Dispute Resolution - BIMCO Promotes Mediation

January 2002

BIMCO Press Release of 4 January 2002:

BIMCO Promotes Use Of Mediation With New Dispute Resolution Clause

In a move designed to increase the shipping community’s awareness and use of mediation techniques in resolving disputes, BIMCO has developed a Standard Dispute Resolution Clause by incorporating a comprehensive Mediation Clause in to its widely used Standard Law and Arbitration Clause. A specialist BIMCO Working Group consisting of experts with particular expertise in maritime arbitration and mediation were responsible for the drafting work. The London Maritime Arbitrators Association (LMAA) and the Society of Maritime Arbitrators, Inc, of New York (SMA) provided valuable input and comment throughout the process.

In shipping industry terms Mediation remains a relatively new dispute resolution technique, although it has gained widespread approval in other sectors. In the last few years, however, there has been a noticeable increase in the level of interest in mediation. BIMCO’s Deputy Secretary General, Søren Larsen, believes that "the new Clause will provide parties with a solid contractual platform on which the mediation process can be applied if appropriate to the dispute".

BIMCO has chosen to incorporate a standard mediation provision in to its existing Law and Arbitration Clause to ensure that one party cannot use mediation as a delaying tactic. Although parties are free to mediate at any time, the provisions of the BIMCO Mediation Clause are only triggered by the commencement of arbitration proceedings by one party against another. Should the parties elect to use mediation to resolve all or part of their dispute, the arbitration process continues to run in parallel. The Mediation Clause has been drafted in contemplation of scenarios where parties may go to mediation at various times throughout an arbitration process in order to attempt to resolve parts of a larger dispute.

BIMCO recognises that mediation is a voluntary, confidential, "without prejudice" process and the Mediation Clause does not attempt to impose mediation on parties that do not believe the technique to be appropriate to their dispute. Nevertheless, should one party simply refuse even to try resolving the dispute through mediation, the arbitration tribunal is given the right to take any refusal without good reason into account when allocating the costs of the arbitration.

To ensure that the mediation does not interfere with the conduct of the arbitration procedure the Clause provides for the arbitration tribunal to consider possible conflicts with the mediation when setting the timetable for the arbitration.

By default, the Mediation Clause provides that each party should bear its own costs incurred in the mediation, but share the mediator’s costs and expenses.

Although the mediation process has been integrated with arbitration in an attempt to minimise any conflict of timetabling between the two procedures, according to BIMCO’s Grant Hunter "the confidentiality and legal rights of the parties are fully protected by the Clause. No information or documents disclosed during the mediation can be revealed to the arbitration tribunal, unless required by law. Similarly, the right of either party to take measures they consider necessary to protect their interest is not affected by the mediation".

BIMCO’s Clause is designed for use internationally under a wide variety of jurisdictions. Because of differences in the application of statutory time limits under different jurisdictions, the Mediation Clause is careful to draw to the attention of the parties that they should be aware that the mediation process might not necessarily interrupt time limits.

The BIMCO Standard Mediation Clause has received widespread international endorsement from leading dispute resolution associations. The LMAA, which was involved with the development of the BIMCO Standard Law and Arbitration Clause in 1998, has stated that it "has been pleased to continue the co-operation with BIMCO that began with the previous BIMCO Arbitration Clause. Whilst acknowledging that the trend towards mediation has been slower than anticipated when it first introduced its own mediation terms in 1991 the LMAA has noted an increasing interest in mediation in the last two years. This has led the LMAA to provide formal mediation training to nearly half of its full members and to prepare new Mediation Terms which will come into effect early in 2002. A full LMAA mediation service will therefore be available for parties agreeing to mediation and the new BIMCO Dispute Resolution Clause".

In New York, the Society of Maritime Arbitrators (SMA) said that "close co-operation between the LMAA and SMA, as leading dispute resolving associations, is essential to furthering the interests of the industry we serve. We were delighted to have this opportunity of working closely with our LMAA colleagues in support of the BIMCO Standard Mediation Clause and look forward to more opportunities of doing so in the future".

Further support has come from the Chambre Arbitrale Maritime de Paris (CAMP) which "appreciates that the new Mediation Clause to be incorporated in the BIMCO Standard Law and Arbitration Clause has been adopted by the Documentary Committee. There is no contradiction between that Clause and the text of the Conciliation/Mediation Rules of Chambre Arbitrale. CAMP fully supports the idea of such a clause which answers the more and more insisting needs of the parties all over the world".

The Standard Mediation Clause will be published as part of the new BIMCO Standard Dispute Resolution Clause. Copies of the Clause are available from BIMCO’s website, under the Members’ area. A copy of the full text of the Clause is attached to this Press Release.

BIMCO Standard Dispute Resolution Clause

BIMCO is the world’s leading private association of shipping companies, with nearly 2,700 members in 122 countries. The owner-members of BIMCO control a fleet of 470 million DWT thereby representing 69% of the world’s merchant fleet. Among its many activities, the organisation provides strictly professional, non-political information and counselling services for the maritime community including owners, brokers, agents and club members. BIMCO is an official observer at the International Maritime Organisation.