SMA RULES FOR MEDIATION

DOCUMENT NO. 5

1999

FOREWORD

In our continuing effort to be responsive to the needs of the maritime industry, we are pleased to introduce our new SMA Rules for Mediation.

These Rules, complemented by the existing Arbitration Rules and Rules for Conciliation, will provide the industry with one further means to achieve resolution of their commercial disputes in a time-efficient and cost-effective way to their mutual satisfaction.

The Society of Maritime Arbitrators, Inc.
New York

February 1999

Table of Contents

Article 1 - Application of the Rules
Article 2 - Initiation of Mediation Proceedings
Article 3 - Appointment of the Mediator
Article 4 - The Role of the Mediator
Article 5 - Submission of Statements to the Mediator
Article 6 - Date, Time and Place of Mediation
Article 7 - Representation
Article 8 - Mediation Session
Article 9 - Vacancy
Article 10 - Termination of the Mediation
Article 11 - Settlement Agreement
Article 12 - Resort to Arbitral or Judicial Proceedings
Article 13 - Costs
Article 14 - Confidentiality
Article 15 - Role of the Mediator in Other Proceedings
Model Mediation Clause

SMA Rules for Mediation

Article 1

Application of the Rules

a) Whenever, by contract or special agreement, parties decide to settle dispute/s under the Mediation Rules of the Society of Maritime Arbitrators, Inc. (SMA), these rules shall apply.

b) Any dispute or any issue related to the dispute, including procedural issues, may be submitted for mediation with the agreement of all parties upon the execution of a written submission agreement.

c) The parties may agree to exclude or vary any of these rules at any time.

Article 2

Initiation of Mediation Proceedings

a) A party to a dispute initiates mediation by advising the other party, in writing, briefly identifying the nature of the dispute. If there is no provision for mediation in the contract, the claimant may invite the other party to agree to mediation.

b) The receiving party shall reply within fifteen (15) days from the date sent or within such period of time as specified in the invitation.

Article 3

Appointment of the Mediator

Within ten business days of agreeing to submit the matter to mediation, the parties shall choose a mediator acceptable to both. If they cannot agree upon a mediator, the Corporate Secretary of the SMA shall submit to the parties a list of SMA members who are experienced in mediation or who have received training in mediation. In the event that the parties still cannot agree upon a mediator, the President of the SMA shall appoint the mediator.

Article 4

The Role of the Mediator

a) The mediator shall act in an independent, neutral and impartial manner to assist the parties in reaching an amicable settlement of the dispute.

b) The mediator shall be guided by principles of objectivity, fairness and justice.

c) The mediator shall not be liable for any act or omission arising from his/her role as mediator.

Article 5

Submission of Statements to the Mediator

a) At least ten days prior to the first scheduled mediation session, the parties shall exchange and submit to the mediator written summaries describing the nature of the dispute and identifying the issues to be resolved.

b) The mediator may request either or each party to submit further explanation of its position, supplemented by any documents or other information deemed appropriate.

Article 6

Date, Time and Place of Mediation

a) Unless otherwise agreed, the mediation shall be held in the City of New York at a convenient location agreeable to the mediator and the parties.

b) The date, time and place for the first hearing and all subsequent hearings, if any, shall be determined by the mediator in consultation with the parties.

c) The mediator, the parties and their representatives may meet in person or by telephone conference call at the mediator's discretion, in joint sessions or in separate caucuses.

Article 7

Representation

The parties have the right to be represented by counsel, but each party shall have present an individual with decision-making authority to discuss, negotiate and conclude a settlement. The parties may appear pro se if they so choose but may seek counsel at any time during the mediation.

Article 8

Mediation Session

a) At the commencement of the mediation session, the parties shall make oral presentations explaining their positions.

b) The mediator may question the parties to clarify their positions.

c) The mediator shall, in separate caucuses, review the strengths and weaknesses of each party's contentions and make suggestions accordingly. However, any information supplied by a party to the mediator on a confidential basis shall not be disclosed to the other party without advance agreement of the party furnishing the information.

d) The mediator shall have no authority to impose a settlement but shall act as a neutral and impartial facilitator to help the parties narrow their differences and reach a resolution of their dispute.

e) If requested by the parties, the mediator may at any stage of the proceedings offer settlement proposals with discretion to provide or not provide reasons therefor.

f) No formal record or transcript of the mediation shall be made.

Article 9

Vacancy

If the mediator resigns or is otherwise unwilling or unable to serve, a replacement mediator will be selected in the manner provided in Article 3.

Article 10

Termination of the Mediation

a) Mediation is voluntary and any party may withdraw from the proceedings at any time prior to the execution of a written settlement agreement by giving written notice to the mediator and the other parties.

b) Any settlement reached in the mediation will not be legally binding until it has been reduced to writing and signed by the parties.

Article 11

Settlement Agreement

If the mediation is successful, a settlement memorandum may be prepared by the mediator and signed by all parties. Alternatively, the parties may thereafter prepare a formal settlement agreement specifying the terms and conditions of settlement, including a time frame for implementation and finalization, if appropriate.

Article 12

Resort to Arbitral or Judicial Proceedings

a) Unless the parties agree otherwise, the submission to mediation shall not stay or otherwise delay the arbitration or litigation of a pending matter.

b) Any arbitral or judicial proceeding in relation to the dispute may be initiated or continued notwithstanding the mediation if such proceedings are deemed necessary by a party for protecting its rights and/or defenses.

Article 13

Costs

Prior to commencing the mediation, the mediator shall give the parties his/her best estimate of the costs of the mediation.

"Costs," unless otherwise agreed, shall include:

(a) Mediation Fee, which shall be agreed to by the parties prior to commencement of the proceedings,

(b) Travel and other expenses of the mediator.

The costs of the mediation are to be borne equally by the parties. All other expenses incurred by a party shall be borne by that party.

Article 14

Confidentiality

The parties and the mediator agree not to disclose, transmit, introduce or otherwise use opinions, suggestions, proposals, offers, or admissions obtained or disclosed during the proceedings by the parties or the mediator as evidence in any lawsuit, arbitration or other proceeding, unless authorized in writing by all parties to the mediation or compelled by law. The fact that a mediation has occurred or is continuing shall not be considered confidential.

Article 15

Role of the Mediator in Other Proceedings

a) The parties and the mediator undertake that the mediator will not act as an arbitrator, witness, consultant, expert, representative, or counsel of a party in any arbitral or judicial proceedings in respect of a dispute that is the subject of the mediation proceedings, unless all parties and the mediator agree otherwise in writing.

b) The mediator shall not transmit or otherwise disclose confidential information provided by one party to any other unless specifically authorized in writing by the party providing the confidential information.

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 commercial arbitrators 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 entered in the U.S. Federal District Court for the Southern District of New York.

© Society of Maritime Arbitrators, Inc. 1999

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