Mediation Clause 2020

Overview

The Mediation Clause 2020 has been taken directly from BIMCO’s Dispute Resolution Clause (which has been re-drafted to deal only with arbitration and is now called the BIMCO Law and Arbitration Clause 2020). The objective is to provide parties with a free-standing clause that they can choose to incorporate into their contracts during their negotiations as appropriate.

Mediation Clause 2020

BIMCO Mediation Clause 2020

The parties may agree at any time to refer to mediation any difference and/or dispute arising out of or in connection with this contract. In the case of any dispute under this contract in respect of which arbitration has been commenced, the following shall apply:

(a) Either party may at any time and from time to time elect to refer the dispute or part of the dispute to mediation by service on the other party of a written notice (the “Mediation Notice”) calling on the other party to agree to mediation.

(b) The other party shall thereupon within fourteen (14) calendar days of receipt of the Mediation Notice confirm that they agree to mediation, in which case the parties shall thereafter agree a mediator within a further fourteen (14) calendar days, failing which on the application of either party a mediator will be appointed promptly by the Arbitration Tribunal (“the Tribunal”) or such person as the Tribunal may designate for that purpose. The mediation shall be conducted in such place and in accordance with such procedure and on such terms as the parties may agree or, in the event of disagreement, as may be set by the mediator.

(c) If the other party does not agree to mediate, that fact may be brought to the attention of the Tribunal and may be taken into account by the Tribunal when allocating the costs of the arbitration as between the parties.

(d) The mediation shall not affect the right of either party to seek such relief or take such steps as it considers necessary to protect its interest.

(e) Either party may advise the Tribunal that they have agreed to mediation. The arbitration procedure shall continue during the conduct of the mediation but the Tribunal may take the mediation timetable into account when setting the timetable for steps in the arbitration.

(f) Unless otherwise agreed or specified in the mediation terms, each party shall bear its own costs incurred in the mediation and the parties shall share equally the mediator’s costs and expenses.

(g) The mediation process shall be without prejudice and confidential and no information or documents disclosed during it shall be revealed to the Tribunal except to the extent that they are disclosable under the law and procedure governing the arbitration.

Explanatory notes

Although parties are free to mediate at any time, the provisions of the BIMCO Mediation Clause 2020 are only triggered by the commencement of arbitration proceedings by one party against another. Should the parties decide to use mediation to resolve all or part of their dispute, the arbitration process continues to run in parallel. The Mediation Clause can be used in scenarios where parties may mediate several times during an arbitration process in order to attempt to resolve parts of a larger dispute. 

The consensual nature of the mediation process is reflected in the freedom given to the parties to choose where, how and on what terms the mediation should be conducted. The parties are not obliged by their choice of law and place of arbitration to conduct their mediation in the same jurisdiction. The mediation may be conducted in whatever location is convenient to both parties. If the parties cannot agree to how and where the mediation should be conducted, the mediator may set the arrangements on their behalf.

BIMCO’s recognises that mediation is a voluntary, confidential, “without prejudice” process and the Mediation Clause does not attempt to impose mediation on parties that do not believe the technique to be appropriate to their dispute. Nevertheless, should one party simply refuse even to try resolving the dispute through mediation, the arbitration tribunal is given the right to take any refusal without good reason into account when allocating the costs of the arbitration. 

To ensure that the mediation does not interfere with the conduct of the arbitration procedure the Clause provides for the arbitration tribunal to consider possible conflicts with the mediation when setting the timetable for the arbitration. 

By default, the Mediation Clause provides that each party should bear its own costs incurred in the mediation, but share the mediator’s costs and expenses.

Although the mediation process has been integrated with arbitration in an attempt to minimise any conflict of timetabling between the two procedures the confidentiality and legal rights of the parties are fully protected by the Clause. No information or documents disclosed during the mediation can be revealed to the arbitration tribunal, unless required by law. Similarly, the right of either party to take measures they consider necessary to protect their interest is not affected by the mediation.

BIMCO’s Clause is designed for use internationally under a wide variety of jurisdictions. Because of differences in the application of statutory time limits under different jurisdictions, the Mediation Clause is careful to draw to the attention of the parties that they should be aware that the mediation process might not necessarily interrupt time limits.

BIMCO recommends that users of the mediation provision should seek legal advice in respect of whether the mediation process in their chosen jurisdiction affects time limits.

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