The Baltic and International Maritime Council (BIMCO) has introduced a new standard Mediation/Alternative Dispute Resolution Clause 2021 (Mediation/ADR Clause 2021) which shipping industry players can consider including in their charter parties or other contracts.

The new clause, which replaces the Mediation Clause 2020, aims to facilitate the amicable resolution of disputes between commercial parties and save valuable management time and legal costs by avoiding arbitration and court proceedings.

The key features of the Mediation/ADR Clause 2021 are as follows:

1. The new clause has been drafted as an all-encompassing ADR clause that makes reference not only to the traditional mediation but also other forms of ADR such as early intervention and early neutral evaluation. In selecting the appropriate mode of dispute resolution, BIMCO advises parties to consider issues such as the nature of the claim, the guidance required and the status of parties’ relationship;
2. Either party may invite the other to participate in the selected ADR procedure prior to or after the commencement of any proceedings. This is in contrast to the Mediation Clause 2020 where commencement of proceedings was a pre-condition to requesting ADR;
3. The parties are required to give reasons for any refusal to agree to ADR and any unjustified rejection to participate in ADR may result in cost consequences;
4. The parties are obligated to take the necessary steps to progress the ADR in good faith and without undue delay;
5. BIMCO clarifies that participation in ADR under the Mediation/ADR Clause 2021 is not intended to affect a party’s right to seek relief necessary to protect its interest (i.e. potential injunctions, arrests or other enforcement actions) and documents/information disclosed during the ADR will not be revealed in any arbitration or court proceedings except to the extent disclosable under the law and procedure governing the relevant proceedings; and
6. The parties are to bear their own costs in the ADR and share any third party costs and expenses equally (unless otherwise agreed).

Readers should note that the Mediation/ADR Clause 2021 must be used together/alongside with the BIMCO Law & Arbitration Clause 2020 or any other law and arbitration/jurisdiction clause chosen by parties as it is not intended to replace the vital law and jurisdiction provisions in BIMCO contracts.

Starboard observes that despite recent increased interest in ADR worldwide, the earlier BIMCO Mediation Clause 2020 was not widely accepted and used. The changes made in the BIMCO Mediation/ADR Clause 2021 seek to improve the ADR offering in the hope that their attractiveness would heighten awareness of and/or encourage the use of ADR. Much would depend on whether the industry is influenced more by the need to save time and costs that would otherwise be spent on the case itself or by the need to resolve a dispute in a way that gives rise to a determined result that stands as a legal or commercial precedent.

Dentons Rodyk thanks and acknowledges Associate Kavitha Ganesan for her contributions to this article.