Cross Border Mediation in Maritime Transportation-Related Disputes in European Union

Introduction

Mediation could be said to be a kind of an original appeasement overture or conciliatory procedure which is primarily aimed for the speedy resolution of disputes, or business conflicts, emanating from trade-related issues. In the case of mediation, the procedure involves, inter alia, an appointment, upon request, of an impartial intermediary with mutual consent of parties, in order to facilitate the parties in arriving at a jointly agreeable solution to their contested issues (Brussels, 1).

Role and responsibility of a mediator

A mediator is very much like a neutral referee, or an umpire, in a team event. While he is not directly involved in the event, his discreet presence ensures that order prevails and the game is played in the right spirit. He is not responsible for the performance of players, he only controls and supervises events from the outside. A team’s defeat cannot be attributed to him, since he is only a coordinator who acts discretionally and dispassionately moves the game forward till the final whistle is sounded. The final outcome of the game is not his concern, but its conduct is.

In the event of a referee making a mistake, he may not able to correct it, since it already becomes binding on the players (Nunes, 1).

But in the case of mediation, the results are gained by consensus among parties, with the mediator playing the objective role of bringing the members onto the negotiating table. Again, the mediator not only supervises the results but also makes necessary arrangements for its enforcement among the parties (Nunes, 1).

Aspects governing mediation

Under a mediation procedure, it is believed that a mutually agreeable and satisfactory settlement of disputes could be achieved. The main aspect of mediation is that it is non-mandatory, and thus, non-binding on the parties to the dispute. At any time during the mediation proceedings, any, or all the parties could withdraw from the mediation process and seek ADR, like court intervention, arbitration, appeal, tribunal, etc, depending upon the status and surroundings of the case and the clauses governing the settlement of disputes signed between the parties.

Unlike an arbitration settlement or court order, mediation does not have any powers or rights conferred or vested upon the mediator to institute a settlement that could be imposed upon the parties (Results for Mediation, 1).

Therefore, it could be said that a mediator is an informal procedure that is fundamentally aimed at assisting the parties to reach an agreeable settlement among themselves, through negotiation and dialogue, without any legal or statutory binding (Results for Mediation, 1).

Kinds of mediation

Facilitative

There are basically two types of mediation- the first being the provision of a mediation facility. Here, the mediator seeks supportive methods by which each party’s perspective and viewpoints are understood, and peaceful solutions are sought through dialogue and intervention. In this case, the mediator acts as a go-between among the disputants, and by interacting with them, offers to create a congenial environment by which each party meets and discusses matters with the others regarding the various facets of the problem and how solutions could be reached (Results for Mediation, 1).

Evaluative

The other type is the assessment method under which a non-binding assessment of the case, its history, roots of the disputes, the role of the disputants, etc. are delineated and, taking into account the stands taken by the parties, a settlement is negotiated.

As mentioned earlier, the decision of a mediator is not binding upon parties; any of the disputants could withdraw from the mediatory procedure if dissatisfied, and, at their discretion, seek other forms of dispute resolution (Brussels, 1).

Therefore, it could be said that the main reasons for justification of mediation procedure could be seen as follows:

• A heavy backlog of pending court decisions making this legal process unviable
• High Costs of court litigation
• lengthy time required for seeking court decisions
• Control of the settlement is not with the parties
• The time frame for settlement and conciliation procedure may be long and indeterminate. Further, if amicable solutions are not reached , the aggrieved party may seek an appeal in higher courts
• Confidentiality of business aspects may be lost due to intervention of government or courts
• By far the most important aspects would be in terms of the future relationships of the parties- if an embittered and long-drawn court procedure is resorted, it could affect the long term business relationships of the parties. This would be detrimental to the long term business interests of all the parties since rancour could lead to loss of business goodwill and amity (Brussels, 1).

Differences between arbitration procedures and mediation techniques

There are fundamental differences between arbitration procedure and mediation techniques, the essentials of which could be seen as follows:

• Arbitration is an objectively designed procedure, according to the signed covenant between the parties seeking remedial of disputes. It may be court designated arbitration and binding upon the parties. On the other hand, mediation is the use of a Third Party mediator who assists in bringing disputing parties on the dialogue table. While under arbitration, the parties refer the dispute to an authority whose award is binding; in the case of mediation there is no question of any award- the main function of the mediator is to seek a meaningful dialogue between the parties, as such the mediator does not have any role, or factual powers to enforce decisions upon the parties.
• In the case of arbitration the parties are aware of their rights and responsibility under prevailing laws, and the arbitrator, an expert legal authority, well versed in arbitration procedures, is designated to study the issues surrounding the matter, seek referrals among the parties and offer solutions. However, in the case of mediator, the person could be an insider, or a member of the contracting parties, and through informal means, he seeks to reach a gainful solution to the disputes
• An arbitration award may bind the parties, but a mediation decision may not do so.
• Arbitration functions within the legal framework, or the conduct of the parties under contractual agreement, but mediation is an informal and out- of-court procedure that is reached by the parties themselves, and not though the intervention of any third parties to the contract.
• In arbitration, a party’s task is to persuade the arbitral tribunal of its case. It addresses its arguments to the tribunal and not to the other side. In mediation, since the outcome must be established by both parties and is not decided by the mediator, a party’s task is to convince, or to negotiate with, the other side. It addresses the other side and not the mediator, even though the mediator may be the medium for communications from one side to the other. In other words, the objective of arbitration is an award, which may be one-sided and favouring one party to the detriment of another, but in case of mediation it is a mutually agreeable and acceptable solution decided by all the parties through dialogue with one another.
• The terms of reference and scope of arbitration may be higher than that of mediation. If a mediatory procedure fails to produce a satisfactory accord acceptable to all parties, within say 60-90 days, it is possible to seek arbitrating to reach a solution.
• An arbitrator decided an award, a mediator facilitates a solution (Simms, 1).

When is mediation appropriate and fitting?

It may not be fitting on all occasions. Mediation may not work when unison of thinking between the parties may not be forthcoming. Again, in cases where one party is being manipulated by another, and a clear-cut solution is required, it may not be advisable. Where mutually acceptable solutions cannot be worked out, it is not prudent to resort to mediation. Again, the rationale for mediation, when there is a court decision or arbitration award pending is debatable, especially when it compromises the business interests of one party against that of another (Gregory T., William D, Higgins., and O’Connell, 1).

On the other hand, mediation is a suitable method when priorities of either or both of the parties are in terms of:

• Minimizing the costs involved in settling the dispute;
• Maintaining overall control over the dispute-settlement process;
• Seeking a just and equitable settlement;
• Maintaining privacy and confidentiality concerning the dispute;
• Safeguarding an underlying business relationship between the parties to the dispute so as to ensure that business links are maintained after the mediation is settled. In the event of court or other mediums, the relationship among parties may be permanently vitiated (Gregory T., William D, Higgins., and O’Connell, 1).

In a continuing or long standing relationship which is also based on future needed, it is seen that mediation serves a right purpose, unlike arbitration or court intervention where a decision may profit one party but cause indeterminate loss of goodwill, future business prospects or development of business activities (Gregory T., William D, Higgins., and O’Connell, 1).

Small losses may induce larger profits in long run

It is important in business that small losses be incurred in order to achieve, larger profits, or avoid substantial future losses, and a mediation serves to do just that. By involving all the disputing parties to the contract and seeking mutual compromises to protect their business interests through dialogue, it does not force awards or verdicts on parties but allows them to seek their own solutions through negotiations which, in the long run may be more profitable, especially for small and medium business enterprises, who cannot afford hefty court or arbitration fees nor long drawn litigation processes which culminate into losses. Where the problems are not very serious and could be solved on the negotiating table, mediation is the appropriate method, especially in maritime business (Results for Mediation, 1).

Parties who enter into mediation do not surrender their legal rights or remedies. If there is no settlement during the mediation, each side can continue to enforce their rights through appropriate court or tribunal proceedings. However, if a settlement has been reached through mediation, legal rights and obligations are affected in differing ways. In some situations, the parties may only wish to have a memorandum. In other cases, a more elaborate deed of agreement is drafted and this deed serves to bring a legally binding covenant. (Results for Mediation, 1). (See attached file)

Table showing relative merits of ADR procedures:

It is now necessary to consider the aspects of cross border mediation process in international maritime business (Results for Mediation, 1).

Cross border Mediation in international maritime business

Maritime business is a complex aspect in today’s business milieu. This has been further intensified with globalization and the opening of economies and the advent of e-commerce and greater deployment of internet technology. Thus, geographical and demographic barriers have been broken down and the doors of international business has opened for all nations, big and small, developed or underdeveloped, widely populated or sparsely populated, etc. (Results for Mediation, 1)

Features of mediation

The main features of mediation could be seen in terms of the directives are in terms of the following:

1. Subsidiarity
2. Proportionality
3. Confidentiality (Phillips, 3-4).

It is now necessary to consider these directives in detail. In the case of subsidiarity, it could be said that no act should take place by any level of government that could equally effectively take place by a smaller one, or a more local one. Thus, in the ADR Directive, the government in Brussels is agreeing upon broad outcomes, but then instructing each of its constituent governments to do the actual enacting of legislation. (Phillips, 3-4).

“Proportionality” instructs that a government should reach out so far as it is necessary for the government to meet its objectives and not beyond it, when seen in the context of cross border disputes within the EU, it is seen that pan European disputes may sometimes go beyond that of the European jurisdiction (Phillips, 3)

The areas in which these directives are responsible are cross border disputes of commercial or legal nature and not of administrative nature (Phillips, 3).

Article 7 of the directives suggest confidentiality that neither peacekeepers nor those involved in the administration of the mediation process shall be compelled to give evidence in civil and commercial judicial proceedings or arbitration regarding information arising out of or in connection with a mediation process, except:

• where this is necessary for overruling considerations of public policy of the Member State concerned, in particular when required to ensure the protection of the best interests of children or to prevent harm to the physical or psychological integrity of a person; or
• Where revelation of the content of the agreement resulting from mediation is necessary in order to implement or enforce that agreement (Phillips, 1-4).

The Directive’s very subsistence is a major event. The consideration of this Directive by the member states was thorough and deliberative. By virtue of its promulgation, and as witnessed by its passage, the Ministers of Justice of each of the European Union’s constituent members studied a topic that most of them had never previously addressed as a legitimate constituent of public policy. The entire ten-year process of framing, and eventually enacting, the EU Directive speaks to the first plenary opportunity that Europe had to look at this process.: (The European Directive on Commercial Mediation: What It Provides and What It Doesn’t : F. Peter P 1 :

It is now proposed to discuss the EU established directives of mediation.

The new directives issued by European Parliament (2008)

The new Directive contains five key rules.

1. The Directive necessitate Member States to support the training of mediators and the development of, and observance of, voluntary codes of conducts and other effectual quality control mechanisms concerning the provision of mediation services. These mechanisms may include market-based solutions provided that they aim to safeguard the flexibility of the mediation process and the freedom of the parties and to ensure that mediation is conducted in a useful, objective and capable way (Brussels, 1).
2. The Directive gives every judge in the Community, at any stage of the procedure, the prerogative to invite the parties to seek recourse to mediation if (s) he considers it appropriate in the case in question. The judge can also propose that the parties attend an information conference on mediation (Brussels, 1).
3. The Directive obliges Member States to set up machinery by which accords resulting from mediation can be rendered enforceable if both parties so request. This can be achieved, for example, by way of approval by a court or certification by a public notary. The choice of modus operandi is left to the Member States. This condition will enable parties to give an agreement resulting from mediation, a category, similar to that of a judgment without having to begin judicial proceedings. This prospect, which currently does not exist in all Member States, can provide an inducement to parties to resort to mediation rather than seek court intervention. Although parties will in most cases voluntarily comply with the terms of an agreement reached in mediation, the possibility of obtaining an enforceable title can be desirable for responsibilities, such as child maintenance, which require regular payments over a fairly long period, in the course of which the compliance of the debtor to fulfill his obligations willingly may deteriorate (Brussels, 1).
4. The Directive also ensures that mediation takes place in a private milieu and that information given or testification made by any party during mediation cannot be used against that party in subsequent judicial proceedings, if the mediation fails. This provision is essential to give parties confidence in, and to encourage them to make use of, mediation. To this end, the Directive provides that the mediator cannot be constrained to give evidence about what took place during mediation in subsequent judicial proceedings between the parties (Brussels, 1).
5. Finally, the Directive contains a rule on restraint and prescription periods which ensures that, when the parties engage in mediation, any such period will be suspended or interrupted in order to guarantee that they will not be prevented from going to court as a result of the time spent on mediation. Like the rule on confidentiality, this provision also indirectly promotes the use of mediation by ensuring that parties’ access to justice is rendered intact, should mediation not succeed. (Brussels, 1)

Case Study – “Sea Empress”

Maritime dispute for accidental spillage of oil tanker causing loss of marine life and environmental damages.

The critical aspect that could not be immediately tacked in the Sea Empress disaster was the offloading of leaking oil from the damaged hull until it had lost almost 50% of its cargo. The inclement weather and inability of the small boats available to prevent the ship from grounding compounded the problems (Press Statement “ SEA EMPRESS”, 1).

The tanker was removed from the rocks and docked to allow off-loading the remaining oil but before that time nearly 70,000 tes were lost (Press Statement “ SEA EMPRESS”, 2).

While transporting around 30,000 tones of heavy fuel oil off the coast of Brittany 19,800 tones were spilled into the sea. Mopping up operations took place along 400 kilometers of contaminated coastline and over 250 000 tones of tainted waste was collected from the shoreline. The International Oil Pollution Compensation Fund (IOPC), who manage the compensation claims under the 1971 Fund Convention (Press Statement “ SEA EMPRESS”, 1).

The litigating parties agreed with a proposal by the Court that they should seek settlement through mediation, thereby avoiding prolonged and expensive legal proceedings. Following a successful mediation, which was held over two days in October 2003, it was agreed that MHPA would pay £20 million to the Fund in full and final settlement of all claims in the recourse action. (Out- of- Court Settlement of Recourse Action taken by the International Oil pollution Compensation Fund 1971 Against the Milford Heaven Port Authority in Relation to the “ SEA EMPRESS “ Incident, 1).

Case Study – Erika incident

Compensation is available to any individual, business, private organisation or public body that has undergone pollution damage as a result of the Erika incident.

Compensation is payable under the 1992 Civil Liability and Fund Conventions as endorsed into French law (Press Statement “ SEA EMPRESS”, 1).

Compensation is payable for expenses actually incurred and for loss or damage actually suffered as a result of the oil pollution (Press Statement “ SEA EMPRESS”, 1).

Release of funds

The total claims arising out of this incident by far surpassed the amount of Funds available for compensation. In order to enable the 1992 Fund to make substantial payments to claimants, the French Government and the French oil company TotalFinaElf took the responsibility to pursue their claims only to the extent all other applicant were compensated in full, the claim by TotalFinaElf to figure after the Government’s claim. (Bennett and White, 12).

In the beginning, the Fund had to limit its payments to a certain percentage of the loss or damages actually suffered by the respective claimants, however in April 2003 the level of payments for claimants, other than that of the French Government and TotalFinaElf had risen twofold. (Bennett and White, 12).

The Executive Committee empowered Director to make payments in respect of the French Government’s claim to the extent that he considered there was a sufficient margin between the total amount of compensation available and the Fund’s exposure in respect of other claims (Press Statement “ SEA EMPRESS”, 2).

In December 2003, the 1992 Fund paid €10 million (£7 million) to the French State, equivalent to the French Government’s subrogated claim in respect of the supplementary payments made by the Government to claimants in the tourism sector. (Bennett and White, 12).

In light of developments during 2004, the Director decided that there was sufficient margin to enable the 1992 Fund to make additional payments to the French Government. Consequently, in October 2004, an amount of €6 million (£4 million) was paid to the French State relating to the Government’s supplementary payments to aggrieved parties. (Bennett and White, 12).

Recourse actions resulting from mediation in Erika incident

The aspect of mediation in Erika is evidenced when the executive body of the International Oil Pollution Compensation Fund (IOPCF)decided to take legal action, with the motive of recovering the amounts paid by it as compensation, against the parties who may be found accountable as a result of the ongoing investigations into the cause of the incident, namely against the holder and the manager of the tanker vessel Erika, their liability insurer, the vessel charterers and the classification societies which had inspected the Erika. (Erika, 1). This decision was taken after mediative talks were held with concerned officials and intergovernmental departmental agencies (Press Statement “ SEA EMPRESS”, 2).

Various types of contingent marine transportation liabilities

The various types of marine transportation liabilities that could arise are:

Potential Liability Based on Direct Negligence or Fault due to:

• Collisions and Explosions
• Burden of Proof
• Navigation, Operation and Maintenance of the Ship
• Towage, Loading and Unloading
• Jones Act–Death on the High Seas Act
• Minimum Potential Liability (Nunes, 4).

Other types of liability occurrences

Besides this there could be other liability arising due to contractual miscarriages by parties, inability to provide services, lowered quality and degree of care by responsible maritime officials, etc. For all this it is necessary to adopt positive measures, and in the event of disputes falling within the purview of mediation, it needs to be taken up in order to effect a swift, speedy and economical solution after taking all the viewpoints into mind (Nunes, 4).

Given the restricted responsibility assigned to a charterer under the traditional time charter, it follows that the time charterer’s obligations to outside third-parties can only surge from its sense of duty and responsibilities (i) under the charter party, (ii) as the owner of the technology used to devise and build the ship in a manner that permits the transportation of dangerous cargoes, or (iii) as the owner of the cargo itself primarily on the charterer’s potential (Nunes, 5).

Under contractual obligation it is necessary that negligence and /or lack of duty of care, as a direct result of which third-party suffers personal injury or property damage needs to be proved to attract liability under this clause. Further, it is seen that most of the obligations under maritime trade are enjoined by ship owner and except for glaring and egregious nature of negligence, he may not be held liable for losses (Nunes, 5).

In the event that disputes arouse over loss, or damages, the various parties to the contract, the ship owner, charterer, holder of bill of lading, etc., could take recourse to mediation for solving the problem. (Nunes, 5).

The possible calamitous mishap event in maritime trade of a ship carrying hazardous cargoes could be dual:

1. an accident could involve the collision of the ship with another ship or a dash with a fixed property, such as a loading or offloading terminal;
2. an accident could involve an on-board explosion, or detonation. In each of the foregoing circumstances, there would be liabilities for property and personal injury damages that would be apportioned among the parties responsible for such damages (Nunes, 7).

Given that, the owner is responsible for the operation, navigation, and maintenance of a ship under a time charter, the owner and not the time charterer is most likely to be the party held responsible in such accidents. The significant issue in determining whether a time charterer would have any third-party liability in either of the foregoing accident scenarios would be whether the time charterer was also somehow at fault. All these aspects could be subject matters of mediation or adjudication, depending upon the terms and conditionalities of contract and the facts surrounding the case (Nunes, 7)

How mediation could be formally used for maritime disputes?

Further, if one were to consider the other maritime disputes that occur in international trade it could be said that aspects like the navigation, operation, and maintenance of a ship are exclusive jurisdiction of the owner (Tony, 6).

While the master of the ship is under the charterer’s orders with respect to what cargo is to be loaded and where it is to be loaded, the navigational aspects of each voyage are undoubtedly, under the owners’ control.

Therefore, unless a time charterer directly manipulate the navigational decision-making of a ship and the ship owner or operator accepts such direction, an accident involving the collision of a ship with another ship or contact with a fixed object like rocks, icebergs etc, would not normally be the charterer’s fault. In much the same way, unless a time charterer directly controls maintenance activities of a ship and the owner accepts such direction, an accident involving an explosion on board a ship due to its improper maintenance activities would not ordinarily be the fault of the charterer, except under the exceptional circumstances mentioned above (Tony, 6).

Therefore, it could be said that in such cases the use of dispute removers like mediation could be used for reducing conflict areas and promotion of better trade and business relations between the disputing parties. However, it needs to be said that cross border mediation could only be used in conditions where all the parties are agreeable to mediation techniques and seek settlement as per this accord (Tony, 6).

A time chatterer also has the contractual duty to pay the fees associated with the loading and unloading of a ship’s cargo; however, as noted previously in Part III.B.1, unless expressly agreed or affirmatively assumed, that duty does not usually extend to supervising such activities. Thus, if an explosion or accident were to occur as a result of the loading or unloading of any potentially volatile cargo, again, the time charterer should not have any legal liability to third-parties in connection with such an accident, unless willful negligence on his part is proved (Tony, 6).

In Whyche v. Oldendorff, 284 F. Supp. 575 (E.D. Va. 1967), the court ruled that a clause in the time charter in question–making it the charterer’s responsibility to load, stow, trim, and discharge the cargo under the supervision of the ship’s captain–was not sufficient “to shift the responsibility for stevedoring operations or control of the ship to the time charterer. (Tony, 6).

It is seen that cross border maritime disputes resolution has received a green signal after the formation of the European Union and the globalization of trade links in the world market. Nowadays, more and more trade partners are opting for arbitration or mediation for settlement of disputes not only for the low costs which it involves but also because of the speed and efficiency which it entails. Moreover, the redeeming feature of maritime disputes lies in the fact that the relations hips are maintained without anger or rancour and the business links or goodwill between the litigating parties (Tony, 6).

Comparisons between mediation in USA and UK

It is seen that in the US, there is more of conciliation work being undertaken whereas in the UK, it is a mediative process. The primary differences between conciliation and mediation, is that an element of mediation is always present in conciliation. The mediator role is that of a person who tries to bring about a consensus among the opposing persons or ideals, which vitiate the peaceful settlement of the dispute or issue, and which, in the long term could be said to be litigative, since the matter may need the court’s attention and intervention (Results for Mediation, 1).

The basic idea of conciliation which is widely used in dispute settlement involves the use of pacifying techniques and the need for reaching an amicable solution, which may, or may not need a mediator. Conciliation could be carried out by conciliation officers, or people from within the organization, which could even be people who are employees, or insiders who are well versed with the psyches of the factions, and their objective in creating non-solutions for the problem.

The main reasons for conciliation would be to bury the respective differences of all the parties, and seek a mutually agreeable solution that could deal with the vexed problem. Mediation as practiced in the United Kingdom would mean the appointment of an outsider, or even an insider, who would look into all aspects of the issue in hand, and suggest ways and means to end the impasse. This is not to even mildly suggest that the verdict or award would be decided or imparted by the mediator (Results for Mediation, 1).

As mentioned earlier, the main role of a mediator would be to encourage discussions and dialogue among the parties among themselves,; he would persuade the various parties to the dispute to interact among themselves and find a just and equitable solution among themselves with only an outside role played by the mediator. Thus it is seen that mediation is an informal technique which may not have judicial validity. Although the Courts may, in certain cases, advocate mediation or arbitration, it would need to take up the type of issue and its various implications before suggesting whether arbitration or mediation needs to be done (Nunes, 7).

However, it is seen that not very major issues, or disputes, could be handled by mediators. This is because there is no legal validity and the parties may or may not accept the mediator’s role. At any point of time, the aggrieved party is in a position to reject the mediating process and choose any other alternative method, like arbitration, Court intervention, ombudsman, etc (Nunes, 7). There are certain inherent requirements that facilitate mediation and they are as follows:

1. The members themselves must be willing and desirous of seeking a peaceful solution to the issues in hand and need to offer all co-operation to the process
2. The issue should not be one that offers a judgment that may place one person in a more beneficial position than the other, in which case the mediation may not be acceptable.
3. Where one party or a group feels that injustice has been done, and needs to be remedied, a strong and unilateral decision needs to be taken. This cannot be offered by mediation, but is possible only by arbitration or courts where, one party has to be put into place by a decision for the benefit of all.
4. In case the subject matter is illegal, against public policy or ultra vires any governing laws, mediation need not be accepted, since it would mean defending a wrong action. It would become necessary in such cases, to investigate and trace the wrong doers and place them before the process of law for suitable punishment. In such cases, neither mediation nor arbitration could work (Nunes, 8).

Contemporary maritime trade setting

In the context of mediation the following aspects also needs to be mentioned. In today’s commercial world, sea trade is oldest, established and widely used method of international trade and is governed by many conventions like Hague Visby laws, CMR and Warsaw Convention etc. However, within the characteristics of private laws and determination of commercial disputes, there is an increasing trend towards including arbitration/ mediation clauses in commercial contracts to obviate the need for court intervention at later stages, should and when such situation arises. This is because of the inherent tendencies of Court decisions are to be long drawn, expensive and time consuming and also sometimes unsatisfactory to parties (Simms, 1).

A mediation clause, on the other hand could be used and executed, only to the extent it is actually required, in other words, mediation would be used sparingly, as and when it is needed to solve roadblocks in the gamut of world trade. Arbitration or mediation lessens the risks of international trade, since it dispenses with court intervention and is designed to solve problems than create more problems. Arbitration suffers from certain flaws in terms of rules of evidences that are not always strict or enforceable (Simms, 1).

According to experts, mediation, considered an intrepid experiment in the 1970s and ’80s, has progressively become a way for businesses in Dane County to avoid settling disputes in costly court trials (Simms, 1).

“We are long past the point, years past the point, where mediation in a business context was a mere experiment,” said Terry Peppard, a Madison attorney who just published a book on the arbitration and mediation of business disputes in Wisconsin. (Simms, 1).

It is now an exceptionally well-proven business process, and there should be no business executive anywhere in America who is not intimately familiar with the mediation process and its benefits. You can’t be a good executive if you don’t know that this is out there and what it can do for you. (Simms, 1).

He goes on further to say that “Mediation is less formal than a court trial, more private, less costly and less bruising.” (Simms, 1).

Impact of port activities on trade in the EU

One of the crucial aspects of maritime trade is the contribution of ports which handle 90% of the EU’s trade with 3^rd Countries and nearly 30% of trade among the EU countries. (Port Infrastructure: Green Paper, 1).

Thus it is seen that with increasing dependence on ports for trade sustenance, it also becomes necessary to implement mediation laws governing port management. Thus, with increasing pressures on ports caused by global trade, it is but natural that disputes would arise which need the attention of mediative intervention. Again, it is seen that EU facilitates a single market economy. This means that trade within the EU could bed characteristically different from that outside the EU in terms of covenant determination and consummation, tenancy, currency of contract, trade obligations and issues relating to payments, etc.

A single market economy has both challenges and benefits. The major challenge would be in terms of stiffer uniform trade terms and blanket policies while the benefits could be larger scope for business and profitability. All these aspects could not be outside the purview of litigation and therefore, business associates need to incorporate clauses of mediation and arbitration in their contracts. (See Appendix 1)

Again, it may be seen that the law distinguishes the private relationship between the member states owners and other disputant parties.

The financing of ports and maritime infrastructure and policies on charging their users vary from one country to another, reflecting the considerable differences in the approach taken towards their ownership and organisation. Ports may be owned by the State, regional or local governments or by private enterprises. In the past, ports tended to be seen mainly as suppliers of services of general economic interest provided by the public sector and financed by the taxpayer, whereas now the trend has moved towards considering ports as commercial entities which ought to recover their costs from port users who benefit from them directly. The port industry can therefore be seen as an industry in transition (Port Infrastructure: Green Paper, 1).

Induction of the Marco Polo Programme in EU trade

The EC has been endeavoring ceaselessly to promote the economic cause of its member States and introduce innovative ideas and practices that could facilitate smooth and environmentally friendly trade between EU countries. As a sequel to this ideal, it has introduced Marco Polo programme to better facilitate intermodal transportation among member States with relation to surface transport movements.

It has been established that road transport may be considered environmentally unfriendly, given its high emission of CO2; moreover, it has also been a chief cause of traffic congestion, risk of accidents and other mishaps in areas where heavy surface transport movements are prevalent. In a bid to reduce, or contain such occurrences, the EU had drafted the Marco Polo Programme which seeks to reduce road transport services by augmenting the combined use of rail, waterways and sea transport. (Intermodal Transport: The Marco Polo Programme, 1)

The White Paper on transport observed that the rate of road freight transportations in the EU would rise by 10% by 2010 and cross border traffic is expected to double by 2020. This is a matter of concern not only for environmentalists but also economic planners and relevant governmental agencies in the EC. There is also a crying need for diverting short route traffic (less than 100 kms) from road to more effective waterways or alternative service not only from the environmental protection point of view but also in terms of attaining better logistic management efficiencies in intermodal transportation (Intermodal Transport: The Marco Polo Programme, 1).

Marco Polo plans has been seen not only as a successor to PACT, but also, as a programme that could actively contribute to the objectives of the EU in terms of reducing the brunt on surface transport and achieving economies by diverting road services to equally, or more viable, waterways methods. (Intermodal Transport: The Marco Polo Programme, 1)

The mediative aspects of Marco Polo programme

The implications of Marco Polo in terms of mediation would be that with larger growth in the maritime and waterways industry, in the coming years, the incidence of maritime disputes is also perceived to rise substantially, since economic growth is more often than not accompanied with different types of business risks and challenges which need to be addressed promptly.

Therefore with the induction of Marco Polo, the incidence of maritime issues which may need mediative intervention is also expected to rise with the full fledged induction among member states of the EU (Intermodal Transport: The Marco Polo Programme, 1).

In the years to come, road transport needs to be substituted, as far as is possible with alternative modes of commercially viable transportation systems.

Effectiveness of mediation vs. conventional techniques

While arbitration deals with deciding the case, mediation is more concerned about settling the case, which speaks volumes about the real intention of mediation in finding amicable solutions to certain vexed maritime disputes.

Mediation is often criticized for being unable to providing binding decisions. With all fairness to mediation, it needs to be said that the binding decisions has to be provided by the parties, and not the mediator, or his mediative process.

The mediator cannot be held responsible for the outcome of a mediation progression just as a referee cannot be fined for a team not winning a game (Intermodal Transport: The Marco Polo Programme, 1).

Blameworthiness of mediators

Therefore, it need be said that the mediator need not be blamed for the failure of the parties to reach a solution since the primary responsibility of mediator is to create a platform, and infrastructure for facilitating the negotiation process. It is neither necessary nor obligatory on the part of the mediator to conduct mediating needs, nor find solutions for the issues of the parties; it is only necessary for the mediator to create an environment in which the parties could solve their problems and issues without rancour and disagreement. It is often said that the mediation process lacks conviction since the decisions are not enforceable unlike a Court Order (Results for Mediation, 1).

Objectivity of mediation process

Backlogs and onerous judicial work pending in courts

Nowadays, Courts are constrained to recommend arbitration, or mediation to disputing parties, because primarily, there are many backlogs of pending cases, and also because, even presently there are many cases remaining in progress that needs immediate attention. Therefore, Courts need to prioritise their case dealings and wherever possible attend to important or urgent cases which need immediate attention. The smaller and less significant civil cases could be dealt with through other forms of interventions, like arbitration, mediation, etc. (Gregory T., William D., and O’Connell, 1).

Elementary and primary cases could be resolved at initial stages itself, instead of being heard in busy Courts which may be burdened with more important cases for their immediate attention. In other words, mediation seeks to alleviate the burdens and responsibilities of courts by offering amicable solutions that otherwise would need to be heard by judges (Gregory T., William D., and O’Connell, 1).

The ADR procedure

Mediation is playing an increasing role in resolution of civil cases and its main inducement is the early settlement within lesser time and money mediation. A national survey of general counsel and outside attorneys in the United States conducted by the renowned accounting and audit firm Deloitte & Touché during 1996 on the subject of Alternative Dispute Resolution (ADR) discovered that corporate in-house counsel viewed mediation as the choicest alternative.

An earlier survey by the same firm in 1993 reported more than half of in-house advice chose arbitration as their principal type of ADR, with 41 percent listing mediation. However in year 1997, 65% preferred mediation and merely 28 % in-house counsel wanted arbitration as their wanted technique of Alternative Dispute Resolution (ADR) (Gregory T., William D., and O’Connell, 1).

The success rate of mediation has been so wide that nearly 88% of mediation Cases brought forth have been settled through mutual agreement of parties. The popularity of mediation as a settlement tool is not only in advanced countries In the US. Even in Europe, this has been widely acclaimed and acknowledged as a suitable vehicle for dispute settlement (Elden and Ziebarth, 1).

Benefits of mediation procedure

The main gains of mediation are in terms of retaining control over the establishment. This is self induced and not forced on to the members. It empowers the members to real solutions prearranged according to their choice and preferences. It allows the parties to resolve disputes according to their needs and requirements and in conformity with covenant or the drafting of new covenants, in substitution of earlier ones. In other words, the main idea of mediation is consensus and not imposition – if it were imposition, it would be within the purview of arbitration, or even worse, court verdicts (Elden and Ziebarth, 1).

Mediation is a process, usually coordinated by one mediator. Arbitration, on the other hand would involve a three panel board for each activity of arbitration – technical, commercial and administrative/legal. If mediation supersedes arbitration, at least two arbitrators would become redundant.

Intricate civil cases repeatedly profit from two mediators: one to work on liability and assessment of claims/damages and the other to work on insurance issues. Two or more mediators also may segregate classes of parties and work individually within those groups. In large real estate and property cases, one mediator may work with a large firm of subcontractors while the other enjoins with the prime contractors. Often many arbitrators readily leave arbitration and devote only on mediation (Elden and Ziebarth, 1).

Mediation plus arbitration techniques

Mediation, instantly followed by arbitration and sometimes called Med/Arb is also become largely accepted by the business community, where it becomes necessary to first seek a consensus and agreement between parties before working out the modalities of dispute. The first part, consensus, is taken care of by mediation, and the deeper aspects, like indemnity, liability, loss and damage assessment, involving laws and technical aspects are handled by expert professional arbitrators, etc.

It is often worthwhile to for mediators to act as sole arbitrators where the parties can agree if the matter does not resolve during mediation; but it is, in certain cases required to have separate mediator and arbitrator or single mediator and arbitration panel with three different professionals offering expert services for cause of dispute adjudication and eventual settlement (Elden and Ziebarth, 1).

The easiest way to install mediation is to concur to it. Since it is at its center, joint decision, if the parties agree to it, it can occur even without contract provisions mandating it. They can agree to mediation techniques even before the formal arbitration is enforceable. In the event mediation could solve the problem sufficiently it would be well and good. Again, mediation could also be chosen as the viable means for future disputes. Mediation can also be added to contracts. A large number of mediation cases are resolved at this stage itself, obviating the need for arbitration, or court intervention. Parties are encouraged to try mediation since failure to attempt mediation may preclude a party from an award of attorneys’ fees otherwise awardable under the contract (Elden and Ziebarth, 1).

The framework for mediation exists in well recognized formal process clauses, rules, and procedures. Commercial dispute resolution organizations, both non-profit and otherwise, have been in business for the sole purpose of resolving disputes since the bygone eras of maritime trade. (Elden and Ziebarth, 1).

Roger Fisher’s Beyond Machiavelli: Tools for Coping with Conflict (Penguin Books 1994) focuses on international conflict resolution providing insight into disputes between North and South Korea, the United States and Iraq, Egypt and Israel, among others. Fisher’s students at the Harvard Negotiation Project reported enhanced abilities to resolve all sorts of personal disputes whether with roommates, parents, or landlords (Fisher., Kopelman., and Schneider, 151).

The analytic tools and process guidelines, which enable a mediator to analyze any conflict and to figure out why a conflict has not been settled enable the development of new approaches and fresh ideas to kick, start the mediation process on the road to resolution. There does not appear to be anything inherent in maritime activities which would preclude mediation (Fisher., Kopelman., and Schneider, 151).

In the book by Roger Fisher et al, Beyond Machiavelli: Tools for coping with conflict (1994), the authors succinctly expound the theories of conflict formation and its perceived resolutions. The coping mechanism is important in dealing with disputes and it is believed that when confronted with conflict, the person should think in terms of creating a process for handling a flow of problem rather than think about seeking a particular solution that could solve it permanently.

The person should adopt a pro-active approach not a reactive one. In the need to formulate forward and progressive purposes, it is essential that the opposing person’s interests, inspiration, motives and psyche needs to be analyzed, identified and how best the conflicting ideals or stands could be resolved (Fisher., Kopelman., and Schneider, 151).

The diagram below suggests a chain of possible solution derivation using a planned and step-by-step procedure.

Beyond Machiavelli: Tools for Coping With Conflict. Roger Fisher, Elizabeth Kopelman and Andrea Kupfer Schneider. Cambridge: Harvard University Press, 1994, 151 pp.

Making the proposal is the next stage, the specifics of which could be made and result in concrete actions. Again, in mediation, it is also necessary to consider the ethical aspects. In mediation, it is often necessary to consider the process oriented views that could substantially lead to its resolution and determination. (Fisher., Kopelman., and Schneider, 151).

In Maritime activities, there does not appear to be anything inherent which would prevent the use of mediation. Its services are even sought and sustained by most of the private companies looking for economical ways of ending disputes. With increasing globalization and open waters polices pursued by most governments, especially in EU community, disputes have become endemic and common. The rate of growth of shipping sectors also generates all kinds of shipping disputes, national and international.

Add to this is the fact that different counties pursue different laws and customs to suit individual state requirements and governmental regulations. This gives rise to misunderstandings and often conflicts between nations which go beyond commercial interests. Since often millions of euros are at stake, it is imperative that quick justice needs to be meted and defaulters corrected and penalized (AAA Rule Changes: Dispute Resolution Journal ADR News, 95-96).

Thus mediation and conciliation have become lucrative practices, especially in commercially developed and prosperous countries. Maritime transaction is a necessary offshoot of world trade which will continue generating cross-border conflicts and considering the quantum of disputed assets, it is undeniable that litigation in courts would be costly and long drawn process. There are attempts to avoid such process the world over, and countries have begun to pay more attention to international commercial mediation.

For instance, for the first time AAA (American Arbitration Association) put a provision on international mediation while amending its international Rules. (AAA Rule Changes: Dispute Resolution Journal ADR News, 95-96).

MEPs in the committee and the Council agreed that remedy to mediation must always be voluntary, even if, in some cases it is advised by a court. In any event an EU citizen who chose a mediation procedure to resolve a dispute would not thereby be prevented from seeking remedy in an ordinary court. To ensure that any agreement reached by the parties to mediation proceedings is enforced, the text specifies that the agreement should be applicable in all Member States. The Council had endorsed MEPs’ first-reading position on confidentiality, to ensure that neither mediators nor the parties involved in the proceedings may disclose information regarding the mediation (AAA Rule Changes: Dispute Resolution Journal ADR News, 95-96).

This is of utmost importance since confidentiality in dealing with information regarding the mediation should not be produced during arbitration for this could result in loss of safeguards of members financial or other interests. Moreover, in an international setting dispute of maritime, confidentiality ensures that strategic business interests are not available to competitor companies in other parts of the world. (AAA Rule Changes: Dispute Resolution Journal ADR News, 95-96).

The accepted text also asks Member States to provide guidance for national mediators and to encourage the chalking out of voluntary codes of conduct to guarantee a fair trial. At a later stage, EU governments could post the list of trained mediators on the internet. Denmark has not opted for EU membership and that means that legislation will not apply to Denmark, which means residents of other EU countries wouldn’t be able to fall back on the mediation principle there. Still, a growing number of MEPs have been pushing the Council and European Commission to find a common solution, especially inasmuch as EU residents don’t even need passports to travel between most countries (Fisher., Kopelman., and Schneider, 151).

European Commission‘s directive on commercial mediation

In this context it is seen that the European Commission efforts to homogenize the practices governing international trade is indeed commendable, considering the fact that Europe is not a federal state( in line of US) and different members have various laws governing commercial trade practices. The fact that the EC has approved the European Commission‘s directive on commercial mediation in 2008, is indicative of the unified thinking that the EU members have.

It is however to be seen that this directive is not applicable where the members are not free to decide among themselves regarding the issues that need to be debated and deliberated upon. In other words, a sense of independent thinking and non-imposition is present in this directive (Mulcahy., Linda., and Tillotson, 258).

A mediation of a kind where mutual understanding and co-operative trust could benefit from this directive, but in the case of unilateral acceptance, or unwillingness to bind themselves to the directive by member states could undermine the legal validity of such an arrangement by members and could render it unfit for commercial applications, except in limited cases where all parties are desirous of seeking a solution to the problem.

Further, there are aspects of confidentiality in the conduct of mediation since affidavits or testimonials produced by parties during the course of mediation risk being revealed outside the mediation area, especially competitors. Therefore, it is necessary that mediating parties need to observe privacy and confidentiality among themselves and to the outside world. (Mulcahy., Linda., and Tillotson, 258).

The need for a centralised dispute monitoring agency under the aegis of EC directives has become the need of the day, and what individual countries need to do is to translate objective of the EC into laws in tier own countries.

Where non-conformity exists between the directives and country laws, there is need to make necessary amendment in country laws to accommodate EC directives. (Mulcahy., Linda., and Tillotson, 258).

Present context of ADR

The Courts are now considering the use of ADR’s as an alternative technique of conflict resolution and intervention, especially in the present context of burgeoning litigation costs and efforts spend on court procedures. The Court feels that small issues need to be resolved by the parties without a trial and its legal ramifications. However the main issue to contend with is the willingness and disposition of the parties to enter into meaningful dialogues and seek the ADR procedures as suitable for ending their pending issues. This is specially so when all parties do not co-operate or seek consensus. (Mulcahy., Linda., and Tillotson, 258).

Moreover, in a closed ended conflict, the aggrieved party (ies) may not be willing or agreeable to seek a third party intervention lest it be prejudicial to their interests. In some cases, delay is beneficial to contesting parties, in terms of loan interest and use of common funds, which could stop if a decision is forthcoming, or the case is decided outside the purview of the Court. (Mulcahy., Linda., and Tillotson, 258).

The law states that parties need to be agreeable to decide how disputes are resolved and the time frame, within which an amicable solution could be made.

The increasing acceptance of mediation as an effective ADR settlement is seen from the fact that the City Dispute Panel, a mediation centre , lays claim to have dealt with cases involving $4000 Million. (Mulcahy., Linda., and Tillotson, 258).

BIMCO

One of the largest private sector shipping associations, BIMCO has held centre stage in protecting the cause of shipping companies mainly in EU countries. It is the prime mover for developing a Standard Dispute Resolution Clause (SDRC) for curbing and effectively managing shipping related disputes (BIMCO Promotes Use of Mediation with New Dispute Resolution Clause, 1).

BIMCO’s Deputy Secretary General, Soren Larsen contends that the new clause would enable parties with a sound contractual base, on which the mediation process can be applied if suitable to the dispute. (BIMCO Promotes Use of Mediation with New Dispute Resolution Clause, 1).

BIMCO has ensured through its mandatory provisions governing mediation that the members may not slow down proceedings citing mediator procedures and although the parties are at full liberty at any moment, the provisions of the clauses could only be summoned with the beginning of arbitration proceedings. Should the parties convey that the mediation needs to prevail in order to seek a solution to the disputes, the arbitration process would move concurrently. (BIMCO Promotes Use of Mediation with New Dispute Resolution Clause, 1).

The clause does not seek to create conflict zones between the arbitration and mediation procedures, nor strive to create dominance of one over the other. Since mediation may have its limitations in terms of member commitment and binding the parties and lack of obligatory need, it is necessary to reinforce it with professional inputs and sense of purpose and direction provided by arbitrators.

According to the clause, the mediation expenses are born by the members and the mediators fees are mutually shared by members. (BIMCO Promotes Use of Mediation with New Dispute Resolution Clause, 1).

BIMCO recognises that mediation is a self- exercised, privatel, “without prejudice” medium and the Mediation Clause does not seek to confer mediation on parties who do not feel that this interventionist method is suitable for the solution to their dispute. However, if one party even negates the thought of using this medium for dispute resolution without proper justification, the arbitration tribunal, at its discretion, could take this negative stand into account when allotting the costs of the arbitration. (BIMCO Promotes Use of Mediation with New Dispute Resolution Clause, 1).

Conclusion

It is seen from the above deliberations that although a phenomenon matter of recent usage in the context of world trade, mediation is fast gaining currency as a honoured and tested method of global ADR. It obviates the need for protracted court deliberations and, paradoxically, is often recommended by Courts as a viable solution to maritime issues, especially minor ones that could be easily amenable to out- of- court settlements.

Along with arbitration which is a later, or concurrent version of mediation, it is believed that the continuing influx of maritime issues could be considerably reduced, which could be beneficial not only to the parties but also to the legal administrative framework which underpins business activities on a global scale.

Prognosis for the future of mediation

Finally, the writer believes that the future shall witness a boom in maritime trade, especially in global and EU markets, given their robust infra-structure and progressive business-friendly approach. With the business world closing in on competition and morbid trade restrictions, soon, trade barriers would soon become a feature of the past. Nations would vie on global terms rather than regional basis, and this would trigger large scale economic activities in all parts of the globe. With growth increases, the risk of managing businesses also escalates. There would be need to seek robust insurance covers and mandate mediation clauses favouring the seller countries in order to stay and prosper in global business, irrespective of product or service considerations.

Mediation as a shield against business threats

With global demand for mediative skills and techniques on the rise, the scope and demand for such business protection activities shall rise exponentially in later years to protect and preserve the sanctity of global and EU business enterprises and to ensure that business opportunities are not impaired by the notion of contingent threats, legal or otherwise.

If global business has to succeed and grow, it is imperative that the business environment need to be free of excessive controls, especially in the export areas. With globalization, it has become necessary for business houses to compete, not only in the national, or regional markets, but with international competitors from any part of the globe. For this the main focus needs to be on pricing and quality. A discerning global buyer needs the best quality at the most reasonable price, and thus, the country of origin ceases to hold any material significance when it comes to global trading.

Appendix 1

Source of this Appendix

Rodney M Elden and Ziebarth E. Irene “Does Mediation Have a Place in International Maritime Disputes” presented at the XIIIth International Conference of Maritime Arbitrators in Auckland, New Zealand, March 1-5, 1999 accessed on 25 August 2008 from. (Elden and Ziebarth, 1).

Some sample Clause provisions in Mediation covenants are provided below.

Sample Provision No. 1

Where, in the event of a dispute arising out of or relating to this contract, the parties wish to seek an amicable settlement of that dispute by conciliation, the conciliation shall take place in accordance with the Rules for Conciliation of the Society of Maritime Arbitrators, Inc. of New York then in force.

Sample Provision No. 2

Mediation: The parties to this agreement agree to mediate any dispute or claim arising between them out of the Agreement, or any resulting transaction before resorting to arbitration. Mediation fees shall be divided equally among the parties involved. If any party commences arbitration without first attempting to resolve the matter through mediation, then that party shall not be entitled to recovery of attorney’s fees even if they would otherwise be available to that party in any such arbitration. Arbitration: [parties insert standard provision]

Sample Provision No. 3

Mediation Followed by Arbitration. The parties agree that any and all disputes, claims or controversies arising out of or relating to this agreement shall be submitted to JAMS/Endispute, or its successor, for mediation, and if the matter is not resolved through mediation, then it shall be submitted to JAMS/Endispute, or its successor, for final and binding arbitration under the rules of the Federal Arbitration Act and processes of the Society of Maritime Arbitrators. The parties will cooperate with JAMS/Endispute and with one another in selecting a mediator from JAMS/Endispute’s panel of neutrals, and in scheduling the mediation proceedings. The parties covenant they will participate in the mediation in good faith, and that they will share equally in the costs.

All offers, promises, conduct and statements, whether oral or written, made in the course of the mediation by any of the parties, their agents, employees, experts and attorneys , and by the mediator or any JAMS/Endispute employees, are confidential, privileged and inadmissible for any purpose, including impeachment, in any arbitration or other proceeding involving the parties, provided that any evidence that is otherwise admissible or discoverable shall not be rendered inadmissible or non discoverable as a result of its use in mediation.

Either party may initiate arbitration with respect to the matters submitted to mediation by filing a written demand for arbitration at any time following the initial mediation session or 45 days after the date of filing the written request for mediation, whichever occurs first.

The mediation may continue after the commencement of arbitration if the parties so desire. Unless Otherwise agreed by the parties, the mediator shall be disqualified from serving as arbitrator in the case. The provisions of this clause may be enforced by any court of competent jurisdiction, and the party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including attorneys’ fees, to be paid by the party against whom enforcement is ordered.

Source of this Appendix

Rodney M Elden and Ziebarth E. Irene “Does Mediation Have a Place in International Maritime Disputes” presented at the XIIIth International Conference of Maritime Arbitrators in Auckland, New Zealand, 1999. (Elden and Ziebarth, 1).

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