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  • Bhupinder Singh & Neha Garg

Contextualizing Maritime Arbitration - A Key Tool in Maritime Dispute Resolution

“A smooth sea never made a skilled sailor” -Franklin D. Roosevelt

Ships and vessels across the oceans act as an interplay among various parties who are entering into commercial contracts. This interplay is not only confined to the owners, also includes the cargo handlers and suppliers involving a multiplicity of various contracts. Maritime arbitration is now becoming a point of interest for joint investors all over the world because it is satisfying the economy enforceability, efficiency, and moreover the expedition of various disputes and questions pertaining to the arbitration of law. Maritime law refers to the private law dealing with navigation and shipping, and it covers both marine waters and inland waterways. The roots of maritime law can be traced as far back as 900 BC, at which time there was an urgent need for legal solutions to the customary law practices and codes. Also known as ‘admiralty law,’ it was basically used to handle various maritime issues like the carriage of goods, maintenance of ships at sea, insurance, registration etc. Maritime law comprises both public and private law, procedural national and international law and it was first seen in the Roles Oleron of circa 1190 A.D. Later it gained importance in English Admiralty Court. It consists of International Maritime Conventions and general maritime law consisting of common rules and standards pertaining to the shipping industry, to include bills of lading, sales contract, charter party agreements etc. The doctrine of maintenance and cure provided for medical care free of charge, wheelchair, pain medications and long-term treatments to seaman injured while underway. It also provided for the maintenance services to seamen until they returned back to work. The basic rationale behind the maritime laws is to provide for maritime liens and mortgages to banks from which loan money is being taken to purchase ships, as well as the vendors who were supplying the requisite necessities and fuel to the ships. It also provides for salvage award or merit salvage where if a property is lost at the sea and is found by some other person then the finder has the right to claim salvage award on that property. It also brings upon the liability on the ship owners if passengers are injured in the case of negligence or lack of reasonable care by the ship owners. Maritime law also imposes collision liability which is based on the fault principle, and it imposes liability on the colliding vessel if the collision is caused by negligence of the colliding vessel.

The evolution of the international conventions on maritime law can be traced back to the Brussels Convention of 1924 and later in 1979 the Hague-Visby rules came into force but did not contain any specific rules regarding the maritime arbitration. The United Nations Convention on the Carriage of Goods by Sea of March 30, 1978 ("Hamburg rules") also provides for recourse by means of arbitration.[1] The various International Conventions which deal with maritime safety include the International Convention for the Safety of Life at Sea (SOLAS), United Nations Convention on the Law of Sea (UNCLOS), Maritime Pollution Regulations (MARPOL), and the Standards for Training Certification and Watch-Keeping (STCW).

Within the recorded history of maritime law, there has been little doubt that admiralty jurisdiction extends to the high seas and territorial seas.[2] The US Supreme Court extended the scope of maritime laws to navigable waters. To qualify as "navigable waters," bodies of water must form in their ordinary condition by themselves, or by uniting with other waters, a continued highway over which commerce is or may be carried on with other states or foreign countries in the customary modes in which such commerce is conducted by water.[3]

Maritime Arbitration is an emerging field that is developing both at the translational level and also at the interstate level. Maritime arbitration preceded International Commercial Arbitration and it deals with the arbitration disputes that involve ships. Earlier, the international disputes which pertained to maritime law were resolved by transnational commercial arbitration at the intergovernmental level. This arbitration mechanism is also seen in the International Tribunal for the Law of Sea ("ITLOS") which, at its core, deals with the jurisdiction according to the Montego Bay Convention and various other international agreements which pertain to the Law of the Sea. It should be noted that the International Court of Justice may hold concurrent jurisdiction over a maritime dispute with the International Tribunal for the Law of Sea and arbitrators.[4] Maritime arbitration provides a scope of interim measures in cases of urgent matters so that the status quo may be maintained. It is primarily concerned with the vessel and its attachment. This is specified in the arbitration clause regarding the powers of the Tribunal to grant interim measures. If the arbitration clause does not provide for the provision of interim measures, then there has to be a balance between the powers of the court and the arbitration Tribunal so that the effectiveness of arbitration is ensured.

The United Nations Conventions provides for the enforcement of the arbitral award under Article II (3). When the United States adopted the New York Convention, it specified that the Convention applies only to "commercial" matters.[5] Maritime issues are also considered to be commercial matters under this Convention. The Federal Arbitration Act (U.S.A.) also deals with the New York Convention. Section 8 of the Act provides that a party to arbitration may cease a vessel if it is resorted to arbitration. The 1925 United States Arbitration Act provides an agreement to arbitrate maritime transactions "as valid, enforceable and irrevocable as any other contract."[6] In Galilea, LLC v AGCS Marine Insurance Co. 2018 WL 414108 (9th Cir. Jan.16, 2018), the U.S. Ninth Circuit Court of Appeals has supported the arbitration clause in maritime insurance policy as per the Federal Arbitration Act. The parties in this case have agreed to the adoption of American Arbitration Association rules to the insurance contract, which provide that the arbitrator shall have the power to rule its own jurisdiction.

The International Court of Maritime Law is also an independent institution which is particularly organised to manage arbitration proceedings relating to the international maritime transactions and trade. It has also partnered with the Paris Chamber of Maritime Arbitration so that dispute resolution may be to the global economy through arbitration. London retains its dominance over maritime arbitrations due to the London Maritime Arbitration Association which is intimately connected with the London Court of International Arbitration and International Chamber of Commerce with around 83% of the total number of arbitration cases held under its purview. In 2019, about 96% of arbitrations were decided by the LMAA. In Wael Almazeedi vs Michael Penner and Stuart Sybermsa [2018] UKPC 3 it was held that disclosure by the arbitrators is mandatory so that transparency may be maintained. Similarly in Halliburton Company vs Chubb Bermuda Insurance Limited 2018 EWCA Civ 817 it was held that the scope of the duty of disclosure depends upon informed observer conclusions that may give rise to a possibility of bias and therefore arbitrators have a legal duty to disclose the requisite information that gives rise to justifiable doubts that they are biased. In MVV Environment Devonport Limited vs NTO Shipping GMbH and Company MS Nortander [2020] EWHC 1371 (Comm) it was held that the basic presumption of determining that a person whose name is in a bill of lading as owner is only an erroneous association of liability, as the shipper, who is also named in the bill of lading, is not having any express or implied authority then the Arbitral Tribunal will not exercise any jurisdiction over the individual in question.

In India, maritime arbitration has become a matter of concern as the domestic court is not able to resolve cases of international maritime arbitration. Covid-19 has also introduced a trade crisis and there are various technological advancements due to which the inclination for dispute settlement has shifted from litigation to arbitration. In India, maritime arbitration is governed by the Maritime Arbitration Rules under the Indian Council of Arbitration. The Gujarat Mediation and Arbitration Centre is also now being set up to resolve maritime and terrestrial disputes. The Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 also governs maritime laws in India. It addresses issues both in rem and in personum. In Harmony Innovation Shipping Limited vs Gupta Coal India limited and Another (Mar 10, 2016) it was held that the language of the contract should be clear and unambiguous only representing the intention of the parties. Similarity in Kargil International S.A. vs Bangladesh Sugar and Food Industries Corporation, it was held that on the basis of the arbitration clause in the contract the seat of arbitration was London.

In today's scenario, life is changing pertaining to the exchange of data and information through electronic means and major international conventions are also requiring that arbitration clauses or arbitration agreements should be made online to facilitate parties ease of access. The competition between arbitral institutions is now becoming more and more fierce and there is a need for a standardized maritime model contract for dispute resolution. There is a need for the establishment of maritime arbitration courts within the purview of international maritime organisations. Ad hoc and institutional arbitration procedures are gaining impetus around the world. Courts are also required to play as invigilators in analysing the clauses pertaining to arbitration agreements. Arbitrators must make adequate disclosures in order to curb ill will or malice in arbitration proceedings. This will further facilitate the parties in recognising arbitration as a complete relief method such that wrongdoers may be held responsible for their actions and a fundamental fairness is ensured as per the applicability of foreign law.

*** The views expressed herein belong solely to the authors and do not necessarily represent the opinions of JTMS or the Yonsei Institute for North Korean Studies. Dr. Bhupinder Singh is an Associate Professor in the School of Law, CHRIST (Deemed to be University) India and a visiting Professor at Santo Tomas University, Colombia. His research interests are Global Healthcare, Criminal Law and Human Rights. Neha Garg holds an LLB from Delhi University as well as an LLM in Corporate Law from Sharda University. She currently works at Bharati Vidyapeeth Institute of Management and Research as an Assistant Professor of Law while she pursues a PhD in International Commercial Arbitration.


Works Cited:

[1] United Nations Convention on the Carriage of Goods by Sea March 31, 1978 article 22, 17 I.LM.603 (hereinafter Hamburg Rules). [2] Grant Gilmore & Charles L. Black, Jr., The law of Admiralty, 1-11 at 31 (2d ed.1975). [3] The Daniel Ball, 77 U.S. (10 Wall) 557, 563 (1870) [4] Convention on the Law of Sea, U.N. Doc. A/CONF.62/122 (1982) hereinafter UNCLOS. [5] New York convention, Art II (3) [6] 9 U.S.C 2(1998)

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