The International Olympic Committee officially postponed the 2020 Tokyo Olympics this week, with Japanese Prime Minister Shinzo Abe saying the games needed to be rescheduled to “a date far beyond 2020 but not later than summer 2021, to safeguard the health of the athletes, everybody involved in the Olympic Games and the international community.’
From a public health perspective, this is a no-brainer. Having 11,000 world-class athletes and millions of coaches, fans, staff and volunteers gather for a 5-week period in five months, flies in the face of what responsible leadership is currently telling citizens to avoid doing.
From a legal perspective, a postponed event of any size can cause a legal fallout that could take months to resolve. But a literal Olympic sized event, that could take years to resolve.
Jill Pilgrim, founder and managing attorney of Pilgrim & Associates in New York, has 36 years of experience in contract negotiations and dispute resolution. From 1998-2009, she served as general counsel for the Ladies Professional Golf Association (LPGA) and USA Track & Field (USATF), two Olympic sports that have given her a unique perspective into how the legal community will resolve this.
“In this situation, the contracts are going to contain force majeure clauses,” Pilgrim said. “Likely this coronavirus pandemic will fall within the force majure clause.”
A force majeure is a general matter that suspends the obligations of parties involved due to something that is out of their control. Citing examples from a force majeure clause from her career as general counsel of the LPGA, the standard provision will cover “an act of God, criminal act, war and epidemics.”
Pilgrim described the ripple effect that a postponed Olympics could present, considering planning is done as much as eight years in advance.
“There are airline and hotel reservations that now have to be changed to a future date that may already be booked,” she said. “Not to mention that an entire Olympic Village is built with living quarters, which people are going to move into once the games end.”
Considering that industries across every sector of the global economy have been impacted by the coronavirus pandemic, it is possible that any renegotiations and dispute resolutions will be amicable.
Insurance companies that sold policies to affected businesses might suffer the most losses, as Pilgrim notes event cancellation insurance can be quite expensive. For example, the International Olympic Committee paid $14 million to protect against canceling the 2016 Rio Olympics, according to media reports.
“These events that cause cancellations,” she said. “They’re once every 50-year type events.”