ADR goes small

IN a perfect world, no boat owner would ever fail to observe the provisions of the collision regulations, equipment would never fail and there would never be any misunderstanding between those who own and purchase vessels and those who provide the vessels themselves, their equipment and the other services which make it possible for people to take to the water.

However, the reality is that the sea is an unforgiving mistress, weather and sea conditions are difficult to predict, despite the best efforts of the meteorological services, equipment is not foolproof, and mistakes and errors of judgment will continue to be made by those in charge of yachts and other vessels. There are ever-larger numbers of people using our waterways and sea-lanes and it is a sad but inevitable fact that disputes involving leisure craft will continue and probably increase.

For many years, those who operate commercial vessels have frequently sought to avoid the difficulties of going to court by the use of arbitration schemes. For example, the vast majority of salvage disputes are referred through Lloyd's to Lloyd's Salvage Arbitrators, and it is not unusual for marine collisions to be dealt with by the same arbitrators following a private submission to arbitration. Similarly, the London Maritime Arbitrators Association and other bodies deal with a large number of commercial shipping disputes.

Although the Royal Yachting Association (RYA) and the British Marine Federation (BMF) have been prepared to assist parties in small craft disputes by providing advice regarding arbitration, there has, to date, been no formal system of dispute resolution. More frequently the boat owner who finds himself or herself in dispute, either with another boat owner or with a service provider, has had to turn to the courts as the only means of redress.

Experience has taught that the resolution of all types of disputes arising from matters related to yachts and small craft can be expensive both in terms of time and money. Too often the costs involved have been disproportionate to the sums at stake and there has been a perception that the tribunals have not been the best qualified for dealing with these types of disputes.

Further, recent UK governmental guidelines and provisions require that various industries should provide a system of mediation or arbitration. In the light of these considerations, the BMF, in conjunction with the RYA and the Chartered Institute of Arbitrators (CIArb), has decided to develop a mediation and arbitration scheme and set of rules governing these matters. These will be open to all their members and any other parties who may wish to make use of the scheme.

The purpose of the scheme is to provide a system of mediation and arbitration to cover the widest possible range of disputes which may arise between those involved in yachts and leisure craft, and to do so at a reasonable cost and within a reasonable period of time.

In order to ensure that both the industry and the boat-owning public can have complete faith in the independence of the scheme it will be administered by the CIArb, which will organise a panel of experienced practitioners to act as the mediators and arbitrators. The CIArb will also maintain a list of specialist experts who can provide assistance when necessary for the sensible resolution of disputes.

In some circumstances the parties may prefer to choose their own mediator or arbitrator from the panel of mediators/arbitrators, or to choose one from the list of experts. The reasons for doing so will depend upon the circumstances of a particular case and the wishes of the parties involved. It is possible to envisage a situation where the nature of the dispute revolves around one particular issue of an expert nature, for instance the loss of a mast through a rigging failure, and where the legal issues are simple. In these circumstances the parties may prefer to invite a person with particular knowledge of the expert nature of the issues to be the mediator or arbitrator.

The rules provide the parties with the opportunity to take this course provided that they both agree to the choice that has been made. Alternatively, the parties may feel that the factual and legal issues are more complex and may, therefore, prefer to have the matter dealt with by a particular individual who has been independently appointed and has the legal, mediation and arbitration experience in the type of matters which arise in connection with small craft. In the event that the parties do not agree to the appointment of a particular individual as either mediator or arbitrator, the rules then provide that the CIArb will appoint the mediator or arbitrator.

A number of aspects of the scheme are worthy of note. The first is that every case will initially be dealt with as mediation. If the mediation is successful, this will then be the end of the matter. However, if it is not, the case will automatically proceed to arbitration and the mediator will make such interlocutory orders, for example for disclosure of documents, as are necessary for this to occur with the minimum of delay or additional cost.

The rules provide for the mediator to act as arbitrator provided that he considers this to be appropriate and there is no objection from the parties involved. If the mediator declines to act as arbitrator, or if one party objects, then the CIArb will appoint an arbitrator from the panel of arbitrators.The advantage of having the mediator continue to act as arbitrator is that he will already be familiar with the nature of the dispute and its relevant facts. This will reduce the cost of having a new arbitrator read into the relevant documentation and may also make the final arbitration procedure swifter and, therefore, less expensive.

However, it is recognised that the functions of a mediator and an arbitrator are essentially different in that a mediator may have private conversations with each party, whereas the arbitration process necessarily demands that the proceedings are entirely open and transparent. In practice, therefore, it is only in cases where both parties, and indeed the mediator himself, are satisfied that the individual's ability to act as an impartial arbitrator has not been compromised by having acted as mediator, that he should go forward as arbitrator.

A further important aspect of the scheme is that the mediator's fees are fixed and, subject to special provisions relating to the costs of time-wasting, the arbitrator's fees are based on a fixed hourly rate but capped at a percentage of the value of the claim or counterclaim made. This allows the parties to make a reasonable estimate of the likely costs of mediating or arbitrating a dispute and encourages them to assist in accelerating the process. It also prevents the cost of the mediation and arbitration from becoming disproportionate to the size of the claim or counterclaim.