Mediation avoids hefty legal costs for cross-border shipping dispute

• Background

  A dispute occurred between the plaintiff, a large ship-owner and the defendants, who were traders, over indemnities in connection with several bills of lading.

  The plaintiff claimed against the defendants under four letters of indemnities. These had been issued in order for the plaintiff to deliver to the defendants four container loads of freeze-dried fruits carried from Vietnam to US discharge ports. The cargo was transported on the plaintiff’s vessel. The defendants failed to produce the original bills of lading and instead gave letters of indemnity to obtain delivery of the cargo.

  The defendants had refused to indemnify the settlement sum that was paid to the shipper (who were also holders of the four original bills of lading), as well as other costs and expenses which the plaintiff had incurred for misdelivering the cargo to the defendants.

• The mediation process

  An action in Court was filed in the US and Singapore in early 2016. However, both parties decided to mediate the issue as they felt that mediation would allow them to move forward with other business contracts without the dispute hanging over their heads. Additionally, they did not want the matter to proceed for a full trial as a trial would be time-consuming and legal costs on both sides would have been prohibitive.

  The mediation, conducted at SMC, took both parties six hours to reach a settlement.

  During the process, the mediator considered the claim amount and the nature of the defendants’ businesses as well as gave them a reality check on their ability to pay any judgment sum including legal costs both parties would incur in any legal actions in Singapore and the US.

• Outcome

  Both parties agreed that the defendants would pay the agreed mediated amount by instalments over 40 months.

  The mediator said: “The turning point of the mediation came when the plaintiff recognised that the defendants were owners of a small business and were unable to pay any judgment sum upfront or at all.

  “This was a favourable outcome for both parties as the plaintiff, being a large ship-owner, did not require the payment upfront, while the defendants were able to carry on their business.”

  The deal also allowed both parties to continue to operate their businesses and maintain a long-term working relationship.