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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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Monday, 27 June 16
THE BDI UP 3.75 PERCENT ; BCI FELL 1.51% WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose this past week. The BDI was up 3.75 percent from las ...
Monday, 27 June 16
INDONESIA BANS (AGAIN) SHIPS SAILING TO THE PHILIPPINES FROM INDONESIA
COALspot.com: The Indonesian Transport Ministry strictly prohibited harbour masters issuing permits to all Indonesian-flagged vessels bound for the ...
Friday, 24 June 16
U.S WEEKLY COAL PRODUCTION UP MARGINALLY
COALspot.com – U.S, world’s one of the largest coal producers has produced approximately totalled an estimated 13.4 million short tons ...
Wednesday, 22 June 16
SMALL RISE IN SHIPPING CONFIDENCE - MOORE STEPHENS
In May 2016, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). ...
Wednesday, 22 June 16
SHIPPING MARKET INSIGHT - NASSOS SOULAKIS
Stagnation- With the BDI stuck in the low 600 points for almost a month now, if we had to choose a word to describe the state of the Dry Bulk freig ...
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- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- PTC India Limited - India
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Independent Power Producers Association of India
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- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Kaltim Prima Coal - Indonesia
- Planning Commission, India
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- VISA Power Limited - India
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
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- Marubeni Corporation - India
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- Goldman Sachs - Singapore
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- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- The University of Queensland
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
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- CNBM International Corporation - China
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- San Jose City I Power Corp, Philippines
- Aditya Birla Group - India
- Coal and Oil Company - UAE
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- Attock Cement Pakistan Limited
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wood Mackenzie - Singapore
- Malabar Cements Ltd - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Thai Mozambique Logistica
- Timah Investasi Mineral - Indoneisa
- Interocean Group of Companies - India
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Minerals Council of Australia
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Parliament of New Zealand
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- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- European Bulk Services B.V. - Netherlands
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Singapore Mercantile Exchange
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Bukit Makmur.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Altura Mining Limited, Indonesia
- SN Aboitiz Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Antam Resourcindo - Indonesia
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- MS Steel International - UAE
- Thiess Contractors Indonesia
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Ambuja Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- New Zealand Coal & Carbon
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- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Maheswari Brothers Coal Limited - India
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Leighton Contractors Pty Ltd - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- Directorate General of MIneral and Coal - Indonesia
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