The number of disputes in the shipping and international commodity trading industry has always been high; 90% of international commerce travels by sea and with the global financial crises providing an extremely fertile ground for disputes, these numbers have increased noticeably over the last few years.
Unlike most industries, the maritime world has historically embraced arbitration as the preferred method used to resolve disputes and often this takes place in London with English law applying. The English legal system has a steeped history of dealing with maritime matters and today is home to a developed base of specialist shipping practitioners, lawyers and judges. That said, a number of international jurisdictions have already, and are continuing to emerge as suitable alternative locations to London and it’s now possible to find highly technical individuals with the knowledge, experience and commercial sensitivity to arbitrate maritime disputes in a number of key hubs around the world. Acquisition International speaks to the experts.
Ben Horn is principal of a firm of London lawyers and an arbitrator specializing in the resolution of maritime and trade disputes. He is the Co-Editor of The Arbitration Law Handbook. He is a Chartered arbitrator, a supporting member of the London Maritime Arbitration Association, a member of the panel of arbitrators maintained by the Chinese Maritime Arbitration Commission and Singapore International Arbitration commission. He has broad experience of acting as arbitrator in both ad hoc and LMAA arbitrations concerning disputes arising under all the usual forms of contract in use in the shipping industry and is variously appointed by all stakeholders in the maritime industry, including ship owners, charterer’s, cargo interest, ship yards, buyers and sellers, their underwriters and P and I Insurers.
He comments: “The Global financial crisis has led to an increase of disputes in all areas of commerce and shipping, and the international commodity world is no different. This in part is the result of the increased volatility of the markets leading to charterers experiencing falling demand for shipped goods or owners experiencing collapsing freight rates.Estimates suggest that London handles around 70 per cent of the world’s maritime arbitrations. London thus remains the pre-eminent centre for maritime arbitration. It has a proven track record of providing cost effective, impartial and expert decisions, flexible, speedy and private procedures.Traditionally, most standard forms of contract in use in shipping provide for the application of English law and London arbitration. Indeed the Bimco approved Law and Arbitration clause provides for the applicability of English law and arbitration in London under the rules of the London Maritime Arbitration Association (LMAA). Members of the LMAA constitute a body of full time arbitrators from a wide range of shipping backgrounds. The LMAA promulgates its own sets of procedural arbitration rules. These procedural rules are applied to most London Maritime arbitrations. Different procedures are available according to the amount in dispute. Accordingly, if the amount in dispute is less than USD50,000 a documents alone procedure before a sole arbitrator is available but where the LMAA terms apply a full oral hearing can take place. The continued evolution of London Maritime arbitration procedures and the desire of London to stay ahead are illustrated by the recent introduction of new LMAA terms applicable to appointments made after 1/1/12.
London is also home to a wide range of specialist lawyers and advocates, consultants and experts; brokers and insurers, ship sale and purchase brokers, claims handlers and adjusters, providing the necessary expertise to support maritime dispute resolution in London. Overseeing the highly developed and sophisticated process of London maritime arbitration is the presence of a highly respected court system, limited recourse to which ensures maintenance of the reputation of London arbitration.
Timagenis Law Firm (www.timagenislaw.com) of Piraeus is specialized in maritime law, including dispute resolution by litigation or arbitration. Senior Partner Gregory J. Timagenis is an experienced maritime arbitrator (member of the Panel of Arbitrators of NEE, founding member of PAMA and arbitrator in ICC arbitrations).
He comments: “Piraeus and the surrounding area is one of the largest shipping centers worldwide from the point of view of establishment of shipping companies. However, the arbitration activity is disproportionately low. The preferred arbitration center for maritime disputes is London (long tradition, London arbitration clauses in the standard forms of maritime agreements). However the excessive cost and delays in London in the recent years have prompted efforts towards the development of other regional maritime arbitration centers. Piraeus has two Organizations under the auspices of which maritime arbitrations are conducted. The older (since 1969) is the “Hellenic Chamber of Shipping” (NEE, www.nee.gr). The second (since 2005) is the “Piraeus Association for Maritime Arbitration” (PAMA, www.mararbpiraeus.eu), a non-governmental non-profit association. Under the arbitration rules of PAMA, the parties may freely select the applicable law, the language, and the venue of the arbitration and appoint their arbitrator(s), counsel(s) and advisor(s) from all over the world.Greece has adopted (Law 2735/1999) the UNCITRAL model law (1989) on international commercial arbitration and therefore all international arbitrations are subject to the provisions of the model law.
The cost of arbitration in Piraeus is signifigantly lower than in London. In Piraeus there are several law firms and arbitrators experienced in maritime arbitration. A simple clause for arbitration at Piraeus (with two options i.e. NEE or PAMA) may read as follows: “Any dispute arising out of, or in connection with this Agreement shall be resolved by arbitration in Piraeus [at the Hellenic Chamber of Shipping] [in accordance with the Rules of the “Piraeus Association for Maritime Arbitration” in force at the time of the commencement of the Arbitration]”.
Quentin Bargate, Senior Partner of the award-winning firm of English solicitors, Bargate Murray, he comments on what makes him the right arbitrator for the Maritime and Shipping Industry: “Deep experience and an understanding of the industry, including the commercial as well as legal aspects of complex maritime transactions.
I have been appointed and have acted as an arbitrator in complex marine and trade arbitrations, but I also act as a solictor for parties involved in arbitrations of all kinds. I think that being a practitioner is of assistance to my work as an arbitrator because I have not lost touch with the day to day commercial imperatives that are important to users of arbitration.”
Why does the maritime world historically embrace arbitration as the preferred method to resolve disputes? And why does English law often apply?
“Arbitration had many advantages. First, it is private. Second, arbitrators are chosen by the parties for their experience and knowledge, but you have no choice of judge of you go to court. Third, arbitrators can be nationals of or based in any country, even if English law applies as the seat of the arbitration. Fourth, it has the potential to be quicker and more responsive to the needs of the parties. Fifth, arbitration awards are enforceable under the New York convention in many countries where English or other court judgement may not be. Sixth, there is simply greater choice, with the process and rules being designed for the parties, not the convenience of the State. “
How effective is your location in settling maritime disputes? And how does it compare to English law?
“London remains the leading centre for maritime and trade arbitration. One reason is the quality of the experienced arbitrators and supporting professionals who assist in resolving disputes. Another reason is that London arbitration is backed by the English courts and English law, which is respected worldwide. Even the time zone, GMT, helps, as does the use of the English language which most business people speak.”Orestis Schinas is the Professor of Shipping and Ship Finance, Head of the Maritime Business School of the HSBA Hamburg School of Business Administration, he comments in what makes him the right arbitrator for the Maritime and Shipping Industry: “I can contribute an interesting mix of experience and education and training.
My educational background expands from the specialized fields of naval architecture and marine engineering to ship management, employment and finance, while my business experiences expand from new buildings, business development and large corporate projects to advanced and specialized consulting and management. Moreover, my international business and multi-cultural experiences could benefit the settling of cases.
How effective is your Hamburg in settling maritime disputes? And how does it stand out as major maritime hub?
“Hamburg is an attractive and fast growing maritime centre. Arbitration is commonly cheaper, it can be conducted in English and the arbitration awards are enforceable as per the 1958 New York Convention. The advantages of the German Law over the English Law are discussed in the literature, yet parties can choose the applicable Law. Generally, German arbitration is based on the UNCITRAL model law. Expertise, both technical and legal, the option of the parties to choose the applicable Law, cost and time issues attract international cases to Hamburg.”
Over the next 12 months, are there any impending amendments to the law which will maintain or help improve your status as an international shipping and maritime arbitration venue?
“The new environmental legislation in shipping related to air pollution, as well as the initiatives in Europe towards stricter regulations, e.g. the recent discussions in the European Parliament on the amendment of Directive 1999/32 on marine fuels, will definitely impact the relations of various parties. As the environmental legislation becomes more complicated, technical, operational, legal and scientific expertise should be deployed for the resolution of disputes. Germany is among the leaders in this technology and exercises strict practices, so Hamburg might get a benefit as a location for arbitration.”
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