GUIDE to TOMAC ARBITRATION

2. Arbitration Closing Procedure Where Award Given Without Reasoning

The parties may reach a settlement agreement by themselves or fix the terms of the settlement in compliance with the arbitrators recommendation during the arbitration proceedings. One method of guaranteeing performance in accordance with the agreement and of demonstrating the certainty of the creditor/debtor relationship to third parties is the issuance of an arbitration award of which the text consists of the conditions of the settlement agreement.

However, in contrast with an arbitration award issued after completion of the discussions, no reasoning attaches to the terms of the settlement. What is issued is an arbitration award sans reasoning. This avoids the problem of obtaining a notarial deed that may be offensive to the paying party and as far as TOMAC is concerned is the best settlement model.

(1)Agreement for Arbitration Award Sans Reasoning
(Sample)
 
S.S. Heisei Maru Arbitration Panel
Mr. Zento Suzuki
Mr. Eihei Garamori
Mr. Daikichi Sato

ARBITRATION REGARDING THE DISPUTE OVER
THE TIME CHARTER FOR THE S.S. HEISEI MARU

This constitutes notice that, with respect to the arbitration award for the above captioned matter, both parties have agreed that they do not want to have the reasoning for the arbitration award included in the award.

10 October, 1994

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


Explanation of Agreement For Arbitration Award Sans Reasoning

While Section 801 (1) of the Arbitration Act provides that arbitration awards given without reasoning may be dismissed, Clause 2 of the same law provides that when parties have reached an agreement (to the effect that no reasoning need be attached) the lack of reasoning in the award may not be used to dismiss an arbitration award.

When the parties have reached agreement with respect to the terms of the settlement but because of the circumstances performance of the agreement does not take place immediately in the presence of the arbitrators, or there is partial performance with the remainder of the performance carried over, in order to secure performance of the carryover, the parties make and deliver to the arbitrators an agreement requesting the issuance of an arbitration award without reasoning, the text of which is to be the contents of the recommended settlement.

There is no need to state why reasoning for the award is not required, it is enough simply to indicate that the parties have agreed that no reasoning is required for the award.

(2) Arbitration Award Sans Reasoning
ARBITRATION AWARD IN THE DISPUTE OVER
THE TIME CHARTER FOR THE S.S. HEISEI MARU (Sample)

Authentic Copy*1

Claimant (Shipowner) Muromachi 2-3-16, Nihon Bashi, Chuo-Ku, Tokyo
Kofuku Shipping Co., Ltd.
Representative: Representative Director Namio Umino
Respondent (Charterer) 32 Akashi machi, Chuo-Ku, Kobe, Hyogo-Ken Kaisan Busan Co., Ltd.
Representative: Representative Director Sakae Hirano
Attorney Representative: Morio Yamakawa

As regards the dispute between the above parties over the time charter for the S.S. Heisei Maru dated 20 October, 1990, the following arbitrators, appointed in accordance with Section 15 of the TOMAC Rules, after due consideration award as follows.
AWARD
  1. The Respondent is to pay to the Claimant the amount of Yen 68,000,000 plus interest at 6% per annum from the date of the arbitration award until the date that payment has been completed.
  2. The costs required for the issuance of the arbitration award are and shall be split evenly between the Claimant and Respondent.*2
  3. The Tokyo District Court shall have jurisdiction over this arbitration award.
 
FACTS AND ARGUMENTS

No. 1 Summary of the Claim and Defence*3

(Claimant)
  1. The Respondent to pay to the Claimant Yen219,000,000 plus interest at 6% per annum from the date of the arbitration award until the amount has been paid in full.
  2. The costs of arbitration to be borne by the Respondent.

(Respondent)
  1. Dismissal of Claimant's claims.
  2. The costs of arbitration to be borne by the Claimant.

No. 2 The Arguments of the Parties *4

1. Common ground
(1) On 20 October, 1990 the Claimant (the shipowner) and the Respondent (the charterer) concluded a 5 year time charter (hereinafter the charter) for the S.S. Heisei Maru ( __________________d/t) (hereinafter referred to as the vessel) owned by the Claimant. The charter hire for the first three years of the charter was to be Yen25,000,000 per month and the charter hire for the last 2 years was to be determined by the agreement of the parties.

(2) Later, citing the actual reduction in freight revenues due to the downturn in the maritime field and the high yen the Respondent demanded a reduction in the charter hire and after consultation between the parties, as of June, 1993 the charter hire was reduced to Yen23,000,000 per month.

2. Points in Dispute

(Claimant)
(1) In the further modification discussions of charter hire of October, 1993, the Respondent proposed charter hire of Yen15,000,000 per month, and the Claimant, in light of all the circumstances, was willing to lower the charter hire as low as Yen20,000,000 per month but no agreement was reached.

(2) Accordingly, no agreement was reached and the charter hire remained at the previously agreed amount of Yen 23,000,000 per month, and therefore the Respondent was in breach when in November, 1993, they unilaterally wired Yen 16,000,000 into the Claimant's bank account. Consequently, the Applicant claimed the difference of Yen7,000,000 from the Respondent.

(3) However,... [following portion omitted]

(Respondent)
(1)During the further discussions in October, 1993, the Claimant indicated an understanding of Respondent's circumstances. Although an agreement was not reached in the end, the Respondent nevertheless paid the provisional sum of Yen 16,000,000 which was close to the agreed upon amount.

(2) In this way ... [following portion omitted]

No. 3. Evidence

The Claimant submits Claimant's Exhibits No. 1 to 3, and applies to present Daisuke Amayu as witness. *5

The Respondent submits Respondent's Exhibits No. 1 to 30.

REASONING

In accordance with the agreement formed by the parties on 10 October, 1994, we hereby omit the reasoning from this arbitration award.*6

20 October, 1994

 
TOMAC of the JSE
Arbitrator: Zento Suzuki [signature] [seal]*7
Arbitrator: Eihei Garamori [signature] [seal]
Arbitrator: Daikichi Sato [signature] [seal]
 
Explanation of Arbitration Award Sans Reasoning
This type of arbitration award can be drafted when there is an agreement that the reasoning is not required. The efficacy of an arbitration award is unchanged whether or not the award contains reasoning. Under Section 800 of the Arbitration Act any arbitration award has the same efficacy as a final court judgment.
  1. (Note. 1) As it is an arbitration award, in accordance with Section 799 (2) of the Arbitration Act, authentic copies are served on the parties (actually drafted upon settlement and hand delivered to all parties) and the original along with attached proof of receipt from the parties is deposited at the court with jurisdiction. The sample indicated here is of the authentic copy served on the parties.
  2. (Note 2.) Except in special circumstances, the arbitration costs in the case of Ordinary Arbitration are the sum of the fees paid into The Japan Shipping Exchange, Inc. by all of the parties, and in the case of Simplified Arbitration are the fees paid by the Claimant. Contrary to the case of amicable settlement, the basic principle is loser pays andthe percentage of the costs to be paid by each party is determined with reference to the win/loss apportionment. Please refer to Note 1 on the Settlement Agreement, for the nature and breakdown of the arbitration costs.
  3. (Note 3.) Each of the parties' claims are organized and arranged.
  4. (Note 4.) The parties' complete arguments are concisely organized and the factual relationship is clearly stated.
  5. (Note 5.) Listed here are the individuals who actually appeared as witnesses in order to clarify the factual matters.
  6. (Note 6.) It is clearly stated that the reason for the award is omitted in accordance with the agreement between the parties to waive their right to receive a reason for the arbitration award.
  7. (Note 7.) Section 799 (1) of the Arbitration Act provides that the arbitrators must sign and seal the arbitration award and date it with the date the award was made.
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