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