Shipping, arbitration and litigation

Shipping arbitration in London is predominantly facilitated by the London Maritime Arbitrators Association. The different types of schemes in operation indicate different disputes require different methods of dispute resolution.

There are several key considerations which can be important in the resolution of any dispute:

(1) the party's own legal costs;

(2) the size of the costs bill from the other side if the case is lost;

(3) fees of the tribunal; and

(4) the quality of decision making. There needs to be sensitivity to saving costs and avoiding delay.

Fairness is a necessity for any form of dispute resolution: there can be no compromise on this, whether in court or in arbitration. Shipping arbitration would not be as successful as it is without scrupulous attention to this. Even if a mistake were to be made, there is the safety net of court supervision under section 68 of the Arbitration Act 1996 when there has been a serious irregularity in the proceedings which has resulted in injustice. Cases where this occurs are few and far between, however.

The default position, in the absence of agreement to the contrary between the parties, is that there can be appeals on a point of law. However, appeals are rare because of the constraints stated by Lord Diplock in The Nema and now imposed by section 69 of the Arbitration Act 1996. Shipping contracts normally make no contrary provision because they normally adopt standard form arbitration agreements, which are silent on this.

These constraints, which threw out the old special case procedure, were originally thought to be supportive of arbitration by avoiding court interference but experience has shown that they stultify appellate supervision, and deprive English law of the new case law which is the oxygen for its development. Appeals limited to a focused point of law can be quick, the system of requiring permission to appeal prevents abuse (the commercial judges can be trusted about the giving of permission), and an appeal can improve the quality of the end product. The constraints imposed in default of contrary agreement need to be reformulated. If particular shipping parties want more limiting constraints or no appeals at all, they are free to agree that in their contracts.

The Royal Courts of Justice, like the Ritz Hotel, are open to everyone, but not everyone can afford to go there. Costs discourage people from bringing meritorious claims, or defending those which are without merit. In court proceedings costs include the party's own costs, the risk of an adverse costs order and court fees. Compromise over one's own costs can bring with it less than effective preparation or conduct of the litigation and may be a false economy.

Out of all county court litigation, 85 per cent is conducted by litigants in person. Those cases can be of immense importance to the parties and their families.. The complexities of the Civil Procedure Rules, the costs of disclosure, the volumes of inter partes correspondence, with each letter being paid for at professional rates, escalating court fees and the Jackson reforms, which abolished most types of conditional fee agreements, are forcing the public away from being represented at all. The judge cannot substitute for missing evidence, not taking the right points, incorrect concessions and poor case presentation.

In the commercial court, the cases involve much more in dispute, most parties are from abroad and there is almost never a litigant in person. Standards are universally high. Commercial parties work on budgets and so they are reluctant to take large risks in litigation. In small cases the costs can be out of all proportion to what is at stake but in larger cases costs can still dominate the question of whether to continue.

There can be an assigned judge for a particular case, but this is generally not so, and judges have other commitments which can take them away from London. New judges have to be told about the procedural history and the case. This can be contrasted with one arbitral tribunal following the case from beginning to end.

The shipping arbitrators know how the industry works and are sensitive to the considerations of costs and efficiency. They have specialist shipping legal text books to help them, which often will be sufficient. Sometimes the tribunal includes specialist lawyers. For a three man tribunal, each party can choose one arbitrator, which is a system that instills confidence that their case will be properly considered by the tribunal. This consideration is of the greatest importance to them because shipping arbitration is a service industry and clients need to have confidence that their case will be heard and justice will be done. Shipping arbitration offers a tailored service for a specialist industry.

Steven Gee QC, FCIArb is head of Chambers at Stone Chambers

www.stonechambers.com