Maritime Arbitration Disputes – Navigating The Seat Of Arbitration

Globally, the maritime industry is susceptible to disputes due to the technical nature of the industry. The maritime industry comprises various contractual relations and transactions, which sometimes result in disputes that require prompt resolution and ensure the timeous fulfilment of the contractual obligations of the parties and, essentially, timely delivery of the terms of the contract that gave rise to the parties' obligations.

In a bid to achieve timely delivery of the terms of the contract whenever a dispute arises, most maritime contracts provide for the settlement of disputes through arbitration due to the confidentiality, neutrality, and flexibility that it offers. Therefore, as a result of booming international trade and commerce between countries, involving the transportation of goods, people, and services through shipping, which requires the maintenance of shipping vessels, including the building and sale of maritime vessels and equipment assembled and used on the high seas, there has been a growing preference to resolve maritime disputes through arbitration.

ARBITRATING MARITIME DISPUTES

Maritime or shipping activities are usually characterized by contractual agreements such as charter party or service contracts, which involve parties to a definite and specific contract covering a particular specified duration. Disputes may also ensue between parties who are not bound by an agreement. For instance, ship collision or contact damage arising at the ship berth or involving a third party may result in disputes. By its nature, a maritime dispute may be a simple disagreement or a complex, multiparty, multi-jurisdictional disagreement worth millions of dollars.[1] Besides, since international shipping and trade often involve several parties, huge sums of money, and complex terms of contract, the possibility of disputes occurring is often high,² therefore, the timely and viable intervention of arbitration as a form of settling maritime disputes becomes necessary.

Where maritime disputes occur, the first point of call usually involves making recourse to the court, subject to the existence of dispute settlement clauses in the agreement binding the parties. This is in line with Part XV of the United Nations Convention on the Law of the Sea (UNCLOS)³, which permits parties to a maritime dispute to make recourse to a dispute settlement mechanism of their choice, failing which compulsory dispute settlement procedure is then triggered.⁴ The preference for arbitration has, however, increased because of its effectiveness and efficiency in resolving disputes.

Therefore, when parties negotiate and enter into maritime contracts, it is advisable to define the dispute resolution process by incorporating an arbitration clause/agreement in the contract. This is due to the advantage arbitration provides the parties, given that time is usually of the essence in most maritime activities or transactions. The most important consideration in any commercial transaction of this nature is that arbitration is more efficient than litigation. Arbitrations tend to be quicker and less costly. While it is true that the parties must pay for the arbitrators' time, this is offset by the streamlined and more flexible process.⁵

In arbitrating maritime disputes, the parties agree to submit their disputes to one or more impartial Arbitrators to reach a final decision called an Award. Arbitration is widely preferred in maritime disputes due to the privacy, expertise, efficiency, and flexibility it provides. The arbitral process is initiated through an arbitration clause/agreement in a maritime contract, leading to the selection of arbitrators, a presentation of cases, and a binding arbitral Award. The parties entrust the resolution of their disputes to specific specialists whose competence, credibility, and independence they have confidence in. Maritime disputes arise from contracts for the carriage of goods by sea, marine insurance, chartering, sale and purchase, mortgage and repair of sea vessels, demurrage, towage, pilotage, and ice guidance, as well as in connection with any use of sea vessels in commercial activities.⁶

An arbitration clause usually contains an indication of the Rules by which the dispute will be considered, how many Arbitrators will form the Arbitral Tribunal (usually disputes are considered by one or three Arbitrators), in what language the proceedings will be conducted, and where the dispute will be resolved (seat of arbitration) The Arbitration clause may also contain other issues related to the dispute resolution procedure for the specific contract.

If the clause specifies one of the existing Arbitration institutions, then this Arbitral institution will assist in the arbitration and administer the case. It is also possible to form an ad hoc arbitration without reference to an Arbitral institution, in which case, all functions for administering the matter will be assigned to the Arbitral Tribunal. If the contract does not contain an arbitration clause, it is possible for the parties to agree to refer the dispute to arbitration later, even if the dispute is already being considered in a state court. In this case, the parties will enter a submission agreement that allows them to refer their dispute to arbitration.⁷

The parties may refer a dispute arising from their contract to any Arbitral institution in their domestic jurisdiction or any foreign country of their choice. However, some arbitration rules have been developed specifically for the arbitration of maritime disputes, and some arbitration institutions consider only maritime disputes. They are designed to facilitate the prompt and professional resolution of maritime disputes. Some of them are:⁸

1. The London Maritime Arbitrators Association (LMAA): Arbitration conducted under the Terms of the LMAA has become widely known in the maritime industry. The LMAA Terms are specifically designed to resolve maritime disputes, although they are often used in ordinary commercial contracts. One of the advantages of the LMAA Terms is the expedited procedures for disputes with a small claim value (up to USD 100,000). Such disputes can be considered within one month. Arbitration under the LMAA Terms is ad hoc arbitration. The parties notify the Secretary of the Association of the commencement of arbitration, and then the Arbitrators administer the arbitration themselves.

• The Hong Kong Maritime Arbitration Group (HKMAG): Arbitration is similarly conducted under the Terms of the HKMAG. Established in 2000 as a division of the Hong Kong Arbitration Centre, the HKMAG offers special terms for resolving maritime disputes, as well as procedures for expedited consideration of small claims.

• The Singapore Chamber of Maritime Arbitration (SCMA): One of the major centres for resolving maritime disputes is the SCMA. This is a permanent Arbitral institution specializing in maritime arbitration. The Chamber administers various categories of maritime disputes. In addition to the general rules for resolving maritime disputes, the Chamber has adopted special rules for expedited procedures for disputes arising from collisions of vessels, arbitration of bunker disputes, and disputes with small claims.

Some of the maritime Arbitration centers developed over the years to cater to the specific needs of maritime arbitration are: the China Maritime Arbitration Commission (CMAC) set up in 1956, followed, in chronological order, by the bodies set up to serve international maritime arbitration in Paris, London and New York, namely- Chambre Arbitrale Maritime de Paris (CAMP) established in 1959, the London Maritime Arbitrators Association (LMAA) formed in 1960 and the Society of Maritime Arbitrators (SMA) set up in 1963 respectively. In the 1980s and 1990s, now well-established maritime arbitration bodies such as the German Maritime Arbitration Association (GMAA), established in 1983, the Vancouver Maritime Arbitrators Association (VMAA) set up in 1988, Transport and Maritime Arbitration Rotterdam-Amsterdam (TAMARA), formed in 1988 (now UNUM) were set up, with yet further maritime-specific arbitration bodies, particularly in Asia, followed in the 2000s. These included the Singapore Chamber of Maritime Arbitration (SCMA), established in 2004, the Australian Maritime and Transport Arbitration Commission (AMTAC) set up in 2007, and the Hong Kong Maritime Arbitration Group (HKMAG). These maritime arbitration bodies facilitate and support maritime arbitration in their relevant locations, while mostly adopting their own procedural rules. ⁹

NAVIGATING THE CHOICE OF THE SEAT OF ARBITRATION

When entering an arbitration agreement or incorporating an arbitration clause in a maritime contract, the place where the arbitration will be conducted, often referred to as the Seat of Arbitration, is usually of paramount consideration. The importance attached to the choice of the Seat of Arbitration is based on the fundamental impact the Seat has on the legal framework of the Arbitral process and, invariably, the enforceability of the Award. This is because the Seat of an Arbitration determines the governing law and judicial support required for the efficiency and effectiveness of the Arbitral process.

Given the transnational and cross-border nature of maritime disputes, it becomes imperative to choose the appropriate Seat of the Arbitration based on the supportive legal framework of each jurisdiction. Invariably, the choice of Seat carries significant weight, impacting the entire arbitration process and can potentially influence the outcome and even the successful management of any dispute arising.¹⁰

The "Seat" of arbitration refers to the jurisdiction where the arbitration is legally considered to take place. It's the legal address of the arbitration, establishing its connection to a particular legal system.¹¹

In determining the choice of the Seat of Arbitration, the following key considerations must be put into perspective, and these include [12]: the neutrality of the jurisdiction, its supportive legal framework, a stable and impartial judiciary that provides adequate judicial support and intervention, and ease of enforcement of the Award.

1. Neutrality of the Jurisdiction: Given the cross-border and transnational nature of maritime disputes, choosing a Seat that is neutral to the parties can foster trust and confidence, which reduces the risk of challenging the Award and increases its acceptance by the parties. The juridical seat of an arbitration functions as a connecting factor in conflict of laws.[13] This means that where there are conflicting laws of the states of parties in a maritime dispute as to the governing law of Arbitration, the parties can avoid such conflict by choosing a neutral jurisdiction with a favourable governing law, since the law of the Seat of Arbitration presupposes the law that will govern the Arbitral proceedings. In Singapore, for example, it follows automatically that the Singapore Arbitration Act will apply to an arbitration if Singapore is selected as the Seat of Arbitration.¹⁴ In the case of PT Garuda Indonesia v Birgen Air,¹⁵ the Court stated as follows:

"If Singapore is the place of arbitration, the curial law of Singapore applies ... I would add that the curial law, or the lex arbitri as it is sometimes called, is not necessarily restricted to a set of procedural rules governing the conduct of the arbitration. By choosing the 'place of arbitration', the parties would have also thereby decided on the law which is to govern the arbitration proceedings".¹⁶

• Supportive Legal Framework: Parties are advised to choose a jurisdiction that is known for having solid frameworks that aid and support arbitral processes and proceedings that enhance the legitimacy and integrity of the process. Since there is a territorial link between the Seat of Arbitration (lex abitri) and the law governing the Seat of Arbitration (lex loci arbitri), the choice of a neutral Seat or jurisdiction in maritime arbitration gives the parties the ability to determine the legal framework of the arbitration since the selection of a particular Seat results in the arbitration being conducted in accordance with the lex loci abitri.

This territorial link is further reflected in the provisions of Art. 1(2) of the UNCITRAL Model Law.¹⁷ Therefore, the Seat of Arbitration is not merely a matter of geography. It is the territorial link between the arbitration itself and the law of the place in which that arbitration is legally situated.¹⁸ It is therefore clear that the arbitration law of a particular state applies when such state is selected as the Seat of that arbitration, and as such a legal relationship is established between the arbitration on one hand and the arbitration law and the courts of that state/country on the other hand by the simple fact of selecting the seat in that country.[19] The impact of the Seat suggests, therefore, that international maritime arbitration is subject to a regulatory and legal structure, and this regulatory and legal structure is the law at the Seat of Arbitration.

• Judicial Assistance: The role of the judiciary and the Courts cannot be overemphasized in arbitral proceedings. This is because the arbitral process requires the coercive powers of the courts to administer injunctive relief and order interim measures of protection where necessary, in favour of parties in an arbitration. The Courts of the Seat have jurisdiction to entertain applications for interim relief. They can compel reluctant parties to participate in the arbitration or assist in obtaining discovery. Therefore, parties should opt for jurisdictions with local courts that have a robust approach to arbitration and that play a supervisory role as opposed to an adverse role, which can negatively impact the arbitral process and the outcome of the arbitration. Parties should ensure that their choice of Seat has a stable and impartial judiciary that can provide adequate judicial support for the arbitral process.

• Ease of Enforcement of the Award: The Courts of the Seat hold exclusive jurisdiction to hear applications concerning enforcement, annulment, and/or setting aside the Arbitral Award. The designation of a Seat in international commercial and maritime arbitration serves to influence the legal framework for enforcement and recognition of the Award emanating from the process.²⁰ As a minimum requirement, the Seat of Arbitration should be selected in a contracting state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention) to facilitate cross-border enforcement of the Arbitral Award.²¹

The New York Convention, to which over 145 states are now parties, provides the legal framework in international arbitration for the enforcement of an Award.²² By Article I (1), the Convention shall apply to the recognition and enforcement of Arbitral Awards made in the territory of a state other than where the recognition and enforcement of such Awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to Arbitral Awards not considered as domestic Awards in the State where their recognition and enforcement are sought.²³

CONCLUSION

Since international maritime arbitration, just as every international arbitration, is attached to a legal place, selecting the Seat of Arbitration is fundamental. Therefore, the above factors should be considered by the parties when making the decision as to the Seat since such a choice would ultimately have an impact on the entire arbitral process.

Footnotes

1 Nick Coleman, 'Conflict and Compromise – Maritime Dispute Resolution' on GARD (27 July 2017); Ekundayo Oluwaremilekun Babatunde, 'Arbitration Mechanisms in Nigeria's Maritime Dispute Settlement: Challenges and Prospects (Department of Private and Commercial Law, Faculty of Law, Bowen University, Iwo, Nigeria) <distantreader.org/stacks/journals/law/law-203.pdf>

2 Adedoyin Rhodes-Vivour 'Arbitration in the Resolution of Maritime Disputes' (Paper Presented at the 11th Maritime Seminar for Judges on the 1st -3rd June, 2010) 3 <www.drvlawplace.com/media/arbitrationmaritime-disputes.pdf> accessed 25 September 2025.

5 www.blankrome.com/publications/arbitrating-maritime-disputes-0> accessed 29 September 2025.

6www.rcmarb.ru/en/about#:~:text=Arbitration%20is%20a%20method%20of,form%20of%20a%20special%20clause.> accessed 29 September 2025.

7 Ibid. Note 5.

8 Ibi.d Note 5.

9 www.ciarb.org/news-listing/maritime-arbitration-the-dispute-resolution-cornerstone-of-the-global-shipping-sector/> accessed 25 September 2025.

10 Jonathan H. (2014). Determining The Seat of An International Arbitration: Party Autonomy and The Interpretation of Arbitration Agreements, International & Comparative Law Quarterly, No. 63; oal.law/the-seat-of-arbitration-a-crucial-choice-with-far-reaching-implications/#_ftn1> accessed 29 September 2025.

11 Loukas M. (2016). Seat of Arbitration and Indian Arbitration Law Indian Journal of Arbitration Law, No. 4; oal.law/the-seat-of-arbitration-a-crucial-choice-with-far-reaching-implications/#_ftn1> accessed 29 September 2025.

12 Alain, H. (1979). The Place of Arbitration And The Lex Arbitri Arbitration Journal, No.34; oal.law/the-seat-of-arbitration-a-crucial-choice-with-far-reaching-implications/#_ftn1> accessed 29 September 2025.

13 Alastair Henderson, 'Lex Arbitri, Procedural Law and the Seat of Arbitration' [2014] (26) SAcLJ; 886; Abiodun Oduwole, 'Analysis of the Basic Considerations in the Choice of Seat of Arbitration in International Commercial Arbitration' UI Law Journal, Vol. 11.

14 Abiodun Oduwole, 'Analysis of the Basic Considerations in the Choice of Seat of Arbitration in International Commercial Arbitration' UI Law Journal, Vol. 11.

15 [2002] 1 SLR(R) 401.

16 PT Garuda lndonesia v Birgen Air [2002] 1 SLR(R) 401 at [24].

17 The Article provides that 'The provisions of this Law, except articles 8, 9, 35 and 36, apply only if the place of arbitration is in the territory of this State.'

18 Ibid. Note 13.

19 Cap Michal, 'The First Link Case: Implied Governing Law of the Arbitration Agreement is That of the Seat of Arbitration' [2014] (16) Asian Disp. Rev.; 202.

20 Ibi.d Note 13.

21 G Born, International Commercial Arbitration (3rd edition, 2021), §12.01[A]; globalarbitrationreview.com/guide/the-guide-high-net-worth-clients-and-arbitration/first edition/article/strategic-considerations-selecting-arbitrators-seat-institutional-framework-and-specific-clauses> accessed 30 September 2025.

22 Jennifer L. Price, 'Why Where Matters: The Seat of Arbitration in International Energy Contracts' [2013]; Ibid Note 13.

23 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.

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