The international shipping community uses arbitration as a common method for resolving maritime contract disputes. Many in shipping favor arbitration over litigation because they prefer tribunals knowledgeable in maritime matters, rather than courts of general jurisdiction which may have limited exposure to shipping.

In maritime arbitrations, parties play an active role in selecting arbitrators who will decide cases based upon the law, their practical knowledge and commercial reasoning. In litigation, the judicial process provides trial judges who may not have expertise in maritime affairs.

Furthermore, judges may be forced under the doctrine of stare decisis to decide modern-day disputes based on antiquated case law. Arbitrators, however, are not bound by this doctrine and have broad latitude to use their commercial sense of fairness. Neither are arbitrators bound by strict court rules of evidence and procedure.

Most maritime arbitrations are conducted either in New York or London. In the United States, a strong federal policy encouraged maritime arbitration. This policy is set forth in the Federal Arbitration Act (Title 9, U.S.C.). The act empowers federal courts to order parties to arbitrate if they have agreed to do so in maritime contracts. These contracts often include charter parties, bills of lading, wharfage agreements, vessel supply or repair contracts and other matters involving foreign maritime commerce.

The act does not promulgate procedural arbitration requirements other than grounds for vacating an award. The main grounds are failure to postpone a hearing or hear pertinent evidence. Rather, arbitrators are permitted to fashion their own rules unless specific rules are referred to in the contract arbitration clause.

Arbitration Speeds Process
The object of maritime arbitration is to expedite the final resolution of disputes in an inexpensive manner without the restrictive formalities of court proceedings. However, unlike court proceedings, arbitration cannot be used unless contracting parties expressly agree to it.

In most maritime arbitrations, each party appoints an arbitrator based upon the individual's particular expertise and knowledge of shipping. The chosen two then select a third arbitrator as a panel chairman.

Hearings then will be held where evidence and witnesses are presented by the parties. Unlike court trials, arbitration permits the parties to arrange staggered hearing dates that are less disruptive to their everyday business. This flexibility is especially important for scheduling the testimony of seagoing witnesses. At the conclusion of hearings, briefs and reply briefs will be submitted. The arbitrators will then deliberate and decide the case by issuing a final award.

Delays Not Tolerated
As previously mentioned, one of the objects of maritime arbitration is to resolve disputes in an expeditious manner. Can this be accomplished if one of the parties delays hearings for long periods? The recent New York arbitration award of the "Chemical Pioneer" (S.M.A. 3037) clearly answers this question.

In the "Chemical Pioneer" arbitration, a shipowner waited more than three years to commence arbitration for tank coating damage allegedly caused in 1984 by a charterer's cargo. The charterer then appointed its arbitrator. However, the shipowner failed to proceed with its claim. Finally, in 1993 the charterer moved for a dismissal for failure to diligently prosecute.

In dismissing the claim, the arbitrators stated that the "owner has never advanced an excuse for its conduct other than to suggest that the informality of arbitration as a process, and the reluctance of New York arbitrators to dismiss stale claims, sanctions this sort of conduct. If the perception of maritime arbitration as a dispute resolution process conveys this impression, then it is a false image that should be set straight."

The "Chemical Pioneer" award sets the record straight. New York arbitrators will no longer tolerate inexcusable delays. They will expedite the arbitration process by dismissing stale claims.