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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, 20 June 16
CS COAL INDICES CONTINUE UPWARD TREND SINCE END APRIL
COALspot.com: Average 5000 GAR coal index of Indonesian origin was up again by 0.05 percent week over week to averaging $39.39 per ton this past we ...
Monday, 20 June 16
THE BDI HAS FELL 23 POINTS WEEK OVER WEEK
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities declined this past week. The BDI was fell 3.77 percent fr ...
Friday, 17 June 16
CHINA'S NEW POLICY TO REDUCE WASTE IN RENEWABLE ENERGY - FITCH
Chinese renewable energy producers are likely to benefit from a new policy that guarantees a minimum amount of solar and wind power is purchased in ...
Friday, 17 June 16
KOMIPO INVITES BIDS FOR BITUMINOUS COAL FOR BORYEONG POWER PLANT
COALspot.com: South Korea state-owned utility Korea Midland Power (KOMIPO) issued a new tender for 780,000 Metric Tons of Bituminous Coal for its B ...
Friday, 17 June 16
U.S WEEKLY COAL PRODUCTION UP 7.7% - EIA
COALspot.com – U.S., the world’s one of the largest coal producer has produced approximately totalled an estimated 12.9 million short t ...
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- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- Miang Besar Coal Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- CNBM International Corporation - China
- Kapuas Tunggal Persada - Indonesia
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Bukit Baiduri Energy - Indonesia
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Kohat Cement Company Ltd. - Pakistan
- Mintek Dendrill Indonesia
- VISA Power Limited - India
- Goldman Sachs - Singapore
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- Holcim Trading Pte Ltd - Singapore
- The State Trading Corporation of India Ltd
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Samtan Co., Ltd - South Korea
- PTC India Limited - India
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- ASAPP Information Group - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Leighton Contractors Pty Ltd - Australia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- PowerSource Philippines DevCo
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Directorate General of MIneral and Coal - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Marubeni Corporation - India
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- MS Steel International - UAE
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Medco Energi Mining Internasional
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Siam City Cement PLC, Thailand
- Chettinad Cement Corporation Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Gujarat Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- South Luzon Thermal Energy Corporation
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Posco Energy - South Korea
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- Power Finance Corporation Ltd., India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
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