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Why London remains a key centre for maritime arbitration

by Philip McMullan on 14 Oct 2016

maritime_arbitration Britain has a long and proud maritime history with London at its heart. From Sir Francis Drake to Captain James Cook, British sailors have had a huge impact on world history, and the fact that the prime meridian runs through a suburb of South East London illustrates the UK’s central role in the history of seafaring. The economic impact of shipping to the nation’s prosperity and development is incalculable – it is an over-simplification to say that the British Empire was built on sea power, but true nonetheless.

These historical observations serve to illustrate why London has traditionally been seen as a centre for resolving maritime disputes and remains a key jurisdiction to this day. Commercial shipping is an activity with clear inherent risks, which often requires significant capital and, therefore, different parties working together; disputes are not uncommon. The common law relating to contract is littered with cases relating to stevedores and charter parties, as every law undergraduate knows.

Maritime arbitration in London

In the wake of Brexit, the increasing importance of Singapore and Hong Kong as arbitral seats in Asia Pacific (and perhaps concerns about London losing its seat at the top table), UK trade promotion body Maritime London has produced an online booklet highlighting London's pre-eminence as a centre of excellence for the resolution of international maritime and commercial disputes. The booklet is sponsored by the Admiralty Solicitors Group, with expert contributions from the London Maritime Arbitrators Association (LMAA), as well as law firms Holman Fenwick Willan LLP and Waltons & Morse LLP.

The publication sets out in detail the depth of expertise in London as well as the advantages to parties of the flexibility that the arbitral rules provide. London is the current venue of choice for the vast majority of international maritime arbitrations, we are told. In the five years from 2011 to 2015, the authors estimate that approximately 17,650 appointments were made and, in that same period, 3,000 awards were published by London arbitrators. These figures are very likely to considerably underestimate the full size of the market as they only capture disputes in which full members of the LMAA participated as members of the tribunal. The stats do not include cases conducted by members of the Bar and other specialist, or LOF (Lloyd’s Open Forum) arbitrations. Clearly, this is a significant area.

Why international parties should choose London

So why should international parties (who may have little more than a passing interest in Britain’s seafaring history) choose London as an arbitral seat in the twenty-first century?

The booklet sets out a few key advantages. As well as the more general upsides to arbitration, such as confidentiality, a commercial approach and global enforceability in more than 160 countries under the New York Convention, London has further positives to offer. The English courts have a specialised division and specialist judges, who are experienced in dealing with Admiralty and global commercial matters. The court system, therefore, can support arbitration by making orders for the preservation of evidence or to protect assets in order to facilitate enforcement of future or existing awards.  

The booklet contends that the English system has the correct balance when it comes to rights of appeal. There are only two grounds of appeal to the English courts from an arbitral award in the jurisdiction: firstly, on a point of law of general importance and, secondly, in the event of a  "serious irregularity". However, English judges do not step in lightly – in the three years to 2015 there were 56 applications to overturn awards, according to BAILLI. Of these, less than half (24) were given permission to appeal and just 1 per cent were successful in overturning the award.

A number of senior lawyers and arbitrators have backed the marketing initiative, demonstrating that London intends to remain a centre for maritime and commercial dispute resolution for some time to come.

Maritime London vice chairman, and partner global head of transport, Norton Rose Fulbright LLP Harry Theochari commented: "The pre-eminence of the City of London as the world's leading maritime services cluster was reconfirmed by the recent PWC report, which highlighted the fact that English Law is the preferred jurisdiction for commercial and shipping contracts. It must be that when these contracts give rise to disputes London, with its centuries' old understanding and experience of maritime issues and a judiciary and arbitrators having the highest reputation for independence and integrity, must be the right forum.

"The maritime arbitration services that London and the UK provide are a key factor in the continuing success of the Centre of Excellence that is the maritime services industry within the United Kingdom," added Mark Lloyd, partner at Waltons & Morse LLP. "The member firms of the ASG, with the support of their multi-national client base, have been and will continue to be key users of the arbitration services provided in the UK. The points highlighted in the online booklet published by Maritime London clearly showcase why London is and should remain a dispute resolution centre of choice for maritime disputes."

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Topics: International Arbitration, Arbitration

Philip McMullan

Written by Philip McMullan