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06 August 2008
Arbitration is the most traditional and well-known form of alternative dispute resolution. Most arbitration arises from contracts in which the parties agree that if a dispute occurs, it will be arbitrated rather than taken to the courts. At the conclusion of the arbitration hearing, the arbitrator (usually an attorney, a retired judge or an organization that provides arbitration services) makes a decision that is final and binding, subject to only very limited review.
The arbitrator is an impartial but experienced person selected by both parties to the dispute. Although arbitration takes place outside the courtroom, the arbitrator nevertheless reads briefs, reviews documentary evidence, hears testimony, examines evidence and ultimately renders an opinion on liability and damages. An arbitration award can be entered as a judgment after being confirmed by a court of competent jurisdiction.
The advantages of arbitration include the following:
Arbitration is a consensual process; parties will arbitrate only where they agree to do so. Such agreements are generally one of two types: (i) agreements that provide that if a dispute should arise, it will be resolved by arbitration - these will generally be normal contracts (eg, general conditions) that contain an arbitration clause; and (ii) agreements that are signed after a dispute has arisen, agreeing that the dispute should be resolved by arbitration (sometimes called a ‘submission agreement’).
The Netherlands is one of the world’s leading players in transport by sea. Furthermore, it is the home country of several of the market leaders in the offshore (installation) industry. There is expert knowledge on how to transport by both sea and land, the provision of offshore services and shipbuilding. The Netherlands is home to at least three of the finest arbitration institutes in the world with respect to transport and other related services, including combined transport, shipbuilding, road transportation and offshore services.
The Stichting Arbitrage Logistiek (SAL) can provide arbitration in disputes concerning national and international road transport, physical distribution, storage, combined transport, transport over inland waters, rail transport and air transport. The arbitration procedure is conducted according to the SAL Arbitration Rules and ends with a judgment by the arbitrator(s). According to the rules, appeals are not allowed. The rules can be found at www.arbitrage-logistiek.nl.
A SAL arbitration has low costs. The costs and fees can be found in Annex II of the rules. The administration costs are €100, the arbitrators charge €250 per hour and the legal representation costs are fixed up to a maximum of €136 per hour. Compared with the costs involved in regular court proceedings, SAL arbitration is a very cost-effective alternative.
Another arbitration institute with a special focus on transportation by sea, shipbuilding and offshore-related services is the Stichting Transport and Maritime Arbitration Rotterdam Amsterdam (TAMARA). TAMARA is a non-profit foundation established in 1988 by a number of Dutch maritime lawyers and Dutch organizations and associations of enterprises in the fields of shipping, transport and international trade.
TAMARA has, in addition to its own national expertise, an international approach towards arbitration that allows foreign arbitrators and experts to participate. Its rules are drawn up in Dutch and English and the whole procedure can be carried out in either language, or in German or French.
Parties, foreign or domestic, need not worry that choosing TAMARA automatically means the application of Dutch law. Both TAMARA and the Dutch courts respect not only other people’s languages, but also the use of non-Dutch law.
If parties opt for Dutch law, which is naturally the case if only Dutch parties are involved, they choose one of the most modern maritime codes in the world due to a complete overhaul of the Dutch Civil Code including the law on traffic and transport in 1992 (translated into English and French). The code has been given a facelift but it originates from the Napoleonic Code and consequently parties from other continental European countries will find themselves on familiar ground with Dutch legislation and proceedings.
Over 100 arbitrators - half of whom are jurists (ie, lawyers, professors of law and former judges) and half of whom are experts in various fields - have committed themselves to charge no more than:
TAMARA keeps the administration fees equally low; they vary from €300 to €900 depending on the amount at stake.
TAMARA’s rules can be found at www.tamara-arbitration.nl, in Dutch or English.
After initial notification, 21 days are allowed for the appointment of arbitrators, followed by six weeks for filing a complaint and then a further six weeks for a reply. If a case is not too complex, an oral hearing will be held - generally meaning that the system moves as fast as possible.
Disputes dealt with in recent years have concerned shipbuilding (including yachts, super yachts, carriers and oilrigs), charter disputes, stevedoring, agency, physical distribution, freight forwarding and disputes in the fields of insurance, financing and road carriage; in short, all matters related in any way to transport.
By adding “Arbitration in Rotterdam as per the TAMARA Rules” to the general terms and conditions, bills of lading and charterparties agree to arbitration in accordance with the TAMARA rules. The reference to Rotterdam does not mean that the arbitration has to be carried out in Rotterdam. It can be carried out anywhere in the world; the addition “in Rotterdam” is made only to comply with Dutch formalities on civil procedure.
A third Dutch arbitration institute that deals with transport-related issues is FENEX. It is common practice for Dutch forwarders to apply the Dutch Forwarding Conditions that can be found at www.fenex.nl. The conditions contain an arbitration clause (Clause 23) for disputes concerning:
Such disputes between freight forwarding companies and customers will in principle be settled in the last instance by arbitration. The conditions include a brief set of rules for the arbitration procedure. FENEX deals with the administrative aspect of the procedure.
Arbitration by a permanent arbitral tribunal has been common in the forwarding business since 1934. Currently the costs for FENEX’s administrative activities are €200 if either party is a member of FENEX or €400 if neither party is a member. These costs do not cover the arbitrators’ fee. That fee is based on the time the arbitrators spend on an arbitration case. In this regard, the arbitrators require that a deposit be paid before proceedings begin, as an advance on arbitration costs. The exact amount of costs involved is hard to estimate as they depend on the complexity of the dispute, among other things.
Clause 23(4) of the conditions states that an arbitration is commenced by registered letter or fax with a brief overview of the merits of the case and the claim. The letter or fax should contain the names of the parties and the name or names of all authorized representatives. The Secretariat of FENEX will acknowledge receipt of an application for arbitration as soon as possible and will send a copy of the application to the other party, to the chairman of FENEX and to the dean of the Bar Association, with a request to each of the latter two to appoint an arbitrator and to notify the secretariat of the name and address of the person appointed.
Upon receipt of such notification the secretariat shall, as soon as is possible:
Upon receipt thereof, the secretariat shall notify the third arbitrator of his or her appointment, at the same time sending a copy of the application for arbitration and a copy of the general conditions.
The secretariat shall also notify both parties to inform them of the names of the appointed arbitrators. If all three arbitrators have not been appointed within two months of the application for arbitration being lodged, they shall be appointed by the president of the district court within whose jurisdiction the forwarder's business is situated, upon the application of either party. Normally the person appointed by the dean will act as chairman of the arbitration board. If the arbitrators are appointed by the president of the district court, the arbitrators shall decide for themselves who is to function as chairman.
The place of arbitration shall be where the chairman of the arbitrators is established. The arbitrators shall make their award as good persons in equity, subject to their liability to observe the relevant legal rules. Where applicable, they shall also apply the provisions of international transport treaties, including the Convention on Contracts for the International Carriage of Goods by Road. The arbitrators shall determine the procedure for the arbitration, subject to the parties being given the opportunity to put forward their cases in writing and orally. FENEX recommends the procedure to the arbitrators, without any form of engagement. The recommendations cover a range of matters, including the term for conclusions and oral elucidation. The recommended procedure can be found at www.fenex.nl.
There are many other arbitration institutes. Almost every commodity trade has its own institute with its own rules. For example, the international sugar trade is overseen by the Sugar Association of London, which has its own arbitration institute with its own set of rules for settling by commercial arbitration any disputes which have been referred to it.
Arbitration has many advantages. Besides cost and speed, the biggest advantage is that the dispute is decided by people with not only knowledge of the applicable rules, but also knowledge of, and experience in, the particular business which gave rise to the dispute.
(1) For further details, please see http://en.wikipedia.org/wiki/Convention_on_the_Recognition_and_Enforcement_of_Foreign_Arbitral_Awards.
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