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Wednesday, 25 May 16
MEDIATION AS A WAY TO RESOLVE DISPUTES IN THE SHIPPING INDUSTRY - LANA JACOBS
 KNOWLEDGE TO ELEVATE
The shipping market is currently experiencing a serious recession with the Baltic Dry Index and Baltic Capesize Index both at record low levels in early 2016. In addition, capesize rates fell to under USD 2000 a day in January 2016. Coupled with the operating expenses for a standard Capesize vessel, which are estimated to be around USD 6 000 a day, this suggests that the majority of vessels are operating at a loss. Industry experts do not expect any major improvement on these numbers over the next year. As a result, fewer ships are also being built and sold.
In January, TradeWinds reported that Asia-to-Europe trade experienced negative growth, as well as those routes linked to China, West Africa and South America. Moreover, lower demand growth is forecast for container shipping, in the region of a meagre 1% to 3%. The forecast is grim and market conditions are challenging for all service providers, especially shipping lines seeking to retain their key clients, bring in sufficient income and ensure that agreements are honoured.
In these conditions, disputes are widespread. It is therefore essential for parties to maintain relationships with key customers and retain business. When service providers are faced with the need to retain key clients, however, they often make a commercial decision to write-off the loss rather than to enforce a contract and engage in costly litigation or arbitration.
The advantages of mediation as a means to resolving disputes in the shipping industry are its speed, cost and flexibility. Its outcome is aimed at obtaining a value-added, future orientated, commercial solution for all parties involved. Mediation is not restricted to a ‘winner-loser’ outcome, but rather envisages a ‘mutual gains outcome’. Furthermore, mediation is without prejudice to any further remedies or future and/ or ongoing litigation.
Jonathan Lux, a London-based barrister and mediation expert with 30 years’ experience as a solicitor at Ince & Co in the field of shipping, is of the opinion that mediation is the future of dispute resolution. Although the shipping industry is a difficult sector to convince, he believes that the benefits of this approach are numerous.
London Maritime Arbitrators Association (LMAA) arbitration, is so well entrenched as the primary method of dispute resolution within the shipping industry, that although parties complain about the inefficiency, expense and inflexibility of the system, they are loathe to take an alternative approach.
This is not surprising as arbitration is such a well-established form of dispute resolution in the shipping industry. In an international context, mediation is not as well established as arbitration. The 1958 UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) is the key instrument in facilitating cross-border arbitral awards. The New York Convention has more than 145 signatory countries and imposes an international obligation on state courts of signatory countries to refer parties to arbitration in lieu of state court proceedings and to grant recognition of awards arising out of such agreements. However, there is no comparable cross-border instrument governing mediation proceedings or their outcomes.
In the future, however, mediation is bound to feature more frequently because of the regulatory requirements in the United Kingdom and the European Union. The English Civil procedure rules of 1999 introduced the concept of ‘active case management’ which is defined as encouraging parties to use an alternative dispute resolution procedure. The power of the court goes as far as to order adverse costs despite a litigant being successful at trial, because they had unreasonably refused to follow the court’s suggestion to mediate the dispute. This approach was demonstrated in the case of Dunnet v Railtrack.
Court mandated mediation is also a part of other common law jurisdictions including Australia and Singapore. The European Union has also issued directives in terms of cross-border mediation and consumer mediation, which compels each member state to deal with mediation in national legislation. Germany has recently done so with the introduction of the Act to Promote Mediation and Other Methods of Out-of-Court Dispute Resolution in 2012.
The concept of court sanctioned alternative dispute resolution is not novel to the South African legal system. In fact, the Uniform Rules of Court dictate that in preparation for trial, parties hold a pre-trial conference and complete a minute, to be filed in the court file in preparation for a pre-trial hearing. In the minute, parties must confirm that they have considered alternative dispute resolution including mediation and arbitration. The usual practice is for parties to simply state that alternative dispute resolution is not an option. At present, there is no costs sanction for parties in doing so.
As procedural aspects of the South African legal system tend to develop along similar lines to those of the English legal system, an evolution to court directed mediation or to stricter cost penalties for parties who fail to refer appropriate cases to mediation, seems a likely possibility especially in light of the backlog of civil disputes awaiting trial. At the very least and given the context, it may be prudent for the judiciary and legislature to undertake a serious consideration of court directed alternative dispute resolution.
Most recently, South Africa has tabled the International Arbitration Bill, 2016. The Bill aims to incorporate the model law designed by the UN Commission on International Trade Law as the cornerstone of South Africa’s international arbitration regime. The bill defines the concept of ‘conciliation’ to include mediation and importantly codifies the right to conciliation within the context of an arbitration, providing that parties to an arbitration agreement may refer to dispute subject to such agreement to conciliation provided that the agreement provides for such mechanism. The Bill further incorporates the UNICITRAL conciliation rules should parties wish to engage in the conciliation process.
It is clear that there is a move towards mediation as the preferred form of alternative dispute resolution. The key question is how this can be managed in the shipping industry and how mediation can be incorporated into commercial shipping agreements.
Bowman Gilfillan Africa Group’s Shipping & Logistics Practice will hold a panel discussion on this topic in the firm’s Cape Town office at the end of June this year.
Source: Lana Jacobs, associate, Bowman Gilfillan Africa Group’s Shipping & Logistics Practice
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Wednesday, 29 June 16
THE DRY BULK INDICES, OPPOSITE TO MOST GLOBAL MARKET INDICES, ROSE END OF LAST WEEK
Last week closed off with a massive shockwave for markets across the world following the British referendum, the result of which will mark the begi ...
Tuesday, 28 June 16
WEEKLY CS COAL INDICES ROSE ON RENEWED DEMAND FROM CHINA
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up by 0.66 percent week over week to averaging $39.65 per ton this past week, sh ...
Tuesday, 28 June 16
CHINA'S IRON ORE IMPORTS: HOW MUCH MORE WORK FOR CAPES? - CLARKSONS
Chinese iron ore imports account for around two thirds of global seaborne iron ore shipments, making it the key driver of Capesize employment. Whil ...
Monday, 27 June 16
LATEST NEWS ON BIMCO'S CONTRACTS AND CLAUSES
BIMCO is currently updating several of its most widely used charter parties including SUPPLYTIME and BARECON. New developments include the Standard ...
Monday, 27 June 16
BREXIT RESULT COULD SEE UK FACING AN EXODUS OF MARITIME TALENT - FASTSTREAM
The UK’s decision to leave the EU has the potential to drive many of its maritime employees away, according to the results of a survey issued ...
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- Agrawal Coal Company - India
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Jaiprakash Power Ventures ltd
- Essar Steel Hazira Ltd - India
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Mjunction Services Limited - India
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Dalmia Cement Bharat India
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Latin American Coal - Colombia
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Simpson Spence & Young - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- New Zealand Coal & Carbon
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- MS Steel International - UAE
- GMR Energy Limited - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Electricity Generating Authority of Thailand
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Leighton Contractors Pty Ltd - Australia
- Indian Oil Corporation Limited
- Aditya Birla Group - India
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Cement Manufacturers Association - India
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- International Coal Ventures Pvt Ltd - India
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Australian Coal Association
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- ICICI Bank Limited - India
- Larsen & Toubro Limited - India
- SN Aboitiz Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Siam City Cement - Thailand
- The Treasury - Australian Government
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- London Commodity Brokers - England
- Orica Mining Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Barasentosa Lestari - Indonesia
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Holcim Trading Pte Ltd - Singapore
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- Tamil Nadu electricity Board
- Kepco SPC Power Corporation, Philippines
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- TNB Fuel Sdn Bhd - Malaysia
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