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New dispute resolution mechanism raises hopes among port operators

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Shri Vaibhavi Logistics

NEW DELHI : A Conciliation and Settlement Committee (CSC) — an alternate dispute resolution mechanism newly set up by the Ministry of Ports, Shipping and Waterways to deliberate on contractual disputes between concessionaires, contractors, consultants, service providers and major ports for amicable resolution of issues — has achieved its first success.

On December 27, Chennai Port Authority and Chettinad Logistics Pvt Ltd signed a settlement agreement to end a decade-old dispute over a contract awarded to Chettinad in 2008 for installing a semi-mechanised closed conveyor system for coal handling at Jawahar Dock and its operation and maintenance (O&M) for three years. The O&M contract, though, ended prematurely after the Madras High Court ordered Chennai Port to stop handling dusty cargo such as coal and iron due to environmental concerns.

The dispute was referred for arbitration and most of the arbitration award was in favour of Chettinad. Chennai Port appealed against the award in the Madras High Court but lost the case. Instead of approaching the Supreme Court against the High Court order, Chennai Port and Chettinad mutually referred the dispute to the CSC.

“We saved a lot of money by signing a settlement agreement mediated by the CSC,” a Chennai Port official said.

Speedier mechanism

The settlement agreement brokered by a three-member CSC headed by Gopal Krishna, former Secretary in the Ministry of Ports, Shipping and Waterways, raise hopes of an alternate and speedier settlement of many disputes involving major ports which are otherwise languishing in courts.

Presently, there are more than 100 references pending before the courts or arbitration panels on contractual disputes in major ports.

Dispute resolution mechanism followed through arbitration or courts is found to be exceedingly time consuming and financially burdensome on commercial entities like ports.

“The early resolution / settlement of claims, preferably through an out-of-court settlement process, is in the interest of all the stakeholders,” said a Ministry official.

Voluntary process

The Ministry has issued guidelines on the functioning of the CSC.

In cases of disputes pending before arbitration tribunals or courts, either party could make an offer to the other party to come forward and explore the possibilities of conciliation and settlement through the CSC.

If the opposing party is not willing to take recourse to this process or has any reluctance whatsoever, there is no compulsion and they are free to follow the provisions as per law.

Wherever the parties agree to approach the CSC, they shall be required to keep the proceedings pending before the arbitral tribunals or courts in abeyance.

Disputes arising out of orders issued by the erstwhile Tariff Authority for Major Ports (TAMP) may also be resolved through the CSC mechanism.

‘Settlement forum’

Ministry sources explained that the CSC procedure may not be treated as alternate arbitration proceedings, where both parties come with statement of claims / defence, arguments / counter arguments, rejoinders and written submissions aided by their respective lawyers.

“The forum of CSC is a settlement forum, where the essence is mutual give-and-take, rather than the strict legal position of the parties. Hence, the parties are expected to be brief and to the point before the CSC about their respective stands and view the exercise in the spirit of conciliation and settlement,” a Ministry official said.

The conciliation-cum-settlement proceedings shall be completed in each case through five sittings within six months from the day the reference is made to the CSC.

When the parties sign the settlement agreement, it shall be final and binding on the parties.

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