Recent publication of BIMCO Mediation/Alternative Dispute Resolution Clause 2021

Whilst the BIMCO Mediation Clause 2020 focussed on mediation (in the traditional sense), there are many other forms of ADR that have become increasingly popular as practical means of dispute resolution. The new BIMCO Mediation/Alternative Dispute Resolution Clause 2021 is, therefore, wider in scope and embraces not only traditional mediation but also other forms of ADR such as (but not limited to) Early Intervention and Early Neutral Evaluation. It is designed to enable the parties to enter into an ADR process of a type appropriate for their needs/the dispute.

Unlike the 2020 clause, commencement of proceedings is not a pre-condition to the right to call for ADR under the new clause. On the contrary, paragraph (a) enables a party to call on the other to agree to ADR at any time, whether before or after the commencement of proceedings. It is hoped that this will encourage parties to consider ADR at an early stage before costs begin to increase.

Once a party does call for ADR, paragraph (b) requires the other party to confirm within 14 days whether or not it agrees to ADR and, if it does not agree, to give reasons for its refusal to do so. Paragraph (g) provides that any refusal to agree to ADR may be considered by the competent Tribunal/court when determining costs. It is hoped that the need to give reasons for refusal when coupled with the possibility of costs sanctions will encourage the parties to embrace ADR positively with a view to achieving settlement.

If the parties agree to ADR, paragraph (c) obliges the parties to participate in their chosen ADR procedure in good faith and without undue delay. It is hoped that this will reduce the risk of parties nominally agreeing to ADR but then making no genuine effort to engage in the process, something which the other party may seek to bring to the attention of the Tribunal or court when it comes to the assessment of costs.

As with the 2020 clause, paragraphs (d) and (e) of the BIMCO Mediation/Alternative Dispute Resolution Clause 2021 provide that participation in the ADR process does not prevent the parties from taking steps to protect its interests and that documents disclosed in the ADR process shall not be disclosed in proceedings except to the extent disclosable by law and/or the procedure governing the relevant proceedings.

The Clause provides that, save where otherwise agreed, each party must bear its own costs of the ADR procedure and with 3rd party costs to be shared equally.  

It is essential to remember that agreement to participate in ADR pursuant to the clause does not interrupt any applicable timebars. If a timebar is approaching, a party should take steps to protect time by commencement of proceedings or agreement of an extension to the timebar. The clause is also not a substitute for a law and jurisdiction provision and should always be incorporated into the Charter.

The BIMCO Mediation/Alternative Dispute Resolution Clause 2021 is a welcome addition to the BIMCO suite of Charterparty clauses. Mediation (in the traditional sense) is not the only form of ADR. BIMCO’s incorporation of other forms of ADR into the clause will increase awareness of the ADR options available and enable the parties to assess which form of ADR is right for them and their dispute and assist in achieving a swift and cost-effective resolution of their claim(s).

Andrea Skeoch, Deputy Director in North’s FD&D team, was part of the drafting committee.