On demand 1h 29s Basic

Maritime Arbitration 101

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Maritime Arbitration 101

This one hour course will provide an in-depth overview of maritime arbitration claims. This course will provide attorneys with an historical background of maritime arbitration, explain the various statutory frameworks, defined the different types of disputes brought in maritime arbitration, as well as discuss the relevant format and procedures. We will also explore the enforceability of awards, including the potential challenges to an award.

Transcript

- [Jo] Hello and welcome to Maritime Arbitration 101. I'm Jo Colbert Stanley and I look forward to sharing with you an overview of maritime arbitration and to give you a basic, very basic understanding of the process. So by the end of this presentation, it's hoped you will have gained a preliminary insight into the underpinnings of maritime arbitration. We're not going to be doing a deep dive into all of the technicalities, strategies, and tactics, but we will cover the basics. So first, we're going to take in a bit of history. Then, we'll discuss some of the legal frameworks around maritime arbitration and the types of disputes usually referred to in arbitral tribunal. We'll check out the basic format and procedures and wrap up with a brief chat about the enforceability of arbitration awards. As you are undoubtedly aware, arbitration is a dispute resolution mechanism. Some refer to it as an alternative dispute resolution method, suggesting that courts and trials and litigation are the mainstream. However, when it comes to maritime disputes, arbitration is often the norm and the preferred method used by individuals and companies who are at odds about some aspect of their interaction. As such, most maritime contracts like charter parties, bills of lading, insurance contracts, sales and construction agreements, and so on routinely provide for arbitration as the primary means of resolution in the event certain terms, conditions, or performances, contravene the party's understanding of their respective roles and obligations. Indeed and to quote one US Court of Appeals, "Arbitration is an especially important and efficient means of dispute resolution in the maritime field and has largely taken the place of litigation in disputes arising out of charter parties. In its simplest form, an arbitration involves the presentation of disputed facts, contract terms, and legal standards and duties to a neutral third party or a panel of neutrals called arbitrators, who after hearing from all sides, review the evidence and come to a decision about who's right, who's wrong, and who owes who what. This has been the procedure adopted by the maritime industry really since merchant ships first sailed. So, let's journey back some 2,300 years to Athens, Greece for a bit of a historical perspective and look at what seems to be one of the earliest recorded, on papyrus no less, references to maritime arbitration. And by the way, it presents a fact pattern not unsimilar to the types of disputes presented in maritime arbitrations today. We learned from records published in 323 BC of a case referred to as Against Dionysodorus. Historians tell us this involved a business transaction between Dareius and his business partner who endorsed a loan to two ship owners. The ship was tendered as collateral by the debtors in what was known as a bottomry loan. Meaning a loan secured by the vessel's hull or bottom. So Dionysodorus, Dionys we'll call him for short, borrowed 3000 drachma. That's an obsolete Greek currency, but I'm told it would be about $9 US today. He borrowed that from Dareius and Company to sail to Egypt, pick up a load of corn, and return to the Greek seaport of Piraeus. Upon the return of the vessel, the agreement was that Dionys would repay the loan with interest. However, during his journey, the captain, Dionys' business partner and co-signer of the loan, apparently decided to divert to the port in Rhodes where the price of corn was higher than in Athens and he never returned to Piraeus with the ship. Remember, the ship was the collateral for the loan. So, Dareius went to Dionys who had stayed back in Athens and demanded double damages for the breach of contract. Dareius argued his case in front of other Athenian citizens standing around in the marketplace and in order to not appear too offered settlement terms whereby instead of paying 6,000 drachma, the double damages he originally demanded, Dionys would pay back the loan plus interest calculated up to the time the vessel docked in Rhodes and settled the rest of the matter out of court. The remaining amount in dispute, which would be the interest calculated for the unsailed portion of the contracted voyage, that is from Rhodes back to Athens, would then be presented to a private arbitrator, as was the custom at the time. And that arbitrator would resolve the dispute. As Dareius put it, and here of course we're translating from the Greek records, he wanted to leave the settlement of the sum under dispute to the decision of one or more arbitrators to be chosen from among the merchants of this port. This concept of letting other merchants of this port hear and resolve trade disputes embodies what we now call lex mercatoria, which is literally merchant law. That term refers to a set of rules and procedures developed in the Middle Ages by and for commercial interest and those engaged in overseas trade. A body of accepted customs, practices, and penalties were over time compiled to temper what would otherwise have been a chaotic cross-border trading scene. Unfortunately, it seems in the case against Dionysodorus, Dionys opted against arbitration and took the matter to court instead. But that's okay because that's how we even come to learn about the common Greek practice of using arbitration as a dispute resolution tool because, and we'll talk about confidentiality and privacy later, we likely wouldn't have been privy to the arbitration concept but for it being mentioned in that court case. By way of spoiler alert, the records are silent on who won the court case, but I have my theories. So with the first arbitrations being recorded in Athens, we traveled through time to London back in the mid 18th century, where the Virginia and Baltic Coffee House became the site of the London Baltic Exchange. This was when sailing across the Baltic Sea had become a primary trade route. So at the coffee house, we had all kinds of merchants crossing paths on the trading floor and it became the home to brokers and seafarers and ship captains and other businessmen who worked together to negotiate interport commerce. And their interaction gradually became more formalized. That is to say consistency, predictability, and reliability started to emerge. Members paid dues to the Baltic Exchange for the privilege of conducting business there. Rules were developed amongst traders, things like member removal, for example, for business failure, non-payment of dues, or other unacceptable conduct. These commercial means, methods, and measures were essentially a form of self-regulation. We had the name and shame principle governing behavior because it didn't, if you didn't conform to the preferred customs and practices, you'd be shunned and no longer be able to conduct business at the Baltic Exchange. You'd lose access. So if you did not honor contracts or other codes of conduct, you were out. One of the first mottos there was quote, "Our word, our bond." Meaning that merchants took pride in their integrity and trustworthiness. And being ousted from the Baltic Exchange would signal to the rest of the community at large that you weren't an honest businessman. Other procedures were developed to formalize the preference for dispute resolution outside of formal court adjudication and in favor of relying on experienced ship brokers, known as advocate arbitrators, to resolve differences among merchants. There would be a reference to a third arbitrator, if needed, and the Baltic Exchange provided a list of willing broker arbitrators. So over the decades and centuries as interstate disputes multiplied, especially with the change of emphasis from grain trading to ship trading and multinational arrangements, more formal arbitration guidelines were established to provide uniformity of outcomes and the ability to rely on common contracts. Nowadays, while most maritime arbitrations are primarily held in London, places like Paris, Singapore, Hong Kong, and New York also play host. The first maritime arbitration we know of in New York was decided in 1826 and also involved some Greeks. In that case, New York ship builders were commissioned by the Greek government to build two battleships, frigates, named the Liberator and Hope. The Greek's need was urgent because they were in the midst of a battle in the Mediterranean against the Ottoman Empire, but they refused to make the final payment. And the matter went to arbitration where it was decided that one ship would be sold to the US Navy and the other to the Greek government. This historic case, like the matter against Dionys, involved basic issues common to modern day arbitration disputes, such as the illegality of the underlying contract, quantum or cost and fees, and timeliness. Today, we see more complex cases. And while we still basically see the reference of disputes to quote, "merchants of the port," for all intents and purposes, more lawyers are involved in present day arbitration than ever before. Predictably, with the involvement of more lawyers comes more laws. The legal frameworks that influence or govern modern day maritime arbitration are the same as other commercial and international arbitration and include a combination of national laws, state laws, and international treaties or conventions. In England, the first arbitration statute was enacted in 1698. And the advantages and intrinsic worth of arbitration have been continually acknowledged. Today, the Arbitration Act 1996 of England and Wales provides the mandates and directives for the conduct of arbitrations there. In France, arbitrations are within the provisions of the French Code of Civil Procedure, Articles 1442 to 1527. In Singapore, it's called Cap 10 or simply the Arbitration Act. And again, these are just examples. Like in Japan, you have the Japanese Arbitration Act or the JAA. In the United States today, arbitral procedures are governed by the Federal Arbitration Act, which was enacted in 1925 and specifically drew focus on maritime transactions. It was really the first time the federal judiciary and courts formally recognized arbitration's rightful and legitimate place in the realm of dispute resolution. So, we won't be going into too much detail about the Federal Arbitration Act or FAA here because it's undoubtedly covered in-depth elsewhere and time does not permit. But suffice to say, the Federal Arbitration Act bears most of the hallmarks of other legislation designed to protect the value of arbitral processes by establishing procedural guidelines and acknowledging the enforceability of arbitral awards. Likewise, most states have their own version of that legislation or incorporated somewhere in their state statutes, so that arbitration is probably better called accepted dispute resolution rather than alternative. International treaties such as the New York Convention of 1958 provide additional guidance in the name of uniformity and global enforcement procedures. It is dubbed one of the three pillars of arbitration and was developed to ensure the enforceability of arbitration awards in states or countries other than the one in which the arbitration was held. In other words, especially in the context of maritime disputes, it is often the case that the award is rendered in one country, but the prevailing party needs to enforce its findings, the ruling, the judgment, somewhere else. The New York Convention provides disputants the assurances that this is possible by establishing a legitimacy of foreign awards such that national courts can enforce the judgment assuming that country has signed onto the convention. Currently, 167 member states are signatories to the New York Convention, including the United States. Member states may limit the application of the New York Convention to commercial disputes or on the basis of reciprocity. The other two pillars of arbitration are the UNCITRAL Model Law and UNCITRAL Rules. Again, these provide procedural guidelines and enforceability requirements of arbitral awards in jurisdictions that subscribe to their tenets. In addition to national laws, state laws, and international treaties, maritime arbitrations are usually subject to institutional or association rules such as those drafted and published by the London Maritime Arbitrators Association, the Society of Maritime Arbitrators in New York, the Singapore Chamber of Maritime Arbitration, and even the Refined Sugar Association's rules and regulations apply to the process and procedure of maritime arbitrations. There is an implicit hierarchy of laws applicable to arbitrations. For example, the English and Welsh Arbitration Act only applies to arbitrations taking place in those countries or if expressly called for by contract. UNCITRAL Model Law has no force by itself but is adopted in most countries called model law countries. Procedural rules, such as those drafted by institutions, cannot trump mandatory laws of the seat of the arbitration and can be altered with the party's mutual assent. Institutional rules then provide a framework for the conduct of the arbitration, but have no impact on the substantive law applied to the issues. So while maritime arbitration enjoys some of the same characteristics as other commercial arbitrations, such as notions of party autonomy, self-determination, privacy, fiscal economy, for example, there are some unique features of maritime arbitration and we'll discuss them a little bit here. As we've said, maritime arbitration enjoys traditional arbitral concepts of party autonomy and self-determination, such that the parties are free to choose a scope and format of the arbitration within contract term guidelines. They can determine the composition of their arbitral panel and select the procedural and substantive law governing the proceedings. In maritime arbitration, the experiential and doctrinal competence of panel members is generally seen as a paramount consideration. Historically, arbitrators in maritime cases have been chosen because of their relationship to the industry. With a specialized knowledge base, they're able to aid in the expediency and reliability of the proceedings, given that the learning curve of the listening arbitrators is not that steep. They understand the underlying facts and circumstances. A very unique feature of maritime arbitration, as compared to regular commercial arbitration, is the concept of repeat appointments. It's not uncommon for the same arbitrators to appear before the same parties in multiple cases. This is due to, as we mentioned before, their doctrinal competence. Also, a limited pool of qualified arbitrators from which to select to hear maritime cases. Indeed, the notion of repeat appointments or repeat business constitutes a special exception to the International Bar Association's Guidelines on Conflict of Interests that would normally prohibit this type of cross pollination in regular arbitration settings. Another maritime arbitration feature is the so-called documents only hearing. In documents only proceedings, the matter is decided without an oral evidentiary hearing. In other words, the parties exchange documents and submit them to the arbitral tribunal. Full disclosure is built in, such that the parties proffer documents that not only support their claims and defenses, but also those items that may adversely impact the outcome from their perspective. Of course, the parties have an ongoing duty to disclose further evidence throughout the pendency of the arbitration and may request additional documentation at any time. Now with regard to the costs and time savings or quantum afforded by the use of arbitration versus litigation in maritime disputes, we know that adjudicated court cases generally take longer than arbitration because of things like courthouse backlogs, procedural gridlocks, and of course the protracted appellate process. These days, the delays are especially impactful in the maritime context because things like stalled shipments, frozen assets, and the ability to take advantage of make-whole remedies in a timely fashion necessarily drive up the dispute and business expenses. International and domestic trade and commerce are adversely impacted by any delays in the supply chain or transportation of goods, commodities, or passengers. And it of course behooves the bottom line to get disputes resolved as quickly as possible. We mentioned here the feature of confidentiality to note that while arbitration is technically private and as stated in the case Eastern Saga, strangers shall be excluded from the hearing and conduct. The actual duty of confidentiality is often only expressly required of the arbitral tribunal, the parties, and the administrative staff if an institution is handling the case. However, it is generally accepted that confidentiality before, during, and after for all involved is implied. This is useful to parties where, for example, trade secrets or customs and practices are privileged. Exceptions to this notion of confidentiality or privacy includes matters where the parties agree or consent to disclosure, when there's a court order in the interest of justice or in the public interest, such as in cases where the outcome of the proceedings is deemed worthy of publication or dissemination to the general public. Where the parties agree, for example, a sanitized or anonymized award may be published in the "Lloyd's Maritime Law Newsletter," but do not provide binding precedent for future arbitrations on the same topics. Absent, vacate, or set aside, arbitration awards are binding and recognized globally, as we mentioned before by virtue of international treaties such as the New York Convention in jurisdictions that have adopted rules governing the enforceability and honoring of foreign arbitration awards. So with maritime arbitration, as with other types of arbitration, again, we see the parties enjoy procedural flexibility autonomy, but we also see the tribunal able to make nimble adjustments to the proceedings depending on the type of case and party concerns. For example, the parties may agree to unique remedies or unique interim measures during the pendency of the arbitration that you wouldn't normally see in a litigated case in front of a court of law. While some maritime arbitration matters are initiated within the purview of an arbitral institution like the AAA or the LCIA, such that they're fully administered by that institution, for example, in the selection of the tribunal panel, venue, exchange of correspondence, payments of fees, et cetera, others are handled via ad hoc organizations. Meaning those where one company or organization is not directly overseeing and administering the progress of the arbitration procedures, but rather establishes a general framework and then the parties are free to choose their arbitrators and proceed accordingly without any further institutional type oversight, except as needed. So, some of the more well known maritime arbitration centers include the London Court of International Arbitration, LCIA, and the Hong Kong center HKMAG, and the Singapore Chamber of Maritime Arbitration. Some centers exclusively handle maritime arbitrations, while others like the International Chamber of Commerce, the ICC, handle other types of international disputes as well. Of course, in the United States, we have the Society of Maritime Arbitrators, which is based in New York. The SMA was established in 1963 with the goal of developing a more structured approach to maritime arbitration in New York. The founders established formal rules of procedure and a code of ethics. There are currently over 80 men and women full-time arbitrators in the SMA today and over 4,300 reasoned awards published on legal databases. Other institutions and arbitral centers exist reflecting regional preferences and industry specialization. For example, the International Yacht Arbitration Council based in Florida focuses on maritime disputes involving private yachts as opposed to commercial shipping controversies. Each of these office has their own set of rules or terms and procedures which govern the operation and execution of arbitrations under their purview. Parties have the option of expressly providing which of these institutions or centers disputes should be referred to, including that in the arbitration agreement or a clause contained within the operative contract in question. So the first one we had listed here, the London Maritime Arbitration Association, LMAA, currently handles most maritime arbitrations. Last year, the LMAA had over 1,600 maritime arbitrations referred to it, which is more than some of the other more popular centers combined. Reinforcing the LMAA's place as the global leader of choice for maritime arbitration, including disputes involving shipping, offshore energy, and international trade. So let's talk a little more about the LMAA given its position of global dominance in the realm of maritime arbitration. The LMAA presents an ad hoc program that is distinguishable, as we've said, from an institutional program in as much as the association does not administer the referred arbitration. It lets the parties conduct the arbitration with a so-called very light touch from the arbitral tribunal. So it provides a set of rules for arbitrators to follow when they're handling a reference under LMAA principles pursuant to the provisions of an operative contract between the disputing parties. Born out of the Baltic Exchange we talked about before in 1960, the LMAA was formed out of the list of brokers who indicated a willingness to arbitrate disputes between merchants there. Although, there are different types of LMAA membership, there's actually no formal restriction on who can act as an LMAA arbitrator. In other words, if you're following the LMAA Terms and Procedures, you're acting as an LMAA arbitrator regardless of whether you are an actual member of that association. The types of membership include full membership. These are currently about 36 and are full-time arbitrators. Then we have aspiring full members. They're around 30 individuals who promote the association's objectives. And the third group are supporting members, and there's approximately 758 of those currently and they are arbitrators who are available to accept appointments. LMAA members have backgrounds including former sea captains, naval engineers, naval architects, ship brokers, maritime and admiralty lawyers, and protection and indemnity or P&I insurance agents from around the world. And LMAA arbitration enjoys a simplified reference procedure. Meaning one can initiate the proceedings by a simple email to the other party notifying them of the appointment of an arbitrator on your behalf and the application of the LMAA terms. There is no requirement that the LMAA itself approve the arbitrator's chosen. It's purely up to the parties. From the association's philosophical perspective, these proceedings are ultimately treated as ongoing dispute resolution efforts. They're deliberately flexible based on the party's agreement and usually are on the basis of documents, only less than a fifth involve oral hearings, and are designed to enhance the likelihood of resolution without the need of an arbitral award. Indeed, only about 20% of LMAA references end in an award because they resolve during the pendency of the proceeding. The LMAA Terms and Procedures were recently updated in 2021 and are usually updated every four or five years. LMAA proceedings are governed by UK law and thus the terms and procedures follow the provisions of the England and Wales Arbitration Act of 1996 and are incorporated in most popular maritime contract forms. The terms may also be incorporated by express reference in the initial communications at the outset of an arbitration or whenever two full members of the LMAA are appointed by the parties to carry out the proceedings. That is to say regardless of what the contract says, if two LMAA full-time members are appointed, the LMAA Terms and Procedures apply. The LMAA Terms and Procedures include several attachments refer to as schedules, which address specific topics like the tribunals fees, the format of the arbitration, questionnaires and checklists to be exchanged between the parties and with the tribunal, and the conduct of virtual hearings. Usually, two arbitrators are appointed, one by each party. And those two may appoint a third to act as an umpire in the event the first two disagree on a particular issue. However, some arbitration agreements specifically provide for a panel of three. The LMAA tribunal has powers consistent with those laid out in the Arbitration Act, including that of so-called kompetenz-kompetenz, which means the arbitrators have the authority to rule on their own jurisdiction or their own ability to hear and decide the dispute. The tribunal also has the authority to rule on all matters related to the arbitration, procedural and substantive. There are no consolidation provisions in the LMAA Terms and Procedures, unlike with other institutions or organizations. But concurrent hearings may take place when appropriate, for example, when matters are closely related or dependent on each other's outcomes. The procedures also call for an exchange of what's called skeleton arguments about two or three days before any evidential hearing. This helps the parties distill their arguments and notify each other of what to expect. All of the LMAA terms are designed to enhance the opportunity of resolution. The more disclosure, the more transparency shared by the parties, the more likely the parties will realize their respective position's strengths and weaknesses, thereby promoting a mutual resolution of the dispute. There are certain deadlines and timeframes within which documents must be submitted and exchanged and even time limits on speeches, for example. Again, in favor of focused expediency, efficiency, and economy. The LMAA also provides for intermediate claims procedures where the amount in dispute is up to 400,000 US dollars. And there's a small claims procedure, which is kind of an expedited flat fee undertaking and involves disputes valued at under 100,000 US dollars. In those cases, a sole arbitrator is called for. Small claims procedures have very short timelines, limits on submissions the parties may make, and usually involve no witnesses, no expert testimony. And they make up about five to 10% of LMAA arbitrations. There is no right of appeal from a small claims procedure and there's a cap on the party's costs, FALCA or fast and low-cost arbitrations for arbitrations between 50,000 to 250,000 US dollars under LMAA Terms and Procedures are also available where the dispute is decided by a single arbitrator using a strict timetable, just as in the SCP or small claims procedures, designed to produce an award no later than eight months after appointment. There's no oral argument and again, no right to appeal to the courts. The LMAA Terms and Procedures are available for review on the association's website, which should be noted in your supplemental materials. Maritime disputes are factually unique among legal controversies of course. The types of disputes that may be presented to a maritime arbitrator include those involving cargo and passengers, container ships and cruise lines, contract disputes like charter party and bill of lading breaches, and even matters involving offshore wind farms, to name a few. Needless to say, each type of dispute explores a unique universe of expertise and experience. The arbitrator who reviews evidence presented in a dispute over the obligations of a shipbuilder say may have different qualifications than the tribunal handling a contested salvage rights reference or the rights and remedies involved in a case where a ship collides with a lock on the Panama Canal for instance. Maritime arbitrators may even engage technical experts to assist them with their review in complex arbitrations. Many other types of maritime issues are presented to arbitral tribunals such as insurance coverage claims, multimodal transport, contract disputes, and pollution or environmental damage matters. So you've got a problem, you're in dispute with your other contracting party. It involves some type of maritime issue. Now, what? Well, let's have a quick rundown of the format of a maritime arbitration. Remember, each institution or ad hoc association will have different timelines and requirements, but this is a generalization of those. When an arbitral dispute arises in the maritime context, the manner in which it will be referred or the reference to an arbitral tribunal depends entirely on the terms of the contract entered into by the parties now at odds. In most standard maritime contracts, as we've stated before, the LMAA Terms and Procedures are usually the designated guidelines. And given the deliberate simplicity of those provisions, an arbitration may be initiated by way of a simple email from the claimant to the respondent announcing that an arbitration is sought to resolve a specific issue. That email will also identify the arbitrator already appointed by the initiating party and will instruct the respondent to appoint theirs within a specific number of days, 14 days if you're doing LMAA rules. Notice may also be provided to an arbitral institution in the event one of the maritime institutions we talked about before is involved per the underlying contract terms. So the panel is appointed by agreement of the parties or in the absence of agreement, by the president of the relevant institution or association. And sometimes by court intervention might be necessary to enforce panel appointment provisions. At this juncture, it's imperative that nominated arbitrators disclose their relationships with the parties and witnesses. To that end, by the way, as we mentioned earlier, the International Bar Association, the IBA, has developed a published conflict guidelines indicating that different levels of potential conflict require disclosures and whether parties may waive any such conflicts, which happens frequently in maritime arbitrations. The remainder of the procedure of the arbitration will be delineated by the terms and procedures outlined by the relevant institutions, as we've said, and also by some legal concepts. So a little bit more about panel appointments during this process. The composition of the tribunal usually is up to the parties. Under the Arbitration Act 1996, in Section 15 for example, it does leave it up to the parties. However, one must look at the contract where the arbitration agreement is contained. There may be specific requirements that certain institutional procedures and guidelines are in place that establish certain limitations to the panel appointment. In England, for example, there's no requirement that arbitrators have legal qualifications. They may be experts in a particular dynamic of the field and not attorneys. However, the arbitration agreement may specifically require a lawyer. Appointments are made by the parties at all times and it can be based on personal experience, the reputation of the arbitrator, skillset, even how busy they are or how much they cost. So the question becomes whether the contract requires the arbitrator to be a member of a trade body, for example, or of an institution. Is it a requirement that they be gaff de qualified for a grain dispute, or a member of the Baltic Exchange, or a member of LMAA, or the contract may simply say, under panel appointment, a commercial man. That would mean a non-practicing lawyer with relevant practical experience. Man, woman, irrelevant, right? The language, nationality, and religious considerations may also play a part in the panel appointment. LCI rules, for example, prohibit same nationality as either party if it's a sole arbitrator. UNCITRAL model rules also look at the nationality of the arbitrators. Once the panel is appointed and everyone has been notified as required, the next step is usually some form of pre-hearing or initial conference where future deadlines and timetables are established. This includes the timeline for the exchange of documents. And the types of documents exchanged in a maritime arbitration include the initial claim submissions, defense and counterclaim submissions, replies to the defense and counterclaim, and the so-called Redfern schedule. The Redfern schedule is a collaborative document which all participants, including the tribunal, contribute to. It provides a checklist of all disclosure requests, all submissions made, and the rulings the tribunal entered regarding objections and for compliance. Other types of documents exchanged in the maritime arbitration would include, of course, relevant contracts such as bills of lading, operative charter parties, and other things like, depending on the type of arbitration, ship build designs, construction drawings, maps, charts, shipping lanes, and of course, affidavits and witness statements which may be used as direct testimony in the case of a documents only proceeding. After the exchange of documents, the parties may move on to an evidentiary hearing if called for. There, the tribunal will hear direct and cross-examination of the parties, their witnesses, and experts. After the hearing, the tribunal may request post-hearing submissions to clarify certain issues or certain points of law and then they will deliberate. An award is subsequently prepared and published to the parties. In that award, the tribunal will identify the issues, assess liability and quantum of costs. In arbitrations, costs and fee payments generally follow the event, which is a concept different than the American rule many are accustomed to where the parties generally pay their own attorneys' fees and costs. In maritime arbitrations, they follow the event doctrine or English rule is such that the prevailing party's fees and costs are usually paid for by the other side. Unless the parties agree otherwise, maritime arbitration awards usually contain explicit and enumerated reasons for the tribunal's decisions. These are called reasoned awards or award with reasons. As stated earlier, the award is confidential. Although in some cases, anonymized decisions may be published in Lloyd's or for example with the SMA publications. So that's the general format of a maritime arbitration. Not that much different than other commercial arbitration proceedings overall, just different contents. Like commercial disputes, whether arbitrations go forward depends on a valid arbitration agreement. Because many maritime arbitrations are governed by the Arbitration Act of England and Wales, that means a valid arbitration agreement must be in writing. It may be contained in the ship build contract, the underlying operative contract. It may be referred to in communications between the parties or in emails, for example. It may be part of a purchase order. Whatever the case, the agreement between the parties to arbitrate their disputes must be evidenced by a written statement. A good and valid arbitration agreement, as opposed to what's called a pathological one, will contain language to specify the type of disputes it applies to and which entities or individuals are covered by its terms. That is to say will identify which parties, where the case is about, whether third parties who are not expressly identified can be pulled into the arbitration, et cetera. And as you see on this slide, other provisions in a good arbitration agreement will include a choice of law specification. For example, say the arbitration will be held under the terms of the Arbitration Act of 1996, a valid arbitration agreement would identify that. As well as the seat of the arbitration, meaning the jurisdiction in which the applicable substantive law is found. It's important to note that not all disputes are necessarily arbitral and depending on the seat of the arbitration, may not be brought in front of an arbitral tribunal. So, it's important to look at the arbitration agreements terms to establish at the outset whether the dispute intended to be referred to arbitration is a subject matter topic that would even be considered resolvable in the arbitral forum. One final note about arbitration agreements is that they are generally seen as separable or severable from the underlying contract, which is to say that even if the contract between the parties is void for some kind of technical defect, or due to violation of public policy, or even concerns of corruption and fraud, the arbitration agreement itself is treated as a separate legal document and deemed valid, if it is by itself, and enforceable regardless of the defects of the document within which it is contained. This is part of the overall policy to have disputes resolved as opposed to hanging them up on the basis of some kind of technicality. Assuming there is a valid arbitration agreement and the correct format and procedures have been adhered to for referring the dispute to the appropriate arbitration forum, the matter will proceed. And here, we can talk about some of the unique measures that may be undertaken in a maritime arbitration. A security for cost is a bond paid by one of the parties at the beginning or during the proceedings. It is an amount established to avoid an uncollectible award or to cover arbitration cost in advance. In maritime disputes, we see vessel arrests, which is the detention of a subject ship, for example, to prevent further movement of it, perhaps to avoid flight from the jurisdiction or as security. Cargo may also be seized. This is, of course, a form of freezing assets and may be ordered to avoid contamination of the product, or alternate sale, or spallation of evidence. In maritime arbitrations, we also see inspection orders where the tribunal may require a formal review and inspection of the subject location, property, or items under dispute. This might be say to check on the condition of cargo, to establish a baseline, for example, in the case of items that may undergo further deterioration during dependency of the arbitral proceedings, or maybe something like checking fuel samples in bunker disputes. Injunctive relief is also a possibility if deemed necessary to avoid prejudice or harm to one party. So we see maritime arbitration tribunals entering interim orders to preserve evidence, maintain the status quo, or to provide financial guarantees pending the publication of an award. In some cases, the arbitrator may issue a partial award before the evidentiary hearing when there are undisputed facts and legalities in favor of one party. Types of interim awards or interim orders include orders that the wrongdoer be disclosed, for example, gag orders, receivership orders, anti-suit provisions, meaning the parties cannot sue each other in court until the arbitration is concluded, and even search orders. Once the arbitration has concluded and awards published, the question becomes, is it enforceable? How and where? This is an moment in the life of an arbitral award because under the doctrine of functus officio, the tribunal's jurisdiction and authority expire once the award has been published. In other words, the arbitrators have no additional power or jurisdiction beyond the conclusion of the case. So as one might imagine, the losing party unhappy with the outcome may want to challenge the award, seek a reversal, or vacate or have its term set aside. However, the right to appeal any arbitration award, maritime, commercial, international, is limited on purpose because one of the perceived benefits of going to arbitration is finality. In other words, if you're going to end up in court anyway, what would be the point of submitting a dispute to arbitration in the first place? Legislation and most other provisions that deal with arbitration procedures define very narrow instances in which an arbitral award may be revisited. They're listed here and include concepts such as incapacity, meaning one of the signers to the arbitration agreement didn't have the mental fortitude or capacity to enter into a legal contract. Due process violations. Jurisdictional breaches like when arbitrators go beyond their remit in deciding matters outside the scope of the agreement. Or procedural breaches, such as lack of notice or improper impaneling of the arbitral tribunal. The non-arbitrability of the subject matter, violation of public policy and legal error. Whether or not such challenges are viable will depend on the type of award we're dealing with, foreign or domestic, final, interim, or partial, and the jurisdiction where the purported appeal is raised. Outcomes may vary by the seed of the arbitration. So you would want to look at applicable laws such as the Federal Arbitration Act, the New York Convention, UNCITRAL, the English and Wales Arbitration Act, state laws and other foreign or local regulations and institutional rules invoked by the terms of the underlying contract to determine whether a challenge is even viable at the outset. Additionally, the ability to enforce or appeal an arbitral award will depend on initial considerations such as time limits or statutes of limitation. But assuming all the initial hurdles are met or overcome, parties in the US for example, might challenge the enforceability of an award on the grounds that it was procured by corruption or fraud. Arbitrator misconduct may be involved or a manifest disregard of existing law. Again, is important to remember however, that whatever challenges are available will be determined by the law governing the arbitration. The New York Convention adopted by Express Incorporation in the Federal Arbitration Act and other national arbitration laws honors the enforcement of foreign arbitration awards, as we've said, and defers to local jurisdictions. In other words, according to that convention, if the arbitral award wouldn't be valid under state or national law of the place that has jurisdiction or where the award was made, it wouldn't be enforceable under the New York Convention. In spite of all of the obstacles to challenging arbitral awards, challenges happen all the time. The degree of success, however, is limited. So we have listed some noteworthy cases here and we'll avoid going through all of them given our time restriction. But you can see the types of issues presented to challenge the enforceability of arbitral awards and how the courts have ruled on them. The ones listed here include the validity of arbitration agreements that we've discussed, proper notice and service, deference to seat or Lex Arbitri, and tribunal impartiality. The most recent one listed here that I want to go into a little bit is the Haliburton case, which was dealing with tribunal impartiality. This was a big deal case involving a big deal maritime arbitrator and it's worthy of your reading. Haliburton had argued it had justifiable doubt as to the impartiality of one arbitrator because that arbitrator had failed to disclose his appointments in multiple arbitrations with overlapping subject matter that included the same respondent. The overlapping subject matter happened to be the deep water horizon disaster in the Gulf of Mexico and the party that they referred to was the insurance company Chubb and another trans ocean. The arbitrator was core appointed in the arbitration involving Halliburton, but was appointed by Chubb in the second one. Halliburton wanted that arbitrator removed for failing to initially disclose his appointment by Chubb, their adversary, in the second arbitration. This case made its way through the English judicial system and eventually came to rest in front of the UK Supreme Court in November of 2019. Several notable arbitral organizations such as some of the ones we've talked about today, the LMAA, the ICC, the LCIA, the Chartered Institute of Arbitrators, and the Grain and Feed Trade Association or GAFTA, they all expressed profound interests in this topic and submitted amicus type briefs and oral argument to the high court ultimately in declining to agree to the arbitrator's removal. England's high court discussed at length the ability of parties to waive conflict disclosure mandates and relied on the standard of a fair minded and informed observer to determine there was no real possibility of unconscious bias on this arbitrator's part, especially since he explained his failure to initially disclose his multiple appointments and his explanation was not challenged by Haliburton. The arbitrator had said that he simply forgot or that it was mere oversight. As such, he was not removed from the case and was able to proceed with the arbitration and the award stood. This case has produced lots of controversy, lots of tension, and lots of analysis, and I encourage you to look it up. Another case that may be of interest to you is the Tiger Shanghai case from 2019. This was a case about proper notice and service and the contract that was the part of the complaint challenged had stated that supporting documents must accompany the notice of arbitration and claims submissions within 12 months of the charter completion. All supporting documents was the emphasis the claimant heard. The court said that the case was time barred because the plaintiff, the claimant here, didn't submit on a timely basis the survey docs. So as you can see, it's very important for claimants and respondents to not only submit all documents required but to even start the arbitration properly, all of the terms of the contract must be adhered to regarding proper notice and service. Okay, so we're wrapping up. We see that maritime arbitrations have a long standing history of being popular and accepted by merchants and mariners, lawyers and advocates, and the court system. They are seen as efficient and economical procedures for resolving maritime commercial disputes. They do produce binding and final awards that are enforceable worldwide, courtesy of international treaties such as the New York Convention. And in the case of maritime disputes, it's easy to say arbitration is here to stay. If you're interested in reading further about the topics we have discussed here today, I encourage you to refer to the books and articles listed here in the slide labeled References. Thank you for listening. My name is Jo Colbert Stanley. Have a great day.

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JCS
Jo Colbert Stanley
Managing Member
Stanley Legal Services

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