Time Charters
29
Arbitration
Arbitration
| “107. | 17. That should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at New York, |
| 108. | one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them, shall be final, and for |
| 109. | the purpose of enforcing any award, this agreement may be made a rule of the Court. The Arbitrators shall be commercial men.” |
The scope of this chapter
29.1 So far as English law is concerned, this chapter deals only with a very few specific points particular to the arbitration clause in the New York Produce form. Specific points particular to the Shelltime 4 form are mentioned in . For a full treatment of English arbitration law, see Ambrose and Maxwell and Mustill & Boyd. United States law is still given fuller treatment here, because of the continued absence of an American work comparable to those English law texts.Place of arbitration
29.2 Clause 17 of the New York Produce form provides for arbitration in New York. Where London is agreed instead, “New York” in Line 107 should be struck through and replaced by “London” when drawing up the charter.NYPE 93
29.3 Clause 45 of NYPE 93 contains two arbitration agreements: paragraph (a) providing for New York arbitration subject to U.S. Law and paragraph (b) providing for London arbitration under English law. One should be struck out by the parties.Governing law
The charter
29.4 The impact of the arbitration clause on the question of which law governs the charter is discussed in paragraph I.21, above.The arbitration agreement
29.5 The Rome I Regulation and Rome Convention (see paragraphs I.19 et seq., above) do not apply to arbitration agreements and agreements on the choice of court (Article 1.2). The law governing an arbitration agreement, which includes its formation, validity and effect, will therefore be determined by reference to common law conflict of laws rules (for which generally see Dicey, Morris & Collins, and paragraphs 32–002 to 32–008). Where, as in the New York Produce form, the arbitration agreement is contained in the commercial contract to which it relates, in this case the time charter, it will typically be right to conclude that the arbitration agreement is governed by the law which governs the commercial contract. However, as Section 7 of the Arbitration Act 1996 emphasises under English law, an arbitration agreement is considered a distinct and severable contract, even where it is contained in the commercial contract. There is, therefore, no reason in principle why an arbitration agreement should not be governed by a different law from that which governs the commercial contract. But the typical time charter on the New York Produce form contains no express choice of law clause and a choice of London arbitration will usually outweigh other considerations and have the effect that English law governs both the charter and the arbitration agreement in Clause 17.The arbitration procedure
29.6 Whether or not English law is the governing law of the contract, if London is chosen by the parties, or (if they do not make a choice) by the arbitrators, as the place or “seat” of the arbitration, the procedure to be followed will be governed by Part I of the Arbitration Act 1996 (Section 2(1) of the Act) and the English court’s supervisory and supportive powers. Section 3 of the Act defines the “seat” of the arbitration as its “juridical seat”, which means the legal place of the arbitration, which need not be where all the hearings take place. In practice, disputes arising out of time charters on the New York Produce form, but with London chosen as the venue for arbitration, are typically referred to arbitration without any specific discussion of the seat. The implication will ordinarily be that London was intended to be the seat. Where, as is often the case, the Terms of the London Maritime Arbitrators Association are agreed, either in an additional clause or when a reference to arbitration is commenced, that is explicitly the default rule in the absence of agreement to the contrary: see paragraph 6(b) of the LMAA Terms (2012).Reference to “three persons”
29.7 Clause 17 of the New York Produce form requires disputes to be referred to three arbitrators, one to be appointed by each of the parties and the third to be appointed by the two so chosen. For such cases, subject to contrary agreement between the parties, Section 16(5) of the 1996 Act requires that each party appoint their arbitrator not later than 14 days after service of a written request to do so and the two so appointed are required “forthwith” to appoint a third arbitrator. However, in practice, parties frequently agree between themselves that unless the two arbitrators first appointed disagree, a third arbitrator shall not be appointed unless and until the case reaches the stage of a formal hearing or final determination of the dispute on documents. The LMAA Terms (2012) deal with these matters in paragraph 8. In particular, the requirement that the third arbitrator be appointed forthwith is replaced by a right in the two arbitrators appointed by the parties to appoint a third “at any time” after their appointment, an obligation to appoint a third only “before any substantive hearing or forthwith if they cannot agree on any matter relating to the arbitration”, and power, if a third arbitrator has not been appointed and they are agreed, “to make decisions, orders and awards in relation thereto”. Since many LMAA arbitrations are determined ‘on the documents’ with no oral hearing, the practical result is that often the award in an arbitration under LMAA Terms will be that of a tribunal of two arbitrators.NYPE 93
29.8 The London arbitration clause in the NYPE 93 (Clause 45(b)) provides for the appointment of two arbitrators and an umpire, unless a sole arbitrator is agreed upon forthwith when a dispute has arisen. For such cases, again subject to contrary agreement, Section 16(6) of the Act provides that each party is to appoint not later than 14 days after written request and the two arbitrators may appoint an umpire at any time after they themselves are appointed, but must do so before any substantive hearing or forthwith if they cannot agree. In this instance, the LMAA Terms (2012) are to like effect: see paragraph 9. Again, it is normal practice for arbitrators to postpone the appointment of an umpire. It is also very common for the parties, often at the invitation of the tribunal, to agree to convert a ‘two plus umpire’ panel into a panel of three arbitrators shortly before or at the outset of the substantive hearing.“Commercial men”
29.9 In the case below, Donaldson, J., suggested that lawyers practising in commercial matters are not “commercial men” within Line 109 of the New York Produce form. But full-time maritime arbitrators are.The arbitration clause in a voyage charter for The North Duchess provided: “The Arbitrators shall be commercial men.” One party appointed a full-time professional arbitrator who, although originally qualified as a lawyer, no longer practised as such. It was held by Donaldson, J., that his engagement as a full-time professional arbitrator in maritime disputes put him within the class of commercial men for the purposes of the New York Produce form. But it was said, obiter, that those whose experience was solely as practising lawyers, although practising in the commercial field, would not be so regarded: “Some of them can rightly be described as ‘commercial lawyers’, but whilst they serve the commercial world they are not of it.”