS Rules) has gained some traction, it has not become as prevalent as expected, considering the recent disruptions to supply chains. Ms Schumacher attributed this to the duration of emergency arbitrator proceedings and the complexity involved in enforcing such decisions. She proposed the establishment of an adjudicator or an adjudication board for the duration of a supply contract to render faster and cost-effective interim decisions acceptable to both parties.
Stefan Vogenauer (Max Planck Institute for Legal History and Legal Theory) summarized this year's DIS Spring Conference by again emphasizing the overarching theme of disruption. He astutely noted that disruption has been a recurring phenomenon and will continue to be in our unpredictable world. Yet, what remains constant is the impressive capacity of the law – as demonstrated throughout the insightful panel discussions – to adeptly address these disruptions. Ramona Schardt (DIS) concluded the event by extending an invitation for the upcoming DIS Autumn Conference 2023, scheduled to take place in Berlin on 13/14 September 2023.
Sophie Thiel/Moritz Voit