Alternative Dispute Resolution

Conciliation

In addition to arbitration, the SMA offers alternative means to resolve disputes. In 1988, the SMA adopted Conciliation Rules which followed the UNCITRAL Conciliation Rules (adopted by the United Nations in 1981). The procedure, which is both voluntary and confidential, provides the parties with a non-binding method of settling their disputes amicably without jeopardizing on-going and mutually beneficial commercial relationships.

These Rules are available on the SMA website (www.smany.org), or upon request to the SMA Office.

Mediation

In February 1999, the SMA introduced Rules for Mediation [Document No. 5] for those cases that could benefit from mediation prior to engaging in arbitration. The SMA Rules for Mediation are flexible and can be varied by agreement of the parties. The mediation process is voluntary and confidential. Parties can adopt the Mediation Rules irrespective of whether a mediation clause is a part of their contract. Upon request, the SMA will assist the parties in appointing the mediator. Parties can agree to the Model Mediation/Arbitration Clause which is provided under SMA Rules. Under the SMA Rules for Mediation, the mediator is to be independent, neutral and impartial. Should the mediation be unsuccessful, the mediator is not permitted to act as an arbitrator in the subsequent arbitration.

Once the parties have agreed to mediation and selected a mediator, as provided for in the Rules, the proceeding moves forward. The parties must submit written statements, describing the dispute and their positions, with copies to one another. The mediator may request further written statements and supporting documents and evidence from the parties. Thereafter, the mediator assists the parties in reaching an amicable settlement. To achieve this end, the mediator is free to meet with the parties together and separately. If a settlement is reached, the mediator will draw up the Settlement Agreement, which should be signed by all the parties. The Settlement Agreement, as well as all the proceedings, remain totally confidential and are not published or otherwise disclosed.

Until the time of the agreement, the proceeding may be terminated by a written declaration of the mediator that further effort is not justified or by a written declaration of termination from one or both parties. In the event of termination prior to settlement, the mediator undertakes not to act as arbitrator, witness, representative or counsel in any subsequent judicial or arbitral proceedings dealing with the same disputes.

Parties are, of course, free to agree to submit their disputes to mediation under the SMA Mediation Rules at any time even if their contracts call for arbitration or the arbitration proceeding has already begun.

In order to take advantage of the alternative of mediation, parties should include the SMA Model Mediation/Arbitration Clause in their Charter Parties:

Model Mediation Clause

If a dispute arises under this contract, the parties shall seek an amicable settlement of that dispute by mediation under the Mediation Rules of the Society of Maritime Arbitrators, Inc. (SMA) of New York then in force. If the mediation does not result in a settlement, the dispute shall be referred to arbitration before three SMA members under the Arbitration Rules of the Society of Maritime Arbitrators, Inc. (SMA), one to be appointed by each of the parties and the third by the two so chosen. Their decision or that of any two of them shall be final and binding, and judgment upon such arbitration award may be made a rule of a court of competent jurisdiction.

DOCUMENT NO. 1

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