Mediation - A natural role for Shipbrokers

The Baltic Exchange and the London Maritime Arbitrators Association ("LMAA") are currently promoting a mediation scheme.

Mediation is a form of assisted negotiation and involves the appointment of a mutually acceptable person to attempt to assist the parties to reach a settlement. This facilitating role of the mediator is one naturally practiced by shipbrokers. The role of a mediator is not to pass judgement on the parties. Legal training is not a prerequisite to the role.

There are no formal pleadings but before the mediation itself each side will prepare a case summary to be given to the mediator and the opponents. On the day of the mediation the parties normally commence the mediation by making an opening statement. This is informal it is often useful to ask one of the members' own senior staff to make the statement as opposed to having it delivered by a lawyer. The involvement of senior staff is important. One of the main features of mediation is the need for the parties to have someone present with the necessary authority to settle the matter. This does not mean that they must have unlimited authority but simply that someone must have seniority sufficient to negotiate and agree a settlement. The mediation is private and confidential throughout and cannot be referred to in any subsequent proceedings.

In most mediations the parties will go into separate rooms after the initial meeting. The mediator will then discuss the case independently with each side in turn and move between them passing on offers and counter-offers as they are made. Eventually the parties will reach an agreement.

The resolution of the dispute is the parties' own agreement. The fact that it is not the result of a judge deciding in favour of one position over another means the solution can include anything that addresses the parties' needs. No judge can order that a ship owner will accept a charter for a different period at a different rate. However, the parties can agree to a commercial resolution incorporating any additional factors that may be available. The benefit of having a shipbroker/mediator to help the parties to find the basis for such a resolution is obvious.

Mediation is usually an option considered after formal proceedings have been issued. The majority of mediations are, if not court ordered, at least positively encouraged by judges. It has, to a degree, become part of the litigation process often taking place late in the day when significant legal costs have been incurred. The Baltic Exchange/LMAA scheme may encourage parties to use this form of dispute resolution at an earlier stage saving both costs and the damage to commercial relationships caused by legal proceedings. Hopefully a commercially rather than legally based resolution service will emerge.

ITIC's experience of mediation has been very positive. Mediations involving ITIC's members have included both claims against the member, typically members alleged to have been negligent, and cases where the member is bringing the claim. For example, a large commission dispute between a shipbroker and a shipyard was resolved by mediation. The way that the parties' commercial relationship can be allowed to continue was well illustrated by one of our members who while mediating a vigorously disputed allegation of professional negligence nevertheless still fixed the same owner's ship during the mediation.

Mediation is not a solution for every dispute. It can however offer fast practical dispute resolution. Shipbrokers offer years of commercial experience and hopefully will be encouraged by the Baltic Exchange/LMAA scheme to train, and subsequently offer their services, as mediators.