Mediation: Interlegal lawyers settled the dispute under the Ship Repair Contract

The Client – foreign shipowner applied to Interlegal for dispute settlement due to its indebtedness under the Ship Repair Contract.

COVID-19 spread throughout the world for a few months, resulting in expected economic crisis which affected, in particular, sea carriages. Due to essential decrease in cargo flow, lots of market players (including shipowners) faced difficulties in fulfillment of their contractual obligations within duly prescribed terms.

Since ship repair works were performed in due time and to the full extent, the Client fully recognized the fact of its monetary obligations against the ship repair yard. However, with regards to the above circumstances, the Client was unable to make payments under the Payment Schedule stipulated by the Contract. In addition, the Client also incurred penalties accrued for each day of payment delay and faced a threat of ship arrest under maritime claim and suspension of its business activity.

Both parties were concerned of preserving business relations and mutually profitable cooperation in future.

In order to settle all the disputes, discrepancies and claims arising from the Ship Repair Contract, the parties nominated Interlegal as mediator.

Having analyzed the conflict, Interlegal lawyers, with regards to financial, economic and other interests of all the parties, assisted in communication, holding negotiations and working-out terms for dispute settlement. As soon as the parties reached a compromise, Interlegal lawyers drafted amicable agreement which prescribed new Payment Schedule, reasonable decrease of penalties and other terms and conditions.

Due to prompt actions of Interlegal lawyers, the parties were able to settle the dispute without unreasonable arbitration costs, as well as to preserve sound business relations between the companies.

It should be noted that mediation may apply almost in any disputes. One of its main advantages is that the parties may, by mutual consent, determine the issues they want to discuss and to take into consideration while working-out a decision, but in such case they need an impartial and independent mediator able to maintain a fair balance of interests and to facilitate avoidance of additional arbitration costs.

Interlegal lawyer Nikita Kocherba, managed by associate attorney Vitalii Tolstik, led the case.