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