We are aware of the complexity of the current state of affairs regarding COVID-19 (coronavirus) and its impact on the world of business. The exceptional nature of the matter has already brought about the approval of Royal Decree Law 6/2020, of 10 March, adopting a series of urgent measures in the area of the economy and public health protection. More legal measures are expected in the coming days, in several areas.
In response to the requests and queries from many of our clients and with the aim of supporting them through the different scenarios they may find themselves in as a result of this exceptional state of affairs, we have created a multidisciplinary team of lawyers who, based on the experience acquired throughout our offices worldwide since the beginning of this health crisis, are in a position to provide our clients with swift, coordinated advice on the range of problems that may arise.
Areas identified as critical are the following:
I. Labour and Employment
- Preventive and organisational measures in service provision and remote working. Analysis and preparation of policies on preventive measures, health and hygiene and recommendations during service provision; infection management policies; employee data handing when dealing with medical issues; restrictions on travel and attendance at events; and remote working and confidentiality policies.
- Failure to come to work and medical leave. Analysis of employees' rights not to come to work - including cases of school closures - processing and handling medical leave and coordinating with risk prevention services.
- Total or partial suspension of business activity. Employee reorganizations and adjustments to meet business needs (total or partial suspension of activity due to temporary layoffs); termination of contracts; reductions and adjustments to working hours; use of rest time; hours bank; putting in place leave arrangements.
- Ongoing updates. Ongoing advice to adapt potential new legal measures adopted in labour and employment law to the specific needs companies have.
II. Commercial and Corporate
- Termination and suspension of contracts. Concurrence of force majeure, failure to execute a contracts not attributable to the parties or rebus sic stantibus clause in commercial agreements, including service, works and supply agreements.
- Supply chain. Impact of the current situation on the supply chain and adjustment measures.
- Decisions made by Public Administrations. Impact of regulations and decisions adopted by Public Administrations on private agreements.
- M&A. Advice on sales contracts, joint ventures, etc., in order to regulate the impact of COVID-19 on the structure of the transaction appropriately (R&W, conditions precedent or resolutory, transitional arrangements, etc.).
- Material Adverse Change (MAC). Potential application of MAC clauses as a result of COVID-19 in contractual structures, namely financial agreements.
- Accession Agreements. Applicable law (in order to analyse force majeure or similar concepts) in accession agreements between residents of different countries (without contractual provisions on applicable law).
- Consumer regulations. Application and impact of consumer regulations in contractual decisions stemming directly or indirectly from the current situation.
- Corporate governance. Viability of and measures related to holding Shareholders or Board Members' Meetings or other governing body meetings of trading companies remotely.
- Data protection. Issues that may affect personal data processing when requesting medical information or similar.
- Compliance. Potential call for exceptional circumstances that may justify failure to comply fully with legal obligations.
- Community law. Analysis of how Community law can be applied to potential restrictions on the free movement of persons, goods and services on grounds related to COVID-19.
- Clinical trials. Delays or interruption of clinical trials and subsequent delays in new drug development timeframes: difficulties in keeping trials going if patients are placed in quarantine; how to have the product under trial delivered to them and carry out remote monitoring to avoid having to interrupt trials; delays in bringing patients into new clinical trials in areas affected by lockdown.
- Competition. Introduction of restrictions on parallel imports of goods into the EU. Increased prices and collusive practices due to product shortages.
- Regulatory. Delays in necessary inspections for manufacturing or product approval or issuance of export certificates. Consequences of employees' impact on production, preventing product contamination, which could lead to plant closures and product recalls. Opportunities in speeding up the approval of medicines and medical devices to diagnose or treat COVID-19, but implications on product liability.
- Contracts with Public Administrations. Analysis of clauses concerning provision of services, especially those relating to suspending contracts, non-compliance with obligations and force majeure. Consider the possibility of amending the contract due to the existence of exceptional circumstances (e.g. price increases, deadlines, changes to the service or supply, etc.).
- Procedures with Public Administrations. Analysis of the evidence justifying potential non-compliance or delays by the authorities, and requests for the extension of deadlines.
- Liability of Public Administrations. Analysis of whether in a specific case, the activity of Public Administrations (or failure to comply with obligations) may lead to liability and be subject to compensation.
- Orders to close premises or stop public gatherings. Analysis of the authority of the body issuing the order and its grounds, and recording the circumstances and costs involved, in order to examine potential claims for damages.
- Licenses and administrative authorisations. Analysis of the deadlines set for performing works and activities and, where appropriate, requesting deferment of conditions or compliance with deadlines, together with the deadlines and validity of administrative silence.
- Administrative appeals. Check, where applicable, whether regional regulations have been issued declaring non-working days or extraordinary deadlines for filing administrative appeals.
IV. Dispute Resolution
- Legal or arbitration proceedings, defensive measures due to force majeure, rebus sic stantibus, material adverse change, extraordinary change of circumstances. Analysis of legal or arbitration proceedings or defensive measures due to force majeure, material adverse change or extraordinary change of circumstances in each case.
- Legal or arbitration proceedings, defensive measures to amend, renegotiate, suspend or terminate agreements. Analysis of legal or arbitration proceedings or defensive measures to amend, renegotiate, suspend or terminate agreements and the specific consequences in each case.
- Legal or arbitration proceedings, defensive measures due to impacts on productive processes. Analysis of legal or arbitration proceedings or defensive measures due to the impact of the current crisis on production processes or ongoing operations that rely on successive agreements (leases, commercial, supply or other agreements).
- Insurance. Analysis of measures and actions related to insurance for damages arising from the concurrent health crisis.
- Distress situations. Specific analysis of legal alternatives to distress situations caused by the impact on the market and operations of the health crisis that has arisen, including, if necessary, preparing strategies and actions to take in the area of bankruptcy.
- Liability for directors and managers. Analysis of the best courses of action to cover and protect the liabilities of directors and managers in this context.
- Corporation tax. Review of the transfer pricing policy to evaluate the circumstances that may arise, such as (i) potential variation in the analysis of functions, assets and risks between group companies; (ii) potential variation in value creation involving intangibles ("DEMPE" analysis) and (iii) potential variation in the assumption of losses not originally foreseen by a group company.
- Value Added Tax. Analysis of compensation for termination of contracts (e.g. early cancellation or "no-shows") and whether these fall within the scope of the tax or are treated as non-taxable compensation.
- Assistance in handling debt rescheduling and tax settlements.
- Ongoing updates. Ongoing advice to adapt potential new legal measures adopted in tax law to the specific needs companies have.
Further useful materials
Click here for access to all the resources complied by Baker McKenzie in relation to COVID-19.
Please do not hesitate to contact us. The Baker McKenzie team will be at your disposal immediately.