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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, 13 June 16
BALTIC INDEX FLAT, INDEX FOR CAPE RISE
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities flat this past week. The freight market was almost same l ...
Friday, 10 June 16
INDONESIAN 6322 GAR COAL PRICE REFERENCE RISES TO $51.81 A TON
COALspot.com: The Indonesia Coal Benchmark Price increased in June 2016.
The Director General of Mineral and Coal of Indonesia, the regulator ...
Friday, 10 June 16
WEEKLY U.S. COAL PRODUCTION TOTALED AN ESTIMATED 12 MMST IN THE WEEK ENDED JUNE 4, UP 4% W/W - EIA
COALspot.com – U.S the world’s second largest coal producer has produced approximately totaled an estimated 12 million short tons (mmst ...
Wednesday, 08 June 16
BPI ACHIEVES FINANCIAL CLOSE FOR ITS 2000 MW POWER PROJECT IN CENTRAL JAVA
COALspot.com: PT Bhimasena Power Indonesia (BPI) on June 6th, 2016 Achieves financial close for its 2x1,000 MW power project in Batang Regency, Cen ...
Wednesday, 08 June 16
U.S COAL IMPORTS ARE PROJECTED TO BE 12 MMST IN 2016 AND 11 MMST IN 2017 - EIA
Coal Supply
U.S. coal production in May was 50 million short tons (MMst), a 4 MMst (10%) increase from the previous month but 19 MMst (28%) lower ...
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- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Oldendorff Carriers - Singapore
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Coalindo Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Romanian Commodities Exchange
- Indogreen Group - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Central Java Power - Indonesia
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Bukit Makmur.PT - Indonesia
- Africa Commodities Group - South Africa
- Manunggal Multi Energi - Indonesia
- Singapore Mercantile Exchange
- Gujarat Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Barasentosa Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Formosa Plastics Group - Taiwan
- MS Steel International - UAE
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Bulk Trading Sa - Switzerland
- Petron Corporation, Philippines
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Orica Mining Services - Indonesia
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Bangladesh Power Developement Board
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Posco Energy - South Korea
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Parliament of New Zealand
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Uttam Galva Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Antam Resourcindo - Indonesia
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- CNBM International Corporation - China
- Aditya Birla Group - India
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Goldman Sachs - Singapore
- Coal and Oil Company - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Planning Commission, India
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- PTC India Limited - India
- Ministry of Mines - Canada
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- VISA Power Limited - India
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Commonwealth Bank - Australia
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
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