Society of Maritime Arbitrators, Inc.

Conciliation

In addition to arbitration, the SMA offers conciliation as an alternative means to resolve disputes. Following the UNCITRAL Conciliation Rules (adopted by the United Nations in 1981), the SMA Rules for Conciliation [Document No. 4], adopted in 1988, offer formal conciliation procedures to the international maritime community, which can be used as a prelude or as an alternative to litigation or arbitration. The procedure, which is voluntary and confidential, provides the parties with a non-binding way of settling their disputes amicably without jeopardizing friendly, on-going commercial relationships.

Once the parties have agreed to conciliation and selected a sole conciliator, as provided 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 conciliator may request further written statements and supporting documents and evidence from the parties. Thereafter, the conciliator assists the parties in reaching an amicable settlement. To achieve this end, the conciliator is free to meet with the parties together or separately. If a settlement is reached, the conciliator will draw up the Settlement Agreement. Once signed by the parties, the Settlement Agreement is enforceable as if it were an arbitration award under the provisions of the Federal Arbitration Act. The Settlement Agreement, as well as all the proceedings, remain totally confidential and are not published.

Up until the time of the agreement, the proceeding may be terminated by a written declaration of the conciliator 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 conciliator 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 conciliation under the SMA Conciliation Rules at any time even if their Charter Parties provide for arbitration and even if the arbitration proceeding has already commenced.

Mediation

In response to the increasing popularity of court-mandated 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 very flexible and can be varied by agreement of the parties. They are voluntary and confidential. Parties can agree to them whether they have an on-going arbitration or whether they do not have any mediation or arbitration clause in their contracts. Some intervention from the SMA is provided if parties need help in appointing the mediator. The SMA Rules for Mediation offer a model mediation clause which provides for SMA mediation and, if it fails, for SMA arbitration. Under these Rules for Mediation, the mediator is to be independent, neutral and impartial. He or she is not supposed to act as arbitrator in the subsequent arbitration, if the mediation failed.

In order to take advantage of the alternative of mediation, parties should include the SMA Model Mediation 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 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.

Both the Conciliation and the Mediation Rules are voluntary and non-binding. Whereas the SMA Conciliation Rules do not allow the parties to be represented by counsel, the SMA Mediation Rules do. Both sets of rules require that individuals having authority to settle the dispute attend the proceedings.