Find an Arbitrator

Two Arbitrators Address the COVID Pandemic as a Force Majuere Event

by John Curley

October 2020

John Curley
This article first appeared on the Arbitration Matters Blog, here.
Two recent awards involve questions concerning the existence or impact of the Coronavirus as a force majeure event, potentially excusing claimed violation of the parties' agreements.
In American Association of University Professors - University of Akron Chapter, Arbitrator Jack Buettner concluded that the force majeure clause privileged the University's actions when it implemented a "retrenchment."

The effects of the COVID pandemic are certainly unforeseen and surely out of anyone’s control. The number of cases fluctuates from day to day, week to week, and location to location sending counties in Ohio from a Level 2, Orange, to a Level 3, Red, while hopefully avoiding the Level 4 designation which signifies severe exposure and spread and could result in another state of emergency. Cases of COVID on college campuses have been cited as one of the factors that have pushed counties into the Red zone. [Bamforth, E. (2020, September 4) Plain Dealer, p. A5.] The pandemic is affecting colleges in general as cited in Kiplinger’s Personal Finance. (5 Ways College is Changing. 9/2020, p. 44) There is lower enrollment as families struggle through the recession, tighter budgets as student revenue decreases, federal and state funding cuts, and declining government budgets. In an effort to balance college budgets, smaller staffs are being seen as faculty is laid off or furloughed. Circumstances remain in flux as the state grapples with the disease and its spread. COVID is, indeed, a catastrophic event, and it’s resulting impacts are unforeseeable and beyond the University’s control.

Having established that a force majeure did, indeed, exist, the University needed to satisfy the requirements in Section 1(A)  ...

Arbitrator Buettner concluded further that the pandemic did not relieve the University from complying with certain other obligations of the contract "which are feasible and possible to implement since there is no immediate financial impact  or time frame."
In Alaska Airlines, Inc. and Aircraft Maintenance Fraternal Association, Local 32 a panel chaired by Arbitrator Frederic Horowitz addressed a dispute that "arose as the product of economic disruption caused by the global COVID pandemic plaguing the travel industry." The parties disagreed about the scope of certain job security language in their agreement.
Rejecting the position of the Company, the panel concluded that the applicable provisions "confirms the plain language of the parties' Agreement [and] supports the position of the Union."

    The parties are seeking expedited resolution from the System Board of good faith yet irreconcilable differences about the application of force majeure provisions in Paragraph 2. of LOA #9 to the job security provisions in Paragraph 4. of that LOA as well as to the impact if any of those protections on the seniority provisions in Article 9 K.2. of the Agreement. When negotiating the Transition Agreement in 2019, neither party anticipated the massive economic disruptions caused by the global pandemic in 2020. The System Board in these circumstances cannot attempt to presume or conjure what the bargaining parties would have done had the subject been raised in negotiations. Rather, the Board can only interpret and apply the existing contract provisions in a manner consistent with accepted standards of contract construction in light of the unique facts presented.

   In Issue No. 1., the evidence supports a finding the job security provisions in Paragraph 4. of LOA #9 are not subject to the force majeure provisions in Paragraph 2. based on the plain language of those provisions and the absence of a mutual intent manifested otherwise during bargaining.




John Curley is an arbitrator and mediator based in Mt Pleasant, SC. Since 2011 he has been a full time neutral. Before that he was a labor attorney for AT&T and a field attorney at the NLRB. He's on the AAA Labor Panel and the FINRA panel of arbitrators, and he is a Fellow of the College of Labor and Employment Lawyers (inducted 2105). He's admitted to the bar in New Jersey, Texas and California (inactive).  You can follow him on twitter @JohnHCurley.


Additional articles by John Curley
The views expressed by authors are their own and do not necessarily reflect the views of Resourceful Internet Solutions, Inc., or of reviewing editors.

Arbitration News

Which country's laws govern an arbitration agreement?Where parties have chosen to arbitrate their disputes, but have not specified the law of the contract or arbitration agreement, what laws apply to the arbitration agreement? ...more
Challenges And Opportunities Of Virtual Hearings In International ArbitrationCOVID-19 social distancing measures and travel restrictions have particularly affected certain aspects of arbitral proceedings. ...more
To Hold Police Accountable, Ax the Arbitrators Communities should have the power to fire abusive officers. But that power often rests with an obscure group of unelected labor arbitrators. ...more
English Supreme Court decides approach to determining governing law of arbitration agreementOn 9 October 2020, the English Supreme Court handed down its judgment in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC ...more
Virtual Reality Of Arbitration Hearings Due to uncertainties created by the pandemic, virtual hearings will continue to remain the default option in particular in domestic, international and cross border proceedings, in which in-person appeara ...more
Affirmed: “Cluttered” Website Means No Agreement To Arbitrate Clean up that website!! “Clutter” may obscure and negate attempts to highlight terms and conditions that require arbitration of Telephone Consumer Protection Act (TCP ...more
Court-Ordered Non-binding Arbitration: A Way to Move Your Case Forward During COVID This article explores an alternative for civil trial attorneys to utilize court-ordered, nonbinding arbitr ...more
Whether And How To Compel Remote ArbitrationThis article discusses the complex issue of whether and how an arbitrator can compel parties to participate in remote arbitration hearings amid the novel coronavirus pandemic. ...more
New Jersey Arbitration Agreements Need Not Designate a Specific Arbitrator or “Arbitral Forum” to be EnforceableIn Flanzman v. Jenny Craig, Inc., the New Jersey Supreme Court reversed the Appellate Division and held that an arbitration ag ...more
Here’s why pandemic is increasing mediation and arbitration casesAccording to legal experts, there is one major advantage to taking your business dispute to mediation or arbitration instead of a jury trial. ...more