Achieving a settlement outside the courtroom can be done in several ways. Entering into private negotiations with the counterparty before court or arbitral proceedings are commenced, is one option. Participation in judicial or extrajudicial mediation, with assistance from the ordinary courts, arbitral institutions, or independent mediators, are others.
For lawsuits that have been filed with the ordinary courts, we see an increased use of court administered mediation, and an increased percentage of settlements. This is partly due to targeted efforts by the courts. Judges in many of the Norwegian courts specialise in mediation, and some of the larger district courts have specific guidelines for mediation of larger commercial disputes.
As mentioned in our newsletter on so-called “escalation clauses”, we also see an increased use of mediation prior to arbitral proceedings. Commercial agreements with arbitration clauses increasingly include an obligation to attempt to solve a case amicably before arbitral proceedings can be commenced. The trend of increased mediation efforts is reflected in the introduction of mediation rules by various arbitral institutions.
Negotiations and dialogue usually bring the parties closer together – even if the situation seems deadlocked. Therefore, the traction for negotiation and mediation efforts prior to the more formal legal proceedings is welcomed.
On 3 April 2023, the Nordic Offshore and Maritime Arbitration Association (NOMA) introduced a set of Mediation Rules and a Model Mediation Agreement. The purpose is to facilitate a settlement, even if an arbitration has been initiated. NOMA’s Mediation Rules are in general more extensive and detailed than the mediation rules of most other relevant international and Nordic arbitral institutions.
NOMA was established in November 2017 on the initiative of the Nordic countries’ Maritime Law Associations, with the purpose to promote transparent and cost-efficient arbitrations for disputes within the maritime and offshore industry. The background for establishing NOMA was that traditional arbitration institutions such as the International Chamber of Commerce (ICC) and London Maritime Arbitrators Association (LMAA) were perceived as too rigid and not compatible with the more flexible Nordic legal tradition. Even though the dispute resolution products NOMA provides are primarily aimed at disputes within the maritime and offshore industry, NOMA’s rules are formulated so that they can be applied in all commercial disputes, regardless of industry.
NOMA provides a set of Arbitration Rules and Best Practice Guidelines, as well as Fast Track Rules, which aim at providing a certain degree of flexibility and party autonomy, while at the same time promoting transparency and foreseeability in the process. Although NOMA’s recommended Arbitration Clause is not a so-called “escalation clause”, the Best Practice Guidelines, which shall be “taken into account” according to the recommended Arbitration Clause, encourage the parties to consider appointing a mediator and to allocate time during the case preparation for mediation/settlement discussions.
The NOMA Mediation Rules and the Model Mediation Agreement are expected to be an important addition to NOMA’s existing products for efficient and transparent dispute resolution. The Mediation Rules aim at providing the parties with a balanced, specific and practical approach to establish an effective and transparent mediation.
The NOMA Mediation Rules
The NOMA Mediation Rules provide a structured approach to mediation with the purpose to facilitate amicable solutions and settlements of disputes. The rules will apply when the parties have agreed to refer their dispute to NOMA Mediation or to mediation in accordance with the NOMA Mediation Rules.
The NOMA Mediation Rules consist of 22 articles and are aligned with UNCITRAL’s Mediation Rules (2021). As the NOMA Mediation Rules are based on “best practice” and UNCITRAL’s Mediation Rules, many of the provisions are somewhat similar to the corresponding provisions of the mediation rules of other arbitral institutions.
That said, the NOMA Mediation Rules contain more detailed regulations on several topics than the mediation rules of most other arbitral institutions, such as the Stockholm Chamber of Commerce (SCC) Mediation Rules (2023), the Oslo Chamber of Commerce (OCC) Mediation Rules (2017), the Danish Institute of Arbitration (DIA) Rules on Mediation (2015) and the ICC Mediation Rules (2014). The more detailed regulation is particularly connected to the preparation and conduct of the mediation and could facilitate for a more efficient and streamlined mediation process. This may be useful for parties who are not so familiar with mediation procedures.
Upon appointment of the mediator (or mediators), the parties and the mediator shall enter into a mediation agreement addressing the relevant formalities of the mediation. While the mediation rules of certain other arbitral institutions, such as the OCC Mediation Rules, also arrange for such an agreement to be entered into, NOMA has provided a Model Mediation Agreement that can be used for this purpose. The Model Mediation Agreement addresses the relevant formalities of the mediation, such as fees and costs, impartiality, preparation and performance of the mediation, and appears to be a valuable component to secure an orderly and effective mediation.
The NOMA Mediation Rules facilitate for a Mediation Management Conference (MMC) to be held to clarify and agree on practical aspects of the mediation and list a number of items to be addressed in the MMC. In addition to mere formalities such as the time and place for the mediation, the NOMA Mediation Rules also facilitate for the parties to discuss inter alia the schedule for submissions, presentation of help-documents, and the use of witnesses and experts. The mediation rules of many of the other arbitral institutions also provide for some sort of preparatory meeting, however, it is only the NOMA Mediation Rules and the OCC Mediation Rules that contain a detailed plan for the items to be discussed and agreed on in such meeting, with the NOMA Mediation Rules containing the more extensive list. It is our opinion that the items to be addressed in the MMC according to the NOMA Mediation Rules, will provide for a streamlined process.
The NOMA Mediation Rules also contain a more detailed regulation of the submission of documents than the mediation rules of most other (relevant) arbitral institutions. The parties shall prepare a joint summary of the dispute and/or a joint set of documentation to be submitted to the mediator, which outlines the issues in the dispute between the parties and describes the key facts and key legal arguments. If arbitration or other legal proceedings have already commenced, the parties may agree that the statement of claim and the statement of defence and later pleadings shall be used as mediation submissions. The parties are under an obligation to co-operate, and in good faith comply with any reasonable request for additional documentation and information from the mediator(s).
The NOMA Mediation Rules further provide a quite detailed regulation of the main principles and a suggested framework for how a NOMA Mediation shall be conducted. The overall goal of the regulation seems to be securing a clear role understanding and the mediator’s neutrality. If desired, the parties and the mediator(s) may agree on other principles.
If the parties reach a settlement, a settlement agreement shall be entered into for the settlement to be legally binding between the parties. Furthermore, the parties may agree to appoint the mediator as an arbitrator and request him or her to confirm the settlement agreement in an arbitral award, which renders the settlement enforceable in most jurisdiction under the New York Convention.
Whereas for instance the SCC Mediation Rules (2023) and the ICC Mediation Rules (2014) provide fixed and predictable fees for the mediator(s), the NOMA Mediation Rules contain no equivalent regulations. The relevant rates for the fees to be paid to the mediator(s) are assumed agreed on in the mediation agreement. However, either party may refer the mediator’s statement of fees and expenses to NOMA for review.
We consider the NOMA Mediation Rules to be a valuable addition to the products NOMA offers, especially in light of the benefits mediation efforts have when disputes arise, and the increasing use of mediation prior to arbitration. While it is beneficial to have a large degree of flexibility in a mediation process, we believe that the more detailed and extensive regulation of the mediation process in the NOMA Mediation Rules provides this whilst at the same time providing useful input and a solid framework for the mediation. As the NOMA Mediation Rules are not specific for or limited to disputes in the maritime- and offshore industry, or disputes subject to the NOMA arbitration rules, they also provide suitable rules that parties to other disputes can agree on to ensure an efficient and adequate mediation process. We also expect to see that some of the more detailed ― and expedient ― regulations that the NOMA Mediation Rules and Model Mediation Agreement provide will influence the mediation rules of other arbitral institutions, in the same way that we have previously seen that NOMA’s CMC Matrix and Best Practice Guidelines have done.