While opting for arbitration rather than court in
case of a dispute is common practice in the
maritime industry, mediation still is in its infancy. HANSA spoke to [B]Jonathan Lux[/B] about the
advantages of this form of dispute resolution
The term AOR stands for Alternative Dispute Resolution – arbitration or mediation – you changed it to Affordable Dispute Resolution. What[ds_preview] are the advantages of mediation over arbitration?
Jonathan Lux: The key advantages are fourfold: speed, cost, preservation of relationships and creative solutions. Speed and cost largely go hand in hand, because lawyers, arbitrators and mediators charge on an hourly rate basis. If the process is quicker, than the cost should be less. People talk of cost savings potentially in the region of 80% if not more but that of course depends on when the mediation is taking place. If it is at the beginning of the dispute you will save much more costs than when it starts at the door of the court.
What tends to happen in court or arbitration proceedings is that each party advances its case and then looks for justification in the form of evidence. So you have almost self-reinforcing silence built up by each party and then the judge or arbitrator decides which is right and which is wrong. It is said by the way that 90% of the cases are fact-driven – and parties have different perceptions of what these facts are. The more conflicts there are on the facts, the more bitter a case can be to fight. And of course at the end of any bitter fight, neither party will have any appetite to do future business with the other party.
In mediation the approach is quite different. You are not looking at the parties’ formal positions but you are trying to drill down to their true interest. So as an example maybe your formal position is that you want to recover a million from me but your true interest may encompass the fact that actually there is real value in continuing to do business with me. And at some point that can mean your best interest is being served by perhaps compromising your position. So because the focus is interests rather than positions, you are mapping out common ground instead of putting the spotlight on the issues that divide the parties. And because you are building up common ground at the end of the day the parties were achieving a settlement, it has been their settlement and they worked hard to achieve it.
I have seen it very often that parties that weren’t speaking at the beginning of the mediation day, after the settlement agreement was signed, were going to the pub together to have a drink. Disputes drain energy and are a negative force and if you manage to put it behind, you remember all the things you liked about the other party.
You also mentioned »creative solutions« as a key advantage …
Lux: Creative Solutions really is a development of that last point. The judge or arbitrator only has the power to decide on the respective claims and counter claims put before him or her. For example I claim there was breach of clause five of the charter party and that I am entitled to damages from you of 5mill. $. You defend that and say also I was in breach of clause 24 of the charter party and that entitles you to recover 5mill. $ from me. The judge or arbitrator does not have the power to say: What about those other things that neither of you are claiming, wouldn’t that help resolve the issues between you? A mediator may spot these other factors and help the fighting parties to identify where their wider interest might lead them.
You criticize the sequential provisions for good faith discussions, mediation and arbitration that is used in many charter parties or that is even statutory in some countries because this may prevent easier solutions in some cases. What would be your recommendation?
Lux: I suppose my preferred position is to have a tailor-made dispute resolution clause which for example provides arbitration but states expressly that the arbitrators have the power to stay the arbitration proceedings on the application of one or both of the parties or when the arbitrators themselves consider that the interests of justice require it. So when might the interests of justice require it? When the cost is becoming disproportionate to the claim amount would be a good example. I think that is more flexible than these sequential provisions – first mediation, then arbitration – which are a bit wooden and robotic.
Interview: Felix Selzer
Jonathan Lux, a former partner of Ince & Co, is a well-known mediator of commercial disputes and associate member of Stone Chambers. He is founding member of CEDR and titulary member of the CMI.
Felix Selzer
