Supply Chain Disputes

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Supply Chain Disputes Expertise

Ireland is a global hub for world leaders in the pharmaceutical, technology, food and beverage, and engineering sectors. These sectors import products and materials into Ireland to manufacture goods here, often for onward export. They rely on highly sophisticated, multinational supply chains and logistics management as a critical aspect of the smooth functioning of their businesses.

Disruption to any part of a supply chain can have potentially catastrophic consequences on a business both from a cash flow and reputational perspective. In a geopolitical climate that is predictable only for its unpredictability, businesses are placing ever more focus on supply chain risk management.

We have a deep pool of talent and experience across a multidisciplinary team to help our clients navigate the complex legal landscape of supply chain disruption.

As trusted advisors, we ensure that our clients are best placed to mitigate the risks of supply chain disruption arising, and to deal with such disruption as efficiently as possible if it occurs.

Dispute Resolution

There are multiple causes of supply chain disruption.

Within an existing supply chain, these can include:

Miscommunication or breakdown in supplier relationships
Disputes around quality
Disagreements over payment terms
Price fluctuations
Inaccurate forecasting and planning
Supplier insolvency

There are several common external factors such as:

Economic issues, e.g. labour shortages, scarcity of or price increases in materials/inputs, inflationary pressure
Disruption to transportation
Changes to trade policy or regulation
Geopolitical issues
Climate change and natural disasters
Regional and global events such as pandemics
Supplier violations of ESG rules or sanctions
Cyber and other security attacks

Active and effective contract management is critical. Ensuring that contracts are up to date and accurately record the reality of the trading relationship, together with carrying out regular reviews and amendments to existing contracts, as required, is advisable to ensure that there is visibility on the clear terms that underpin every stage of your supply chain.

Disputes often flow from misunderstandings or misinterpretation of contract terms. Today’s supply chains involve increasingly complex and interconnected contractual arrangements between various stakeholders, often across multiple jurisdictions. To mitigate risks of disputes arising it is necessary to have clear, concise, accurate and up to date contractual documentation. Part of the risk mitigation strategy should be to regularly interrogate the issues such as the following:

Are compensation and remedies sufficiently clear and enforceable to enable the wronged party to enforce and recover its full economic loss?
If a dispute arises, how and where will it be resolved? This requires careful consideration – putting the time into considering jurisdiction clauses properly can save a lot of expense and time in the long run. It is important to ensure that disputes are resolved in a familiar and predictable jurisdiction – for example, consider that the same clause in a given contract may not be interpreted the same way by courts in different jurisdictions.
How will key risks like force majeure, price escalation, insolvency, liability and termination provisions are dealt with?

Quick resolution - if disputes arise, it is critical to address them head on and attempt resolution as soon as possible. The longer disputes go on, the greater the risk of higher damages and of parties adopting more entrenched positions, which ultimately will make resolution more difficult and costly.

Dispute resolution clauses – well thought out dispute resolution clauses can assist in quickly resolving disputes, for example by binding the parties to a formal escalation procedure within defined timeframes, expert determination or alternative dispute resolution before either party can issue formal proceedings. Another key issue to consider is how agreements, decisions or orders emanating from such dispute resolution processes are to be enforced.

Consider alternative dispute resolution – in appropriate circumstances, mediation can be an extremely effective, quick mechanism for dispute resolution and relationship preservation, and at a fraction of the cost of litigation.

Acting for an Irish domiciled producer and importer of fine artisanal foods in relation to a pricing dispute with its key Italian domiciled supplier, and in relation to claims around exclusivity of dealing in the context of our client’s third-party distribution agreements.
Representing a large multinational distributor of medical devices in relation to a supply chain dispute with its Asian domiciled subsidiary, to include urgently advising it in relation to mitigating the risk of third-party claims arising because of its inability to onward supply its product as a direct result of the matters in dispute.
Advising a manufacturer of specialist packaging for medical device and pharmaceutical in relation to a payments dispute with a non-EU domiciled supplier, in circumstances where that supplier threatened to cease supply of a critical component to our client’s key product.
Acting for a pharmaceutical group in relation to a supply chain dispute which arose in relation to breach of warranty claim arising on its acquisition of a clinical diagnostics business.