Dispute Resolution
Defining Maritime Arbitration
A maritime arbitration is any arbitration which has a certain relation with a ship.Such a relation involves the carriage of goods or passengers by sea, sale of second hand ships or construction or the chartering of floating crafts as diverse as a superyacht or offshore support vessel.
Diversity and a wide scope defines the essence of commercially based maritime arbitration and is within the four corners of definitions of ‘international’ and ‘commercial’ as contained in Article 1 of the UNCITRAL Model Law and is practised and taught at maritime and commercial institutions internationally. It’s intriguing that London based maritime arbitrations exceed non-maritime commercial arbitrations with number of ad hoc arbitrations conducted under the Terms and Procedures of the London Maritime Arbitrators Association consistently exceeding the cause lists of international arbitral institutions. In the year 2022 the London Maritime Arbitrators Association estimated total number of references (1807) which exceeded the combined number of fresh cases registered with the International Chamber of Commerce (ICC), London Court of International Arbitration (LCIA), Singapore International Arbitration Centre (SIAC) and the Hong Kong International Arbitration Centre (HKIAC) .
Despite its centrality in international commerce and its scale and diversity, maritime arbitration is confined exclusively in the domain of arbitration forums.The rank and file of international commercial arbitration forums consider maritime arbitration as a specialised sector-based form of arbitration of interest only to the shipping industry which has led to the marginalisation of maritime arbitration. The fine distinction is that the cargos which ship transport is not comprised of other ships and ships are not constructed by the sailing crew. The reality is that maritime arbitration is open to all parties who encounter ships, involving all form of international trade. Prior to the rise of global shipping hubs such as Singapore port, Hong Kong and Shanghai port Venice, Genoa, New York and Paris were the significant maritime and arbitration clusters. Even today London remains a popular venue and seat for international commercial arbitration in shipping disputes perhaps attributable to English language and traditions. No doubt the large number of cases filed in London is highly supportive towards the development of maritime excellence ,capacity , expertise, certainty of balanced judgements besides cost effectiveness and being frequented as a popular tourist destination. This in turn has lead to availability of full time London based maritime arbitrators with some or many arbitrators not being law firms. While such diversity of maritime arbitrators is valued at arbitral tribunals but excludes them from non-maritime commercial arbitrations. Every two years maritime arbitrators muster at the International Congress of Maritime Arbitrators (ICMA) which lends credence to them .
India aspires to become a Regional Maritime Hub
India has recently established its first maritime arbitration center in Mumbai called the India International Maritime Dispute Resolution Center (IIMDRC). The Ministry of Ports, Shipping and Waterways of India sought to establish a dispute resolution infrastructure in the maritime sector and supported the center in Mumbai in collaboration with the existing India International Arbitration Centre (IIAC) as an integral component of India’s aspiration of becoming a global hub for maritime dispute resolution.
Resolve India Initiative
The IIMDRC is expected to handle international cases in compliance with the government’s “Resolve in India” initiative designed to encourage Indian maritime entities to utilise domestic arbitration fora instead of resorting to external arbitration centers namely Hong Kong, London and Singapore.
Singapore Chamber of Maritime Arbitration
The Singapore Chamber of Maritime Arbitration ( SCMA ) was originally established in the year 2004 and initially operated under the framework of the Singapore International Arbitration Centre . Acceding to demands by the maritime sector the SCMA was reconstituted in the year 2009 and restructured as a company limited by guarantee and since then functions independently.The SCMA provides a framework for maritime arbitration designed to cater to the requirement of the maritime industry and all sectors of the maritime community are entitled to approach the SCMA. The Singapore Chamber of Maritime Arbitration is a specialist arbitration institution which provides a neutral, cost-effective and flexible framework for maritime and international trade arbitrations responsive to the needs of the maritime industry. Its global and regional members hail from all sectors of maritime, trade and arbitration communities. The SCMA attracts disputing parties in the region by providing solutions crafted to meet regional needs. The SCMA Secretariat helms the promotion and development of SCMA across the region popularising the maritime arbitration domain by sponsoring educational and training symposiums to foster thought leadership and encourage pragmatic solutions for maritime and trade businesses. The financial support for the establishment and continued operation of the SCMA comes from the Singapore Maritime Foundation which is regulated by a board .
Typical Singapore Modern Day Maritime
Contemporary maritime issues include supply of bunkers comprising a significant segment of the Singapore maritime industry and its bunker fuel market recorded sales of around 48 million tonnes in the year 2016 depicting a 54% increase from a decade ago. The SCMA has the jurisdiction to resolve bunker disputes in accordance with the Singapore Bunker Claims Procedure. Typical bunker disputes internationally include quantity disputes, quality disputes , non-compliance with MFM procedures or suspected breach of system integrity (non-calibration etc.) . The SCMA is listed as one of the three designated arbitral seats for disputes arising under BIMCO and NYPE 2015 contracts. The SCMA has over the years acquired extensive experience in relation to time, voyage, bareboat charter and affreightment disputes across different shipping sectors. Charterparties disputes include unpaid hire, demurrage claims , stevedore damage, cargo remaining on board, cargo claims , war risk premiums, inventories and spares.The Red Sea Houthi attacks on merchant ships which causes rerouting of ships and even the transportation of Russian and Iran origin hydrocarbons on largely uninsured Grey” fleets and accompanying US sanctions , is likely to give rise to additional maritime claims.
Commercial Disputes
Commercial Contract disputes arise from commodities trade and SCMA’s arbitrators have sufficient exposures in handling all types of commodities contracts including coal, rice, sand, iron ore , fertilisers and steel. Typical commodities disputes include non-payment upon delivery of cargo, non-delivery , demurrage claims , shortfall in quantity, quality disputes and wrongful termination of contract. Certain endeavours spread across maritime jurisdictions such as the offshore and oil & gas sectors and the world of commerce carries out digital change of title overseas which gives compels boundary re arrangements and maritime disputes.
Pakistan Arbitration Scenario
Pakistan has historically suffered at international arbitration which can be attributed to either lack of exposure or lack capacity in such matters. Glaring examples are the Reko Diq Copper Gold project , Karkay and hydropower disputes . The representatives to the international arbitration tribunals were not adept in this field despite shallow claims to the contrary. Presently India has filed an application to renegotiate the Indus Waters Treaty which is a cause of concern as it affects the food security of almost 230 million citizens of the country . Almost 90 % of Pakistan’s external trade is external and maritime related.The exports of Pakistan are import based . The number of cargo ships calling at the Karachi Port alone averages 1800 annually .Demurrage claims and shortfall in quantity of imported cargo and damage to vehicles are common commercial grievances. Bunkering is not carried out a Pakistan’s seaports even for the national flag carrier Pakistan National Shipping Corporation however it may commence in the near future and generating quality related disputes. Same would be the case for Sea Tourism and passenger movement both within territorial borders and beyond as the Federal cabinet approved the policy a few years back. There should be a focus on dispute resolution which may lead to national arbitration resource development . Dispute resolution is likely to be extended to Trans boundary and Subsea internet corridors as well as the expected multi $ billion Transit trade to Central Asian countries and China. International and national maritime and logistic investors, being capital intensive ventures, need the certainty of a legal and efficacious legal framework. India has completed more then 700 km of navigational Inland Waterways with the assistance of the World Bank and this may give rise to myriad maritime disputes. The Indus Delta and creeks are adjoining the Port Qasim area and policy for Inland Waterways development and logistics by the Federal maritime policymakers is sorely needed to maintain the depth and navigational capability of Pakistan’s rivers. Inland waterways greatly reduces Carbon Emissions and we are lacking in initiatives in this vital environmental area.The emphasis should be to focus on promoting national maritime arbitration to promote the trade and logistics sector of Pakistan and eliminate trade irritants.
Authored ; Nadir Mumtaz
Credit/Sources
https://www.jamesclanchy.com/knowhow/maritime-arbitration
https://www.marineinsight.com/shipping-news/india-establishes-its-first-maritime-arbitration-center/
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