India: The Future Destination of Maritime Arbitration

 

 

As long as human memory can stretch, the sea has been a constant source of sustenance, providing food, wealth, minerals, and other natural resources. Shipping has been widely recognised as the FIRST TRULY GLOBAL INDUSTRY. An industry that is no longer concentrated within a small number of people or a single country but rather spreads worldwide with nearly every coastal nation leaving its footprints on its evolution, thus bringing with it the core of shipping’s International flavour and consequently International disputes.

The financial crisis of 2007-08 not just cracked the backbone of international shipping but also resulted in a spurt of shipping disputes. Owing to its complex nature and involvement of transnational players shipping inherently is a perfect and fertile ground for arbitration. Constantly changing jurisdictions when a vessel moves from one country to another gives rise to difficult disputes which are not always possible to resolve promptly by approaching the national courts. This has exhorted the stakeholders of the industry to join hands in creating centers for dispute resolution which are independent of State jurisdiction. Adding to that, the advances made in engineering, technology, and communications have led to the emergence of various new trade practices and usages, which may not always be in consonance with the domestic laws of the trading countries.

Maritime arbitration like any other arbitration is most often the result of an arbitration clause in a contract, in which case the said clause is paramount. The clause may contain various provisions pertaining to the seat of arbitration, the procedures to be followed in arbitration, the makeup of the arbitral tribunal, and the remedies available. The words of the contract should be clear and unambiguous as only they provide the interpretation of what the parties intended, as in the case of Harmony Innovation Shipping Ltd v. Gupta Coal India Ltd where despite the arbitration clause, courts had to interpret the jurisdiction and intention of parties under the contract.

Similarly, while interpreting the clause in Cargill International S.A v. Bangladesh Sugar & Food Industries Corporation court stated that “Based on the bedrock of the principles of the Arbitration clause in the contract, it is vivid that the intention of the parties was that the seat of Arbitration was London”. Further on the court ruled that “We think it would be appropriate to interpret that the clause is a proper clause and a substantial clause and not a curial or procedural one by which the arbitration proceedings are to be conducted and hence, we are disposed to think that the seat of Arbitration will be at London”.

-Any dispute arising under this Charterparty or any Bill of Lading issued hereunder other than provided for in paragraph (a) hereof shall be referred to arbitration in London, one arbitrator being appointed by each party, in accordance with the Arbitration Acts 1950 and 1979 or any Statutory modification or re-enactment thereof for the time being in force. On the receipt by a party of the nomination in writing of the other party's arbitrator, that party shall appoint its arbitrator within fourteen days, failing which the decision of the single arbitrator appointed shall apply. If arbitrators properly appointed shall not agree they shall appoint an umpire whose decision shall be final and binding.

Moreover, with the enlargement of the function and powers conferred on the arbitration tribunal under the new National & International laws, arbitration inherently has become the favoured means of settling international disputes. These broadened powers and the acceptance of the “Konpetenz-Kompetenz” principal Arbitration has become widely accepted as the Arbitrator can now exercise immense powers like for instance deciding its own jurisdiction and declare interim/provisional rewards.

Constant changes in the shipping industry and complexities of jurisdiction prompted the industry to bring in means of alternate resolution of disputes. Arbitration thus emerged as the dominant choice of dispute resolution in the global shipping industry with the establishment of major maritime arbitration centers in London and New York along with the recent emergence of new centers such as Singapore and China. Unlike the maritime hubs of Singapore & Hong Kong, India’s first Arbitration and conciliation center with an emphasis on shipping disputes is also due to come up in the Gujarat International Finance-Tech City (GIFT). It is being developed under the aegis of Gujarat Maritime University and would be known as Gujarat Mediation & Arbitration center (GMAC). GMAC promises to be different than the other arbitration centers by assuring a gamut of services like the ease in availability of professional services /ease in access to government regulatory agencies (viz. GMB, DG Shipping, etc.), taxation, and Fiscal benefits. Additionally, Gujarat Maritime University will address the industry’s need for manpower requirements. GMAC will offer time-bound and cost-effective dispute resolution by concentrating on all aspects of shipping under one roof. It envisages a presence of leading ship owners, ship brokers, ship charterers, ship recyclers, regulatory bodies & maritime consultants under a single roof.

In conclusion, one would realise that Maritime Arbitrations are largely influenced by the international nature of the disputes. While some areas of Maritime Arbitration are still unsettled, like choosing the area of the foreign forum, foreign choice of law clauses in arbitration agreements, it still continues to be heavily popular in settling Maritime disputes.

Managing Parter Gautam Khurana and Senior Partner Capt. Pankaj Kapoor

 

 

For further information, please contact:

Gautam Khurana, Managing Partner

India Law Offices, New Delhi

e: g.khurana@indialawoffices.com

t: +91 (11) 24622218

 

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