Thursday, 20 November 2014

How to Resolve a Maritime Dispute?

Maritime disputes tend to be international and commercial in their nature and often highly complex. Thankfully today court litigation is not the only method for resolving a dispute. There are essentially six modern methods of dispute resolution, as follows:

Negotiation – This is where the parties get together and try to negotiate a settlement of the issues and perhaps claims between them. It can be effective because the dispute will be elevated to a higher level within the firms in question, perhaps taking the dispute out of the hands of the individuals who are at loggerheads. Commercial considerations begin to be more at play and there can be a greater appetite to compromise. It is also the most cost effective method costing nothing, other than perhaps the cost of supporting legal advice or assistance with the negotiation process.

Mediation – Mediation essentially involves the appointment of an individual to go between the parties and see if they can find common ground or tease out settlement terms that would be acceptable to both sides.

Conciliation – Tends to be reserved for employment disputes.

Adjudication – Tends to be reserved for construction disputes. This method is very quick because often there is a strict timetable for submitting evidence and providing an Award. The adjudicator in Construction disputes in the UK must provide a decision within 28 days of the instruction. This has been intentionally designed for construction disputes where daily costs are often being incurred of hundreds of thousands and if a project were to be delayed for a series of months it would cause considerable economic impact. So the parties sacrifice the ability to present their case and analyse it in granular detail for the right to obtain a swift judgment.

Arbitration – This where the parties appoint an arbitrator or a panel of three arbitrators to listen to their case and give a judgment in much the same way that a court would, but without the strict rules of evidence, delays, formality and the need for lawyers. Also, importantly, it can be done and normally is in private. So the media and the public never become aware of the facts or judgment. The parties can go to arbitration by having a standard term in their contract agreeing to do so, or by agreeing to resolve a dispute that has otherwise arisen by arbitration. They may decide on almost every element of how the arbitration should be conducted, but tend to choose a standard form of rules such as the UNCITRAL, CIArb, CII Rules etc., which provide adaptable templates for Arbitration procedures. Arbitration is by far the most common way to resolve maritime disputes and frequently the LMAA (or London Maritime Arbitrators’ Association) Rules are used.

Litigation – If all else fails the parties always have their original recourse to a court of law.



3 comments:

Navilex 21 November 2014 at 16:28  

Adding my five cents as to the pros and cons of the dispute resolution mechanisms I am familiar with:

Negotiation: I would estimate at above 95% the shipping matters which are ultimately settled through negotiations (whether at their onset or in the course of arbitration or Court litigation. However, one must be ready to fight to get peace and you won't get much if you negotiate with a gun against you head. This is why using a lawyer, filing claim or a statement of claim or points of defence / defence showing the other side that you are ready to fight if it has to turn to that will often enhance the outcome. Obviously, there are situations where the costs of "fighting" exceed a settlement on the best available terms. Some commercial people are also very talented getting the outmost for the other side. Some others or their lawyers may make things worse than they should be. It always goes better when the parties first agree that they disagree but are prepared to assess in good faith the merits of the other's side point of view.

Mediation: A good idea with a good mediator and when both parties respect the mediator and truly want to settle their disagreements. Since a mediation is not binding, it may prove to be costly and a lost of time (since the parties must pay for the mediator) if the parties are entrenched in their position or if one of the parties simply wants to delay things;

Arbitration is good in specialised or highly technical matters especially where the parties are able to keep on carrying on business together despite their arbitration on another matter. The parties may also agree that it be confidential. However, one has to bear in mind that, unlike with the judicial systems I know, the parties have to pay in full the remunerations of their arbitrators and an arbitration award needs to be recognized by a Court before it can be enforced.

Court litigation: Well, in spite all its flaws and bad press, it is still the way to go in my opinion when one deals with a major issue of law or when it is clear that the other side will not pay unless forced to do so. Its process can be lengthier than arbitration but a good Judge will also force the parties to mediate when appropriate. The judicial process is normally public (save exceptions such as family matters, etc.) but this also contribute to making the law evolves (unpublished confidential arbitration awards deprive the community of the input the arbitration may have done to clarify the law).

I hope this helps.

Bye!

Glen Osborne 3 February 2015 at 14:36  

Maybe I'm a little biased, but I've always felt like arbitration for sailors is kind of a bad way to go. I've seen too many companies offer arbitration under pretty dodgy circumstances (like claiming it will get them their benefits quicker), and often it's used as kind of a way to get around full-on Jones Act legislation.

Of course, I could be looking at this all wrong. I have to assume most shipping/insurance companies aren't actually trying to screw people out of their benefits, but in my limited experience it does seem to be the case more often than not. Sadly, it seems like good old fashioned litigation is the most fair and successful option most of the time.

Melo Smith 3 August 2015 at 18:09  

Thanks for this very informative article. I believed that most of the shipping companies and agencies are giving the best benefits that they could offer to crew members. I hope it wouldn't last.

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