German Maritime Arbitration Association campaigns successfully – GMAA events in April and May
Difficult economic circumstances and slow business have lead to an increase in the number of disputes. Creditors pursue their claims more vigorously and debtors try more often to delay payments – to “string their creditors along” – or even to avoid payment altogether on the basis of quite creative excuses. Either scenario triggers tenacious disputes requiring resolution – ideally swiftly, at low costs and without disrupting business relations between the parties more than necessary. The topic “dispute resolution” is commonly ignored when new contacts are negotiated thereby thoroughly underestimating its factual – and legal – significance. It is often enough only when the parties end up at loggerheads that they realize their dispute resolution system is inadequate. The German Maritime Arbitration Association (GMAA) has thus organized a series of presentations and seminars to show the importance of arbitration in Germany to the international shipping world to give an inside view of procedural areas of interest and, generally, to assist in the better understanding of German arbitration and its suitability as a dispute resolution tool for the maritime industry.
GMAA looks back on a busy and successful month with three different events in which German arbitrators explained the advantages of having disputes decided by arbitration in Germany. The overwhelmingly positive response received by the GMAA confirms how much the shipping industry is in need of a fast, cost efficient and competent arbitration format.
On 5 April 2011, the GMAA was invited by the German Ship Owners’ Association (VDR) to expand on the advantages of German arbitration over arbitration in London. Following a paper presentation session GMAA members engaged in a mock arbitration involving a dispute between a ship owner and a shipyard to show “in the flesh” the efficient workings of GMAA. Just as in the majority of GMAA cases, this dispute was settled amicably after the parties presented their case and the arbitrators made a well-reasoned proposal for an amicable settlement. About 20 young delegates attending from different ship owning companies were very interested in the advantages of GMAA arbitration, and a lively discussion with the panellists followed.
On 6 April 2011, the first “GMAA Academy” session kicked off at the office of the GMAA secretariat in the Hanseatic Trade Centre in Hamburg attended by about 50 delegates from the core of the maritime industry – technical experts and representatives from shipping companies – being introduced to the ins and outs of GMAA procedure – by experts and veteran arbitrators.
On 25 April 2011, six GMAA members travelled to Istanbul to present GMAA including a mock arbitration session at the Turkish Chamber of Shipping. The Turkish shipping community was very interested in the efficient, professional and fair procedure under the GMAA Rules. “We were very pleased to see that the GMAA procedure fully meets the expectations and needs of the International Shipping Community”, said Dr. Christoph Hasche, General Secretary of GMAA, after the spectacular reception given by the GMAA in a beautiful restaurant at the banks of the Bosporus. Finally, on 11 May 2011 “GMAA 40” had its first meeting. The “sub-40ties” is an informal group of younger professionals with an interest in maritime arbitration, who meet to exchange their views and experiences. Main topic of the event which was attended by roughly 59 young professionals was be the legal impact of the nuclear catastrophe in Japan on the shipping industry.
The GMAA will continue its campaign for German maritime arbitration also in May. On 20 May 2011, the Hamburg Chamber of Commerce organizes the China Arbitration Day 2011 – of course in cooperation with the GMAA. Just a few days later, on 26 May 2011, the GMAA is invited to the Maritime Competent Centre in Leer (East Freesia) to show how arbitration works under GMAA Rules. This event is organized together with the University of Emden/Leer, Faculty of Shipping. Another highlight will be the seminar on arbitration conducted by Germanischer Lloyd; the German Classification Society and the GMAA agreed to cooperate within the famous “GL Academy” on the topic of dispute resolution on a worldwide basis.
GMAA was also asked to give lectures on maritime arbitration at the University of Hamburg; this project will start in autumn 2001, simultaneously with the second GMAA Academy.
Why are German shipping lawyers and the members of the GMAA so convinced of the advantages of German arbitration?
The German Maritime Arbitration Association – GMAA for short – has for the past few decades provided the global maritime sector with high-quality arbitration facilities for resolving disputes in all areas of shipping. Germany is becoming more and more popular as a venue for international arbitration. In international shipping in particular, the large majority of contracts provide for disputes to be settled by arbitration – above all charter parties, ship-building contracts, management agreements and bills of lading. An increasing number of parties, in particular from outside Germany, are agreeing that disputes between them should be settled or determined in accordance with the GMAA Rules.
Based on German procedural law and the UNCITRAL rules, the GMAA has established sector-oriented arbitration rules which ensure high quality, legally certain, independent, quick, efficient and cost-effective proceedings, which result in awards which are enforceable worldwide. These arbitration rules have stood the test of time for nearly three decades. They are adapted as necessary to current developments in practice and case law.
Proceedings under the GMAA compare favourably with those in other jurisdictions. But they differ from arbitration proceedings in other countries in a number of respects. At the heart of these differences is § 13 of the GMAA Arbitration Rules, according to which the arbitrators work towards an amicable settlement at all stages of the proceedings and, when it is possible, even suggest to the parties the terms of settlement. Thus, an arbitral award is made only if the arbitrators do not succeed in steering the parties towards a compromise. This does not turn GMAA proceedings into mediation, but it does introduce mediatory elements into the arbitral proceedings. As a result of this, a quick and therefore cost-effective amicable solution to the problem can be achieved in the majority of cases. If the settlement talks initiated by the arbitrators fail, the arbitral tribunal delivers a worldwide enforceable award quickly and in a completely impartial manner, without being bound by its previous suggestions.
Whether or not the substantive questions of law forming the basis of the dispute are to be decided under German law or that of another country, for example English law, is decided solely by the parties in the arbitration clause. The clause can have, for example, the following wording where the desired national law is inserted in the blank (if no national law is stated, German law applies to the substantive questions of law, including international conventions incorporated into German law):
“All disputes arising out of or in connection with this contract or concerning its validity shall be finally settled by arbitration in accordance with the Arbitration Rules of the German Maritime Arbitration Association. [________] law to apply.”
The arbitration clause is also valid in its short form:
“GMAA Arbitration, [________] law to apply.”
Even where a foreign substantive law is applicable the proceedings still reflect German principles of thoroughness and effectiveness In contrast to the position under US or English law, proceedings in Germany do not provide for pre-trial discovery or disclosure, with the result that the parties are not obliged to provide a comprehensive exchange of documents. German procedural law can dispense with such pre-trial procedures without a loss of quality because of the different standard of proof required. In addition, in Germany, a strict test of relevancy slims the proceedings down by ensuring that anything which is irrelevant is thrown out. It is not only the oral hearing, but also the entire procedure which is much shorter than in other countries, as a result of the amicable settlements which are frequently reached.
The arbitrators’ fees are fixed in accordance with a schedule which is applied at the outset of the case, based on the value of the claim. The hourly rates of German lawyers (it is not actually necessary to retain lawyers, because any party can appear before the arbitral tribunal without legal representation) are consistently lower than those of lawyers in other countries. All this saves time and money.
The more than 140 members of the GMAA, who come from Germany, England, the USA, France and Switzerland, are specialised maritime law lawyers, or professionals from the shipping industry, experts and former judges. They have great experience in maritime arbitration, are familiar with GMAA proceedings and are available to the maritime sector the world over for appointment as party representatives or arbitrators.
Further information on GMAA arbitration and on the GMAA can be found, in English, on the following website: www.gmaa.de.
By Hasche, Christoph Dr.
Taylor Wessing