JSE-The Japan Shipping Exchange, Inc.

GUIDE to TOMAC ARBITRATION

(2)Settlement Agreement Reached upon Recommendation by the Arbitrators

SETTLEMENT AGREEMENT (Sample)

[Claimant] Muromachi 2-3-16, Nihon Bashi, Chuo-Ku, Tokyo
[Shipowner] Kofuku Shipping Co., Ltd.: Representative: Namio Umino, Representative Director
[Respondent] No. 32 Akashi machi, Chuo-Ku, Kobe-Shi, Hyogo-Ken
[Charterer] Kaisan Bussan Co., Ltd.: Representative: Sakae Hirano, Representative Director; Legal Agent: Morio Yamakawa, Attorney-at-law

Concerning the dispute over the time charter for the S.S. Heisei Maru concluded between the above parties on 20 October, 1990, both the Claimant and the Respondent hereby comply with the recommendation of the arbitrators appointed in accordance with Section 15 of the Rules of Maritime Arbitration of the JSE and have reached an amicable settlement as described below.

The Respondent will pay by wire transfer the sum of Yen55,000,000 into the Claimant company's bank account (***** Bank, ****** Branch, Account No. *******, Account Holder's Name ******) by 30 October, 1998.
Both the Claimant and the Respondent confirm that there are no other credits or liabilities relating to this dispute.
The arbitration costs for the credit of The Japan Shipping Exchange, Inc.*1 in the amount of Yen _____________(including consumption tax of Yen _____________) are to be equally borne by the Claimant and the Respondent. Additional costs are to be borne by the party that incurred them and shall be charged to no other.
When the payment described in No. 1 above is made, then the Claimant will withdraw the above arbitration application. *2

As proof of the above settlement, we make three copies of the settlement agreement; after being signed by the Claimant, the Respondent and the Arbitrators, the Claimant and the Respondent each holds one authentic copy and The Japan Shipping Exchange, Inc. keeps the original.

20 October, 1994

Claimant: Kofuku Shipping Co., Ltd.: Representative: Rep. Dir. Namio Umino (Signature)
Respondent: Kaisan Busan Co., Ltd.: Attorney Representative: Morio Yamakawa (Signature)

As Observers:: TOMAC of the JSE; Arbitrator: Zento Suzuki (Signature); Arbitrator: Eihei Garamori (Signature); Arbitrator: Daikichi Sato (Signature)

Explanation of Settlement Agreement Reached upon Recommendation

It frequently happens that after carrying out a number of hearings the arbitration panel receives a request from one or both of the parties for a suggested settlement.

The terms of the settlement are agreed to by all of the parties. In some cases payment is concluded by the passing of cash from one party to the other in front of the arbitration panel. In others the creditor party has no need for obtaining security because the debtor party has given a promissory note. The example given here is for the case where the creditor party, knowing full the need for security, elects not to obtain it.

(Note 1.) In the absence of extenuating circumstances, in the case of Ordinary Arbitration the total fees paid to The Japan Shipping Exchange, Inc. by both parties; in the case of Simplified Arbitration, the fee paid by the Claimant to The Japan Shipping Exchange, Inc. shall be the arbitration costs. It is customary in the case of settlements for the arbitration costs to be split uniformly (ordinarily there are two parties so we say "halve") between the parties because neither party has "won" or "lost". As the arbitrator's fees are included within this amount, apart from any amount paid to an attorney representative if one has been retained, the cost of the dispute settlement is quite economical.

(Note 2.) During the time until the settlement fund is paid in full, the arbitration proceedings are kept open (in order to keep tolling the time bar) in case the settlement agreement is breached.