UN Convention Designed to Mediate International Disputes May Assist Shipping and Logistics Groups

Land Transport

Source: Handy Shipping Guide, 2019-08-19

Specialist Transport Lawyer Recommends UK Signs Up - But will all governments honour it? 

The law, as it relates to the shipping industry, can be a complicated and expensive beast. Now specialist shipping and logistics lawyer John Habergham of Humber-based Myton Law has put the case for the UK to sign up to a new United Nations Convention relating to the settlement of international commercial disputes through mediation.

In Spring 2020 the new ‘Singapore Convention’ could well come into force having seen 46 countries, including the US and China, sign up this month. The UK and the European Union are notable absentees however and Habergham believes UK importers, exporters and all involved in international trade and the carriage of goods, stand to benefit from the Convention, which aims to provide for the enforcement of mediated settlements of disputes involving agreements across country borders. John Habergham believes the UK will sign up to the convention, saying:

"There is no reason why we shouldn’t and every reason why we should. I can only assume that currently the Government’s attention is diverted elsewhere. Given the nature of mediation, in practice non-compliance rates are low, as parties are unlikely not to follow through with an agreement they have put time and effort into. “Where this new convention could really make a difference is indicated by a survey conducted by the International Mediation Institute in 2014 showing that 93% of respondents were more likely to engage in mediation with parties from another country if there were a way of enforcing mediation settlement rights. So, the Singapore Convention will lend more legitimacy to the process of mediation."

Currently, if settlement of a mediation requires enforcement, this can involve court proceedings in one country which must then be enforced in another jurisdiction, if possible, or arbitration, followed by an arbitral award which then must be enforced in the country where the assets are located. All this is costly and time-consuming, and may discourage parties from engaging in a mediation process at the outset.

Mediation of course, relies on this level of enforcement, something we have seen can simply not happen even when governments themselves are found to be at fault. We have written numerous pieces regarding the Doraleh container terminal which was seized from operator DP World by the government of Djibouti in February last year.

This came about following a case brought by the state agency against the port managers in the London Court of International Arbitration (LCIA) alleging corruption. When the prosecution failed, the government simply expelled DP World staff and took over the assets. The subsequent cases, all brought again in the London Courts, as specified in the management contract terms in case of disputes, all saw DP World victorious in every hearing and the company awarded around half a billion dollars in compensation, interest and costs, not a cent of which has been forthcoming.

The Singapore Convention has been designed as a catch-all, covering all mediation-type resolutions regardless of whether it is titled specifically 'mediation' or not. Similarly, the mediation does not have to be carried out by an accredited mediator to count. As long as the proceedings fall within the Convention's broad definition of a mediation, the parties may apply for relief. Proof that the proceedings were a mediation may be given through signatures from both parties, or from the mediator.

One particular feature of the Singapore Convention is that signatory countries are able to specify that the Convention will only apply if both parties have agreed to it. This provides the opportunity of opting out of the Convention. The courts of signatory countries are expected to handle enforcement of settlement agreements, something which was clearly never going to happen in the Doraleh case, one assumes regardless of whether the Convention had been in place at the time.

Photo: Based in London’s Fleet Street the LCIA is actually an international institution, generally regarded as the leading global forum for commercial dispute resolution. The Court is made up of up to thirty five members, selected to provide and maintain a balance of leading practitioners in commercial arbitration, from the major trading areas of the world, and of whom no more than six may be of UK nationality.

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