JSE-The Japan Shipping Exchange, Inc.

GUIDE to TOMAC ARBITRATION

3. Delivery of the Arbitration Award

(1) Arbitration Award

ARBITRATION AWARD IN THE CASE OF
THE TIME CHARTER DISPUTE FOR THE S.S. HEISEI MARU*1 (Sample)

Authentic Copy *2

2-3-16 Muromachi, 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

With respect to the dispute between the above parties regarding 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, award as follows as a result of serious discussions.

AWARD

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. *3
The costs required for the issuance of the arbitration award are __________________and the Claimant shall pay _____________________and the Respondent _____________________. *4
The Tokyo District Court shall have jurisdiction over this arbitration award.

FACTS AND ARGUMENTS *5

No. 1 Summary of the Claim and Defence

(Claimant)

The Respondent pay to the Claimant Yen 219,000,000 plus interest at 6% per annum from the date of the arbitration award until the amount has been paid in full.
The costs of arbitration to be borne by the Respondent.

(Respondent)

Dismissal of Claimant's claims.
The costs of arbitration to be borne by the Claimant.

No. 2 The Arguments of the Parties

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 Yen 25,000,000 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 Yen 23,000,000 per month.

2. Points in Dispute
(Claimant)
(1) In the further modification discussions of October, 1993, the Respondent proposed charter hire of Yen 15,000,000 per month, and the Claimant, in light of all the circumstances, was willing to lower the charter hire as low as Yen 20,000,000 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 it was inappropriate when in November, 1993, the Respondent unilaterally wired Yen 16,000,000 into the Claimant's bank account. Consequently the Claimant claimed the difference of Yen 7,000,000 from the Respondent.

(3) However,...

[following portion omitted]

(Respondent)
(1)During the further modification discussions in October, 1993, the Claimant indicated an understanding of the 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.

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

REASONING *6

1. Finding that no written record was made specifying the details of the charter hire modification meeting in October, 1993, the contents of which are the crux of this case, and with regard to which the parties are in dispute................., and that the Respondent was wrong to unilaterally wire Yen 16,000,000 per month into the Claimant's bank account, and further that the Claimant strongly objected to this action by the Respondent (Claimant's Exhibit No. 3), we hereby hold that the Respondent was in breach for failing to pay the charter hire due.

2. However, because the Claimant .........................................................................

3. On the other hand, as for the Respondent, ......................., not intending to breach the contract, ............................ , from the perspective of...................., etc., we do not recognize the claim of the Claimant with respect to .....................

4. Regarding the arbitration costs they are Yen_______________________ . With respect to the apportionment of the arbitration costs, as may be surmised from the above, the Respondent was more at fault although neither party was completely without fault, and therefore we hold that the arbitration costs be apportioned at a ratio of 1:2 favoring the Claimant.*7

The arbitrators hereby award as above after due consideration of the totality of the arguments of both parties, the documentary evidence, the hearings of both parties and the testimony of Daisuke Amayu (witness for the Claimant).

20 October, 1998

TOMAC of the JSE

Arbitrator: Zento Suzuki (Signature) (Seal)

Arbitrator: Eihei Garamori (Signature)(Seal)

Arbitrator: Daikichi Sato (Signature) (Seal)

Explanation of the Arbitration Award

When the arbitrators are able to come to a conclusion based upon the documentation, certificates, witness statements, and what they were able to learn from the parties at the hearings, they declare so and the hearings are at an end.

Generally the declaration of the end of the hearings is made orally by the arbitrators to the parties at a hearing. It may also happen that during a hearing the arbitrators state as follows: "if there are any objections they should be submitted in writing within one week. If no written objections are received within one week the hearings on this matter shall be closed."

In any event, in principle the arbitration award document is drafted within one month of the day on which the hearings are declared closed. An authentic copy is then delivered from the Secretariat to each of the parties.

The arbitration award document has basically the same form and content regardless of whether it is for Ordinary Arbitration or Simplified Arbitration. The reasoning for the arbitration award must be incorporated into the arbitration award document in accordance with Section 801(1)5 of the Arbitration Act, unless there is a separate agreement to the contrary between the parties.

In the case of a complex matter, in order to facilitate understanding of the judgement for the specific case, the award document is divided, as in the example, into the award, the facts and arguments and the reasoning. Where the facts of the case or the issues in dispute are simple, or the matter is one for Simplified Arbitration, the award document is simply drafted consisting of the "award" followed by the "facts and reasoning" or simply by the "reasoning."

(Note 1.) The caption of the arbitration award in question. We use a simple title that cannot be mistaken for anything else.

(Note 2.) Please refer to the explanation in Note 1 on Arbitration Award Sans Reasoning.

(Note 3.) The arbitration award (the decision of the arbitrators) is clearly stated. With this the winner can make a dated claim against the loser.

(Note 4.) The apportionment of the arbitration costs is also determined by the arbitrators and this decision is incorporated into the arbitration award. Refer to Note 1 on Settlement Agreement for details regarding the character and breakdown of the arbitration cost.

(Note 5.) The arbitrators objectively and simply state what they have gleaned about the case from their analysis of the parties' assertions, documentation, results of the hearings and witness statements.

(Note 6.) The arbitrators clarify the basis for reaching the holding specified in the AWARD based on the above-stated facts and arguments. When this reasoning is missing, or when the purported reasoning does not actually constitute a reason, the arbitration award may be overturned (see the Arbitration Act, Section 801(1)-5).

(2) Certified Receipt of Arbitration Award

TO: The Japan Shipping Exchange, Inc.

RECEIPT

ARBITRATION IN THE MATTER OF THE DISPUTE OVER
THE TIME CHARTER FOR S.S. HEISEI MARU

We hereby acknowledge receipt of one authentic copy of the arbitration award in the above-captioned matter.

21 October, 1994

Respondent: Kaisan Bussan Co., Ltd.
Attorney Representative: Morio Yamakawa [Signature/Seal]

Explanation of the Certified Receipt of Arbitration Award

Section 799(2) of the Arbitration Act provides that "Authentic copies of the award shall be served on the parties" and the original "shall be deposited with the court of jurisdiction together with the receipts of service."

In practice, authentic copies of the award are delivered by the secretariat by hand directly to the parties or their agents, and the certified receipt of the arbitration award is received from those who accepted service of the arbitration award. When service is not made directly by hand, it is made by certified mail and the certified mail receipt constitutes the certified receipt.

The original arbitration award, as provided above, is actually put in the custody of the court of jurisdiction by the secretariat together with the receipts of service.

The above completes the cycle of an arbitration proceeding.