Alternative Dispute Resolution (ADR) is now a familiar concept and its most common form, mediation, is often used by those in the shipping industry. Indeed there are several mediation organizations whose members are specialists in the business such as CEDR, SeaMediation and In Place of Strife.
The latest incarnation of ADR is Early Intervention (“EI”) and the Charterers Club has been involved with several to date producing very successful results.
The aim of EI is to bring the agreed neutral person, usually an accredited Mediator, into the dispute at a very early stage, with the expectation that it will facilitate impartial communication between the parties. EI incorporates factors that make mediation such an effective process, but at a point that hopes to reach a solution before the parties become entrenched in arbitration or litigation.
There are without doubt many advantages in using EI.
Foremost, it can save time and cost. Cost can be measured both in terms of the cost of legal advice but also the saving in management time for the parties in disposing of a dispute early and this should never be underestimated. Because of its preemptive nature, EI can have the capacity to assist the parties in avoiding taking positions that can lead to lengthy disputes.
Where parties have a genuine issue there is much to be said for quickly resolving it without the need for proceedings being commenced and sometimes the parties are too “involved” to engage in measured discussions.
In that scenario, EI could assist by offering a neutral person who will concentrate on the dispute and target how the parties might achieve a result short of proceedings. Understandably parties will not disclose their true views to each other and often “posturing” means even appointed lawyers cannot be open with each other and will not reveal information, even when the requirements of disclosure during proceedings at a later date means they will have to eventually.
Often a dispute will settle at the eleventh hour. This is for many reasons. Cost implications, both a party’s own mounting legal bills and the risk of paying the winning party’s, and disclosure has enabled a better assessment of the merits once lawyers and any appointed experts have reviewed it. Most significantly the appetite for a fight lessens with time.
But with the involvement of the neutral person not only will time and cost be saved but it can preserve commercial relations between trading partners.
So how does it work?
The neutral person will engage with each party and its lawyers or Club to identify the major points for each. They will assess what each needs to do to clarify its position to the other and draw up an agreed ‘shopping list’ to go forward and finally identify possible solutions. These can range from settlement meetings to discussions by phone or email.
And if no agreed resolution can be reached they can guide the parties in how to take the matter forward, possibly by way of a more formal mediation.
The Charterers Club promotes mediation and can assist in any mediated settlement. They are aware of the strengths and weaknesses of the dispute and are well versed in litigation risk. The success of EI is rooted in realistic and pragmatic advice.
Both SeaMediation and CEDR have EI schemes targeted specifically for shipping disputes. The Club is happy to provide further information about these to clients.