MARY THOMSON Chartered Arbitrator, Mediator, Adjudicator, Barrister & Former Solicitor

Pacific Chambers Hong Kong

Associate, Stone Chambers London & Singapore

Pacific Chambers901 Dina House11 Duddell Street, Central, Hong KongT: (852) 2521 5544 F: (852) 2524 5912E: mary.thomson@pacificchambers.com

Belt and Road Summit – Hong Kong as the Deal Maker

and Dispute Resolver : Maritime Dispute Resolution

Hong Kong 28 June 2018

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INTERNATIONAL MARITIME ARBITRATION :

OVERVIEW

Unique aspects of maritime arbitration compared with

other types of commercial arbitration :

1. Specialist maritime arbitration associations

2. Standard maritime arbitration clauses

3. Incorporation of arbitration clauses

4. Small claims and expedited procedures

5. Interim measures

2This Photo by Unknown Author is licensed under CC BY-SA

• Tokyo Maritime Arbitration Commission of the Japan

Shipping Exchange, Inc (TOMAC) -1926

• China Maritime Arbitration Centre (CMAC) - 1959

• London Maritime Arbitrator’s Association (LMAA) -1960

• Hong Kong Maritime Arbitration Group (HKMAG) - 2000

• Singapore Chamber of Maritime Arbitration (SCMA) – 2004

• Australia Maritime and Transport Arbitration Commission

(AMTAC) -2007

• Emirates Maritime Arbitration Association (EMAC) - 2016 3

1. SPECIALIST MARITIME ARBITRATION

ASSOCIATIONS

“This Contract is governed by English law and all disputes arising under or in

connection with it shall be referred to arbitration in London. Arbitration shall

be conducted in accordance with one of the following LMAA procedures applicable

at the date of the commencement of the arbitration proceedings:-

(i) Where the amount claimed by the Claimants is less than US$400,000…the

reference shall be to a tribunal of three arbitrators and the arbitration shall be

conducted in accordance with the LMAA Intermediate Claims Procedure.

(ii) Where the amount claimed by the Claimants is less than US$100,000…the

reference shall be to a sole arbitrator and the arbitration shall be conducted in

accordance with the LMAA Small Claims Procedure.

(iii) In any case where the LMAA procedures referred to above do not apply, the

reference shall be to three arbitrators in accordance with the LMAA Terms

current at the date of commencement of the arbitration proceedings.”4

2. STANDARD MARITIME ARBITRATION

CLAUSES – LMAA

“This Contract shall be governed by and construed in accordance with English /

Hong Kong* law and any dispute arising out of or in connection with this

Contract shall be referred to arbitration in Hong Kong in accordance with the

Arbitration Ordinance Cap. 609 ….

The arbitration reference shall be to three arbitrators:

(i) A party wishing to refer a dispute to arbitration shall appoint its arbitrator

and send notice of such appointment in writing to the other party requiring

the other party to appoint its own arbitrator within 14 calendar days of that

notice, and stating it will appoint its arbitrator as sole arbitrator unless the

other party appoints its own arbitrator and gives notice that it has done so..

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2. STANDARD MARITIME ARBITRATION

CLAUSES - HKMAG

If the other party does not appoint its own arbitrator and give notice that it has done

so..the party referring a dispute to arbitration may…appoint its own arbitrator as

sole arbitrator... The award of a sole arbitrator shall be binding on both parties as

if he/she had been appointed by agreement.

(i) Where each party appoints its own arbitrator, then the two arbitrators so

appointed may proceed with the arbitration and at any time thereafter appoint a

third arbitrator so long as they do so before any substantive hearing or forthwith

in the event that they cannot agree on any matter relating to the arbitration..

This arbitration shall be conducted in accordance with the HKIAC Small Claims

Procedure ..provided that neither the claim nor any counterclaim exceeds the limit

provided for in such procedure”

Default appointment is by HKIAC 6

2. STANDARD MARITIME ARBITRATION

CLAUSES – HKMAG CONT’D

SHAGANG SOUTH-ASIA (HONG KONG) TRADING CO LTD V DAEWOO LOGISTICS (THENIKOLAOS A) [2015] EWHC 194 (Comm)

• Parties agreed in fixture note:“23. ARBITRATION: ARBITRATION TO BE HELD IN HONG KONG, ENGLISH LAW TO BE

APPLIED.24. OTHER TERMS/CONDITIONS AND CHARTER PARTY DETAILS BASE ON GENCON

1994 CHARTER PARTY.”• GENCON 1994: Clause 19 Law and Arbitration“(a) This Charter Party shall be governed by and construed in accordance with Englishlaw and any dispute arising out of this Charter Party shall be referred to arbitration inLondon in accordance with the Arbitrations Acts…(c) Any dispute arising out of this Charter Party shall be referred to arbitration at theplace indicated in Box 25 subject to the procedures applicable there. The laws of theplace indicated in Box 25 shall govern this Charter Party.(d) If Box 25 in Part 1 is not filled in, sub-clause (a) of this clause shall apply.”

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2. STANDARD MARITIME ARBITRATION

CLAUSES

SHAGANG SOUTH-ASIA (HONG KONG) TRADING CO LTD V DAEWOO LOGISTICS (THENIKOLAOS A) [2015] EWHC 194 (Comm) Cont’d

• Daewoo appointed an arbitrator and later appointed him as sole arbitratorpursuant to 19(a) and Arbitration Act 1996.

• Shagang suggested seat was HK and applicable procedural law therefore HK• Arbitrator ruled on own jurisdiction and decided arbitration subject to English

Arbitration Act 1996 and Gencon clause 19(a) applied.Charterers appealed and English High Court held:• “to be held in Hong Kong” implied choice of HK as seat of arbitration HK and of HK

law as the curial law. Clear words required to displace presumption that law of theseat to be applicable procedural law.

• “English law to be applied” referred to the substantive law applicable to governthe substantive disputes under the Charterparty

• Award set aside• English Court described HK as “..a well known and respected arbitration forum

with a reputation for neutrality, not least because of its supervising courts.” 8

2. STANDARD MARITIME ARBITRATION

CLAUSES – Cont’d

Arbitration Clauses requiring “Commercial men”, “Shipping Men”, “engaged inshipping”. Example New York Produce Exchange (NYPE) time charterparty, Line 109

➢ Lord Donaldson in Pando v Filmo [1975] 1 Lloyd’s Rep.560 where “commercialmen’ clause:

• Lawyers practising in commercial matters are not “commercial men”• Full time arbitrators , although originally qualified as lawyers, are➢ Vincor Shipping v Transatlantic Schiffahrtsknotor [1986] where “commercial

shippingman” clause:• Solicitor who had not practised for 12 years but has been engaged full time at a

P&I Club was a “commercial shippingman”➢ U.S. Ship Management v Maersk Line [SDNY 2002] where “shall be a commercial

person knowledgeable in the operation and chartering of container ships…”• The practical commercial experience a lawyer gains doing non legal work in the

industry cannot fall away the moment he is a practising lawyer

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2. STANDARD MARITIME ARBITRATION

CLAUSES – Cont’d

Example Congenbill 2016, cl. 1

“All terms and conditions, liberties and exception of the

Charter party, dated as overleaf, including the Law

and Arbitration Clause / Dispute Resolution

Clause are herewith incorporated.”

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3. INCORPORATION OF ARBITRATION CLAUSES

THE FEDERAL BULKER [1989] 1 Lloyd’s Rep 103

• Clause in the charterparty required bills of lading to provide for arbitration of

“all disputes arising out of this contract”

• Incorporation Clause in Bills of Lading: “all terms…as per charterparty…to be

considered as fully incorporated as if fully written”.

Held: The arbitration clause was not incorporated.

• The bill of lading is a negotiable commercial instrument which may come into

the hands of a foreign party with no knowledge of the terms of the

charterparty.

• Specific words of incorporation are required to incorporate an

arbitration clause.

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3. INCORPORATION OF ARBITRATION CLAUSES – Cont’d

LMAA

• Small Claims Procedure (SMP) (1989, 2002, 2006, 2012, 2017) – Claims or

counterclaim not exceeding US$100,000

• Fast and Low Cost Arbitration (FALCA) (1996) – Claims not exceeding

US$250,000 if no figure agreed

HKIAC

• ‘Documents’ Only Procedure (2000)

• Small Claims Procedure (2003) - Claims not exceeding US$50,000

HKMAG Hong Kong Maritime Arbitration Clause

• arbitration conducted according to the HKIAC Small Claims Procedure

SCMA Rule 46 Small Claims Procedure (2009, 2015)

• claims not exceeding US$150,00012

4. SMALL CLAIMS AND EXPEDITED PROCEDURES

LMAA’s Small Claims Procedure:

• Sole Arbitrator – fee fixed at Stg3,000, additional Stg2,000 if counterclaim

• Within 2 weeks of notice of arbitrator appointment, Letter of Claim not exceeding

2,500 words with supporting documents

• Within 4 weeks, Letter of Defence, and Counterclaim, not exceeding 2,500 words

each with supporting documents

• Letter of Reply not exceeding 1,000 words, Defence to Counterclaim not

exceeding 2,500 words within 3 weeks

• Experts’ reports not to exceed 2,500 words with arbitrator’s permission

• No oral hearing unless arbitrator requires in exceptional circumstances

• Award to be published within one month

• Recoverable costs Stg4,000, if with Counterclaim Stg4,500 13

4. SMALL CLAIMS AND EXPEDITED PROCEDURES

Available measures :

• Arrest of ship to secure a potential arbitration award. Ship arrest in an

action in rem for the purpose of obtaining security does not constitute a

breach of the arbitration agreement - s 20(6) AO

• Arrest of ship to obtain security for the enforcement of an arbitration

award - THE ALAS [2014] 4 HKLRD 160 HKCFI affirmed by HKCA

Other interim measures to aid maritime arbitration

• Injunctions (includingMareva Injunction)

• Ship Inspection Orders

• Preservation of Evidence Orders

• Taking of samples

• Sale of Property Under Dispute (e.g. Sale of Cargo to Preserve its Value)14

5. INTERIM MEASURES & OTHER JUDICIAL MEASURES

THE END – THANK YOU

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MARY THOMSON

Chartered Arbitrator, Adjudicator, Mediator &

Barrister

E mary.thomson@pacificchambers.com

Mary.thomson@stonechambers.com