Brattle Principal Adoria Lim and Associate Jack Turner have authored an article on the types of litigation that may arise as a result of the COVID-19 outbreak. The authors note that while we are already seeing the devastating human cost of COVID-19, its lasting economic impact, and the ensuing litigation, will take time to fully emerge. However, there are clues as to where commercial business litigation may start in the first instance.
One of the very first signs of global economic stress was the disruption in global supply chains. These disruptions could result in breach of supply contract claims by aggrieved purchasers.
The mounting losses for businesses as a result of supply chain disruptions and reduced economic activity could mean that some businesses will look to their insurance companies for coverage of business interruption losses, which will likely lead to coverage disputes.
As for the companies that are unable to sustain themselves during this period of business interruption and economic stress, they will likely default on their corporate debt or file for bankruptcy. Both of those scenarios can generate lawsuits.
The stock market, which has begun to feel the effects of the global economic stress, has also become extremely volatile. Stock market declines generally lead to investor losses, which can in turn lead to investor lawsuits.
The full economic impact of COVID-19 still remains to be seen, but a worldwide recession would inevitably lead to many different areas of litigation.