Julian Oggel - Smits group | UNUM Transport Arbitration and Mediation

Julian Oggel, perspectives on alternative dispute resolution

UNUM believes it is important to raise awareness about the benefits of arbitration or for solving disputes. In this third edition of ‘Perspectives on alternative dispute resolution’ Julian Oggel, since October 2009 CEO of the Smits group, shares his views. Before 2009 Julian worked as a trade and transport lawyer in Rotterdam. Smits group is a privately owned direct investment company in Rotterdam. The focus is on integrating traditional manufacturing companies with modern deep tech- and fully sustainable business solutions. 

Julian, which prevailing trends in the maritime industry, and in particular in your field of expertise, do you believe will have a substantial impact on doing business (and why)?

I believe there are at the moment five prevailing trends in every industry. These five current trends are the need for speed, scale, safety, sustainability and smartness. The maritime industry is no exception to being exposed to them, even if people active in shipping often seem to consider it unique and part of a separate universe to be distinguished from other economic activities people undertake.

These five trends do not stand on their own but interact constantly and even greatly enhance each other. They are to a business what the ingredients in a cooking recipe are to a dish. As with some food ingredients, some trends are more overpowering than others. In my view the main overriding trend now is (again: just like any other industry) smartness.

After all, modern ICT systems applied well always allow (even ensure) radical disruption of the way business is conducted, whatever that business is. In the maritime field, which is basically a string of sequential and standardized actions/events, modern ICT will for instance mean that traditional ways of linking and executing the various steps in the transport chain can be completely transformed by the constant and real-time sharing of information between machines. The people traditionally involved in those steps will only disrupt that prcess if they stick to the roles they originally had. Unless they adapt to the new roles that will be available (like with technological breakthroughs in the past, there is in my view no doubt that also this time jobs disappear but work stays), they will not be involved at all. This also because the effects will play positively into all of the other four trends. For that reason alone, it will in any case not be possible to stop the momentum from this trend to smarten everything up.

Which unforeseen areas of potential disputes between parties do you think might arise from these trends (and why)?

Thinking along traditional industry boundaries with the original rules and conditions that applied there, will in my view be a waste of precious time. Due to the speed with which change happens, the adaptation process will however still create a lot of tension between parties active in the maritime logistical chain beset by its slow adaptation to new realities.

How can mediation, whether or not combined with arbitration, help to create to mutually beneficial results and competitive advantage for all parties?

In my view by fully embracing the trends identified above and translating them effectively to the field of alternative dispute resolution. Swift solutions provided through knowledgeable actors using modern technological tools will yield desirable outcomes including cost leadership.

What would be the main reasons for parties to choose to opt for dispute resolution through the Dutch system?

According to me this can only be done by proving that legally robust and widely enforceable decisions can be obtained swiftly and at competitive costs.

What steps should companies take to be able to take full advantage of alternative dispute resolution?

Companies should in my view first of all be more aware of whether their business normally entails litigation or not. If so, they should act on it by, as part of their strategy, identify how they can best deal with such structural litigation. This should include regularly assessing the alternatives at their disposal for dispute resolution and what the above trends mean to them in that specific context.

Julian’s top three ‘main benefits’ of (international) arbitration

  • The Speed of the proceedings;

  • The flexebility of the proceedings;

  • The enforceability of the award (New York Convention).

Click here to learn more about the benefits of arbitration
Johan Smit - Boonk Van Leeuwen | UNUM Transport Arbitration and Mediation

Johan Smit, perspectives on alternative dispute resolution in the logistics industry

UNUM believes it is important to raise awareness about the benefits of arbitration or for solving disputes. In this second edition of ‘Perspectives on alternative dispute resolution’ Johan Smit, partner at Boonk Van Leeuwen (www.boonkvanleeuwen.com), shares his views. Next to this he also acts as an arbitrator. Boonk Van Leeuwen is a Rotterdam based law firm, operating worldwide in the fields of shipping, transport, logistics, shipbuilding and (international) trade.

Johan, which prevailing trends in the logistics industry do you believe will have a substantial impact on doing business (and why)?

Key trends in transportation and logistics (and, more generally, the maritime industry) include artificial intelligence in maritime operations, the demand for clean energy solutions and energy-efficient integrations for greener vessels and sustainability. This growing awareness about the need for sustainability requires major investments in the short term, but also opens possibilities for cost reduction in the long term.

As an example of this, the developments in relation to remotely controlled or fully autonomous ships could be mentioned: AI-powered marine navigation systems, supported by improved sensors, collision avoidance algorithms and similar innovations will no doubt have a cost-increasing effect initially for shipping/transport companies, but will also be a tool to reach safety and substantial savings in the long term, for example on crew costs.

The impact on doing business will mainly be found in this long-term approach. Parties will need to focus on the innovations mentioned above, also in relation to future laws and regulations from governmental authorities on sustainability. Parties simply can no longer afford to focus only on short-term profits and returns.Another foreseeable effect is that parties working in the maritime industry will increasingly have to deal with third parties, i.e. parties that do not strictly belong to the logistics chain like, for example, companies providing support in artificial intelligence and software in areas like the reduction of ship related carbon emissions, the prevention of ship related accidents by decreasing human errors, and the improvement of transport efficiency by mapping out the best routes, making real-time considerations, and optimizing cargo processing through smart terminals.

Which unforeseen areas of potential disputes between parties do you think might arise from these trends (and why)?

In the context of the limited scope of this contribution, I will only mention a few examples of potential disputes and legal challenges associated with the operation of autonomous ships.

Firstly, international conventions and national legislation will have to be amended in as far as the safe operation of vessels is at stake. For example, how to deal with the duty to render assistance to another ship or the requirement that all ships shall be sufficiently manned. Could the lack of any seafarers/crew on board lead to liability towards another party?

Secondly, disputes may arise as to the liability of shipowners resulting from maritime incidents such as collisions. What happens if a collision is the result of a failure in the software of an autonomous ship; will liability shift from the shipowner to the software designer?

Thirdly, communication between autonomous ships and manned vessels or traffic services can be a source of disputes in the sense that directions and instructions should be mutually understandable.

How can mediation, whether or not combined with arbitration, help to create to mutually beneficial results and competitive advantage for all parties?

In cases of dispute, parties will usually have already made their own attempts to reach a settlement, if only to avoid costly and time-consuming litigation.

For this reason, the usefulness of mediation is sometimes questioned; the argument is that if a dispute could be resolved outside court proceedings or arbitral proceedings, the parties would already have done it themselves.

However, I believe that in certain cases, mediation can indeed add value and increase to the chances of reaching a mutually acceptable settlement.
Although mediation is usually quite informal, following an “official” mediation route is likely to lead to an increasing willingness to reach a solution, specifically since mediation is a confidential process. In addition, parties are generally more satisfied with solutions which they themselves have helped to materialize.

Moreover, in a process that aims at settlement rather than judgment, there is much more focus on ongoing work relationships and commercial interests.

What would be the main reasons for parties to choose to opt for dispute resolution through the Dutch system?

In contractual maritime disputes were no arbitration is agreed, the case will be brought before the ‘maritime chamber’ in accordance with art. 625 Code of Civil Procedure, with the advantage that the judges who have to rule on such disputes are familiar with the relevant legal provisions concerning transport, logistic services, maritime incidents, and the like.

UNUM arbitration on the other hand offers parties a reliable, accessible, and affordable dispute resolution.

The UNUM Arbitration Rules are clear and transparent and both claimant and respondent have the right to appoint an arbitrator of their choice, enabling them to choose a dispute resolution expert with experience and know-how in the (legal or technical) area covered by the dispute.

What steps should companies take to be able to take full advantage of alternative dispute resolution?

When parties are negotiating the formation of an agreement, usually commercial aspects will receive the most attention. In the light of an intended commercial cooperation, possible future disputes are not a favourite subject.

Yet, when drafting an agreement, the contracting parties would be wise to ask themselves in what area a problem might arise under the contract to be made.

Submitting a dispute to the “normal” court is not always the best option for dispute resolution, especially not when such a possible future dispute is likely to have a technical background rather than a legal nature. In such situations, parties have an interest in having their dispute referred to (an) arbitrator(s) specialised in the field in which the dispute arises.

Johan’s top three ‘main benefits’ of (international) arbitration

  • The enforceability of the award (New York Convention);

  • The influence of the parties on the selection of the arbitrators;

  • The flexibility of the proceedings.

Click here to learn more about the benefits of arbitration

 

Rik van Waasbergen - HerikVerhulst | UNUM

Rik van Waasbergen, perspectives on alternative dispute resolution in the logistics industry

UNUM believes it is important to raise awareness about the benefits of alternative dispute resolution. Therefore we’ve asked Rik van Waasbergen, partner Rotterdam based law firm HerikVerhulst N.V. (www.herikverhulst.nl), to share his perspectives. Rik’s main fields of work concern transport, insurance, international commercial law and ship building contracts and disputes.

Rik, which prevailing trends in the logistics industry do you believe will have a substantial impact on doing business (and why)?

One of the trends I see in the logistics industry is that the logistics cooperation between parties, especially in respect of 3PL and 4PL arrangements, become more legal and the numbers of pages of the logistic services contracts become higher.

In these relations the principals intend to increase the contractual exposure of the logistic services provider and the contractual liability regime becomes an important aspect from a commercial point of view.

In contract negotiations it becomes more important to discuss the liability regime from an insurance perspective involving the question, who can best arrange for insurance cover for the goods respectively for cover for liability for damage to the goods stored/carried/handled.

Which unforeseen areas of potential disputes between parties do you think might arise from this trends (and why)?

An unforeseen consequence of the above and an unforeseen area of dispute is that parties often might not be fully aware of the implications of a liability regime which imposes a more severe liability regime on the logistic services provider apart from the topics which are subject to the mandatory provisions of law/treaty (such as the CMR or the Hague Visby Rules).

If parties no longer apply the standard liability limitations of the standardly relied on branch conditions in their 3PL and 4PL contracts the financial interest of a dispute can become extremely high. This makes amicable settlement discussions difficult. Such will not always be in the interest of the principal itself but instead will mostly be in the interest of its insurers who have insured the goods.

Imposing severe liability regimes on the logistic services provider might provide those cargo insurers with a ‘nice’ recourse position, but the principal can be stuck in longwinded legal disputes, with all negative consequences for the operational relationship.

Further, the premium paid and the cover under the liability insurance policy of the logistic services provider will generally also depend on the use of the branch conditions and with that on the agreeing on the standard limitations and exclusions of liability. A claim under a logistics service contract can via that route evolve into a dispute under one’s liability insurance policy which increases the risk of legal disputes for the logistic services provider as well.

How can mediation, whether or not combined with arbitration, help to create to mutually beneficial results and competitive advantage for all parties?

It is obvious that in a 3PL or 4PL contract or in fact any cooperation which continues for a longer time an arising dispute can best be dealt with as smoothly as possible if both parties wish to continue the cooperation.

In such a case the interests of the parties involved requires consideration possibly even more so than the direct financial interest of the dispute which has arisen.

In such cases a mediation process whereby not only the facts of the case at hands and the contractual liability regime but in fact all interests of the parties can be confidentially considered can be helpful and beneficial to the parties compared to full proceedings.

What would be the main reasons for parties to choose to opt for dispute resolution through the Dutch system?

One of the main advantages of dispute resolution via the Dutch system is that the Dutch system is costs effective compared to other available jurisdictions.

Such is certainly the case for UNUM arbitration and mediation. The quality of the Dutch arbitrators and mediators is high, whereas under the UNUM Arbitration Rules parties can (each) nominate an arbitrator of their choice.

What steps should companies take to be able to take full advantage of alternative dispute resolution?

The ‘one and only thing’ to arrange for to be able to take full advantage of alternative dispute resolution is to agree on it. Such can be done in clear wording in one’s contracts and agreements. The UNUM website provides for clear wordings which can simply be copy pasted.

Rik’s top three ‘main benefits’ of (international) arbitration

  • The enforceability of the award (New York Convention);

  • The finality of the award (no appeal);

  • The speed of the proceedings.

Click here to learn more about the benefits of arbitration