CHAPTER 1: INTRODUCTION

Alternative Dispute Resolution which had emerged in the middle of the 19th Century and was since
the same time became a very important mechanism in removing disputed in all over the world in
different spheres of life.

Arbitration actually is a method to resolve disputes with the assistance of the Court of Law and is an
agreement between parties to resolve such disputes. Hence in clear sense arbitration is an arrangement
stipulated in a contract that entails a process to remove disputes between parties. For instance in case
of enforceable agreement to sell between a part A who is residing in India and B who is residing in
the United States for delivery of mechanical parts which will in most of the cases have an arbitration
clause for resolution of civil disputes. the agreement will also mention the subject matter and scope
of jurisdiction of the Arbitration Tribunal along with the place of arbitration, which is to hear the
dispute and the relevant law and procedure by reference to which the dispute is to be decided1.

Thus an absolute resolution of a concrete range of disputes between the parties can be achieved
through a compulsion being derived from an enforceable agreement to arbitrate the matter rather than
investing time with the court or other governmental agencies to enforce a bargain, as an arbitrators
decision is binding and and enforceable by Legislature and the Judiciary.

Similarly when it comes to Maritime Arbitration which is actually an alternative means of resolving
conflicts especially shipping disputes, which are outside of the court system. Such form of arbitration
is mainly used to enforce the maritime disputes ike destruction of goods, damages, non performance
of contracts and resorting out of court settlements. There are various forms of arbitrations for different
marine disputes, which includes those forms which are binding in which both the parties agree to
abide by the different findings and awards of the Arbitrator; whereas there are also non binding which
are mere opinions or observations given by the arbitration as a sole reference for an action.

There are a variety of situations in which the Maritime Arbitration would apply. For instance there is
a necessity of a panel of arbiters to decide in case of disagreements in the shipping and handling of
sea bound freight. There may also be a case of laws contributing to the protection os maritime workers
and unions and legal representatives to resolve such disputes between employer and worker. The

1
Pon Staff, What are the Three Basic Types of Dispute Resolution? What to Know About Mediation, Arbitration, and
Litigation, (Program on Negotiation, Harvard Law School-2018)

Page 1 of 35
representatives/lawyers of each party can give their opinion on whether there would a safeguard of
the client’s interest to pursue arbitration as an alternative even before an agreement in action2.

Maritime Arbitration is an alternative dispute resolution mechanism which is based on issues directly
or indirectly connected with water or strip of water. Maritime disputes have been in existence with
Merchants buying and selling goods, parties dealing with the use of a ship or any other agreement
dealing with any subject matter commercial in nature. Such form of petty disputes need to be resolved
between the parties at a speedy and timely manner at the earliest. The outcome of such disputes would
be probably that
1. Strong commercial party would insist on a settlement favourable to it
2. The parties may even abandon the arrangement at the point of breakdown, making a clear loss of
one of the parties to the dispute
3. Parties would take assistance of a specific domestic courts for passing an award after a span of
many years
4. Parties may even take recourse of their own domestic courts independent of each other
5. Parties may agree for a neutral domestic court
6. Parties may also agree to mediate or conciliate the dispute
7. Lastly and the most effective is, that parties would agree for arbitration of the disputes through
experienced and well qualified arbitrators in maritime disputes.
But one can never put a blind faith to such form of arbitration as there are obviously disadvantages
embedded which is adversative to a free commercial and a constructive business and commercial
relationship. In Maritime disputes there shall always be some dispute in relation to jurisdiction
because both the parties to the dispute are foreigners and the said courts may declare any of the party
as corrupt or incompetent. There would also be an influence of the foreign government on the parties
to the dispute even in the case of national courts of a neutral country. Hence in such for of maratime
disputes mediation or conciliation won’t be a solution to the problem. Thus in maritime disputes
having jurisdictional issues the arbitration becomes one of the means to adjudicate.

Hence there is a widespread international acceptance of some of the most successful international
conventions where International Commercial Arbitration is a recognises process of resolving disputes
between two international parties. United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards 1958 (AKA the New York Convention) is the most relevant with respect
to Maritime Disputes along with UNCITRAL Model Law on International Commercial Arbitration

2
Marian Dragos, Alternative Dispute Resolution, (Revista Română de Statistică Trim. I-2012), p 1-3
Page 2 of 35
1985. Both these conventions govern maritime arbitration as they clearly define the international
arbitration of disputes, that arbitration awards which have been made conformably with such
conventions are having more enforceability than a judgement of a domestic court. The New York
Convention has been recognised in more than 100 countries of the world including India, which
become a signatory and enforced the same in domestic law in 1960. Hence the power of arbitration
today is more than a judgement of even International Court of Justice or United Nations with respect
to enforceability worldwide. It is the arbitration which gives wider access to a party’s assets and
liabilities than even a Common Law Judgement of English Court3.

Since the Ancient times and the discovery of sea routes, which later became important trade routes
and cosmopolitan commercial society has been created in the persian gulf, americas, eurasia, europe,
the baltic, north sea, indian ocean, south asian borders, african coast, black sea, mediterranean sea,
tigris-euphrates basin and the Arabian Sea. With so many trade routes on the sea there was clearly a
need of settlement of maritime disputes and an evolution of such dispute settlement mechanism in
contemporary times4.

From an international perspective the origins of the maritime arbitration would be traced to the
cargoes of various Greek Traders who had voyages of ships owned by ancient Phoenicians5. However
many academicians like Professor Tetley have pointed out an existence of a dispute settlement
mechanism dating as far back as 1200 A.D. where the customary lex maritime prevailed with tow
medieval enactments/codifications, i.e., Roles of Leron and Consolato del Mare. These codifications
had existed in the Atlantic and northern coasts of Europe and various Mediterranean ports. Professor
Tetley has observed the existence of arbitral awards and decisions which have been preserved in gruff
of Giraud Amalric, a notary in Marseilles, which dates back to 1248 A.D6.

Similarly even a country like India being an important peninsulas of the would also has a rich
maritime heritage with respect to trade and commerce. For instance there was a flourishing sea trade
between Indian region of Lothal in Gujarat and the Persian Gulf and Arabian sea for many years.
Even there was a recognition of Maritime contract of fnus nauticum and law pertaining to bottomry
in the Ancient tests like Many Samhita which dates back to 900 BC. It was later that the British ruled

3
Recognition and Enforcement of Arbitral Awards: The New York Convention, United Nations Conference on Trade
and Development, p 3
4
Sebastian R. Prange, Scholars and the Sea: A Histography of Indian Ocean (University of London-2007), p 3
5
The Handbook of the Society of Maritime Arbitrators New York 4th Edition. See also Professor Tetley, Marine Cargo
Claims, 4th Edition Vol. 1 chapter 28
6
Tetley, Marine Cargo Claims, 4th Edition, Vol. 1 p. 1417, fn. 2.
Page 3 of 35
over the Indian shores for Centuries, and there was an adoption of various common law traditions,
institutional foundations and superstructures, such that there is a deep entrenchment of admiralty
jurisdiction in the Indian Judicial system that is clearly seen.

Although the Indian judiciary in the recent times enjoys presents and a prolific legal system with a
high repute in other common law jurisdictions but it is only with respect to maritime law, that India
is yet to score a superior position in the international arena.

CHAPTER 2: INTERNATIONAL COMMERCIAL ARBITRATION AND ITS

HARMONISATION
2.1 Nature of Arbitration and it’s Advantages
As discussed before, arbitration is one of the most important means of resolution of international
disputes of commercial nature. Same is strictly based on agreement between different parties to the
contract. The nature and scope of arbitration is based on the various principles of contract both in
common and civil law. However there is a high influence of national and international legislations on
such form of contracts. Though the same is not without any appropriate qualification, it is important
to recall and state that the sanctity of contract or pacta suit sevanda, or party autonomy is a key
principle of law and a recognised international legal norm. The same principle clearly demarcates the
relations between all parties in an international transaction. In its true form, arbitration involves a
legal relationship between two or more parties who anticipate a contingency of disputes in their
relationship in future, to prevent conflict, would appoint an independent third party to resolve their
disputes. Traditionally parties to such transaction involved merchants buying and selling goods,
parties dealing with the use of a ship or any contract which directly or indirectly involved a
commercial subject matter7.

Where there is commerce, there is dispute. Dispute is an eminent part of commerce. Hence a
mechanism for their better resolution is necessary. There are various mechanisms for such resolution:
1. Strong commercial party would insist on a settlement favourable to it
2. The parties may even abandon the arrangement at the point of breakdown, making a clear loss of
one of the parties to the dispute
3. Parties would take assistance of a specific domestic courts for passing an award after a span of
many years
4. Parties may even take recourse of their own domestic courts independent of each other

7
S Farhangpur, International Arbitration Agreement Theories,(http://shodhganga.inflibnet.ac.in), p 2
Page 4 of 35
5. Parties may agree for a neutral domestic court
6. Parties may also agree to mediate or conciliate the dispute
7. Lastly and the most effective is, that parties would agree for arbitration of the disputes through
experienced and well qualified arbitrators in maritime disputes8.

Other mechanisms may include impartial experts assisting in the same dispute. But one has to force
various disadvantages to such alternative remedies which can be as follows:
1. Constructive Commercial relationship and Free commercial Bargain would have an arbitrary
force in resolution of such disputes
2. Possibility of failure in case of abandonment of commercial enterprise
3. Defects in enforceability within Domestic Courts
4. Perception of Domestic Courts as being incompetent or Corrupt by foreign parties
5. Domestic Courts of neutral third party may be a better option but the parties to the contract would
be exposed to a foreign governmental process outside the control of both the parties
6. Although parties have an option to meditate or conciliate the dispute but the same are extended
forms of agreements with no final result9
Hence parties to an international commercial dispute are not left with arbitration

2.2 What is Arbitration and what are its Advantages?

Arbitration is a process by which parties have agreed to resolve a dispute arising out of any contract
entered between the parties n future. Hence it becomes necessary for the parties to
1. Specify in detail the very subject, scope and matter of the resolution, third party to whom the
dispute shall be referred along with the relevant law and procedure by reference to which the
dispute is to be decided
2. There is also a legal duty on the parties to give a compulsory resolution of a defined range of
disputes to be referred to arbitration (Duty being derived from earlier free agreement to arbitrate
together with the willingness of other government agency or court to enforce the award of
arbitration)10.
The parties entering into arbitration of disputes also enjoy a variety of advantages. The following are
the advantages for parties to arbitration as the same procedure gives flexibility to parties to choose:
1. Arbitrator

8
Nick Coleman, Conflict and compromise – maritime dispute resolution, (www.gard.co)
9
John Andrew Faris, An Analysis of the Theory and Principles of Alternative Dispute Resolution, (University of South
Africa-1995), p 20
10
Karnika Sawhney, Alternative Dispute Resolution to Online Dispute Resolution, (Indian Council of
Arbitration)
Page 5 of 35
2. Mechanism of choosing the Arbitrator
3. Place of Arbitration
4. Arbitration Procedure
5. Degree of Confidentiality
6. Law to Govern the dispute
7. Procedural Law of Arbitration
8. Court to Supervise the Arbitration
9. Identity of Arbitrator
10. Enforceability

2.3 International Acceptance

There is a widespread international acceptance of International Commercial Arbitration as a
recognised process and institution in the most successful of international conventions. The United
Nations Conventions on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 and
UNCITRAL Model Law on International Commercial Arbitration, 1985 are the most relevant and
notable for the purpose of this research. Such arbitration awards have been made more conformable
and enforceable than judgements of domestic courts. The New York Convention, for instance, has
been made given recognition by more than 100 countries of the world including India in 1960. Thus
an Arbitral Award made through a settlement outside the court currently has more enforceablity than
even the judgement of a Superior Court of domestic jurisdiction. Hence arbitration award gives access
much more wider than any judgement/order of domestic jurisdiction.

Just as Arbitration is the creation of contract, similarly Maritime Arbitration is a creature of

International Commercial Arbitration. Over the years, Maritime Arbitration has become an preferable
alternative to litigation due to:
1. Less Costs,
2. Less Delays,
3. Less Procedural Complication
than any court proceeding in the world. Moreover Maritime Arbitration has been included within the
General Conventions of International Commercial Arbitration involving decisions relating primarily
to question of fact rather than law. Domestic Courts have covered maritime disputes within the scope
of the New York Convention as commercial matters, hence are arbitrable disputes11.

11
Explanatory Note by the UNCITRAL Secretariat on the 1985 Model Law on International Commercial Arbitration as
amended in 2006
Page 6 of 35
As discussed before, the Maritime Arbitration has ancient roots, hence Maritime law preceded
terrestrial law and maritime arbitration preceded international commercial arbitration having it’s
origins dating back the time of ancient lex mercatoria. Unlike different sectors of trans national
commercial arbitration, as hoc arbitration remains a recognised practise in the Maritime economy.
However such form of arbitration can never operate in captivity but rather has to be coupled with
International Commercial Arbitration in practise.

2.4 Historical Perspective and Development of Harmonised Commercial Law

Traditionally there have been different systems for dispute resolution in
1. Commerce Law
2. Commercial Law
3. Maritime Law
And a synthesis of the above mentioned law plays a great role in resolution of such disputes.
Especially with the contemporary phenomena of globalisation, there have been astonishing changes
bought about by commerce and integrated global and regional markets created thereby.

Currently in the Contemporary world there has been an influence of the supranational forces of
various municipal states creating linkage, dependence and opportunities unrelated to the sovereign
nation states which transcends the boundaries of such states. The same is an unstoppable process that
has penetrated the sovereign laws of different states and is an important tool for communication of
bringing effect-ability in commercial intercourse.

For centuries Commerce and maritime affairs have became universal and timeless in their activities.
Both human commercial and maritime activity clearly transcend the political structures of the day
and give a reflection of timelessness of such activity. As per historical precedents there have been
important development and maintenance of 4 elements in coherent merchant law:
1. Degree of unifying commonality in law of the place of business
2. Degree of unifying commonality in the laws of the sea
3. Unifying role of specialised courts dealing with commercial disputes
4. Unifying role of standard forms of contracts
Even in contemporary commercial maritime economy sucxelemets are recognisable. Maritime law
with the help of international conventions has shown striking degree of uniformity in Maritime
disputes like shipping. Such activities are known and practised in almost all parts of the world.
Majority of the international maritime activities with applicable commercial law can be seen in parts
of Persian Gulf, the Arabian Sea, the Tigris-Euphrates Basin, the Mediterranean Sea, Africa and its

Page 7 of 35
coast, the Black Sea, India, and the Indian Ocean, South-East Asia, the Pacific, China and North Asia,
the North Sea and the Baltic, the great rivers of Europe and Eurasia, and the Americas. Even the big
commercial maritime centres of the Middle East, Damascus, Alexandria and other commercial
societies have from ancient to modern times supported such activity. Indian Ocean has also
progressed with sponsoring commercial and maritime activity fro a millennia before and after the
British Raj. The monsoons enabled trade from the Red Sea to Asia, with seasonal winds to China, the
Philippines and North Asia. Malabar teak, coconut fibre, flax, cotton and metals made India a
flourishing site of shipbuilding. bn Battuta, the Tangiers-born lawyer, merchant and geographer of
the 14th century described Calicut in South West India as one of the largest harbours in the world
visited by merchants and seafarers from China, Sumatra, Ceylon, the Maldives, Yemen, Persia and
“all quarters”; and he described “Zayton”12 in China as the very largest harbour in the world with
hundreds of vessels. One can see in the past the same forces and elements underpinning international
or transnational commercial law today like:
1. Character of international commerce and maritime activity
2. Mobility and Freedom of commerce
3. Uniformity and Predictability with respect to common and elemental activity, i.e., promise,
bargain payment, security, insurance, transport and role of the agent
4. Awareness and Knowledge of dispute resolution within the merchant community with respect to
commercial and maritime affairs
5. Uniformity in transactional documents13

There have been various attempts made by different jurisdictions with respect to harmonisation of
commercial and maritime law since the 20th Century. Maritime law and Maritime lawyers have
dominated the attempts towards a unification and harmonisation of commercial law for a century.
Carriage of Goods under bills of lading is a great example. Brussels Conference was the result of the
abuses contracted by unbridles freedom of contract practised by shipowners along with the
constitution of an acceptable compromise of minimum rights and obligations in the carriage of goods
by sea under bills of lading in the Hague Rules. The same process took a span of over 50 years. There
was always a need to bring about a fair balance between unbridled freedom of contract with bill of
lodging carriage. It has been internationally accepted that there is a recognised need to balance the
following demands of commerce:
1. Certainty

12
A port on the coast of China described by one writer, Oakeshott, in 1936, as “modern Chiian-Chau”
13
Justice James Allsop, International Commercial Law, Maritime Law, and Dispute Resolution: The Place of Australia,
New Zealand and the Asia Pacific Region in the coming years, (Australian and New Zealand Maritime Law Journal-
2006)
Page 8 of 35
2. Predictability
3. Party Autonomy
4. Despatch
5. Fairness
Repeated attempts at harmonisation have spawned important private and public bodies. Until the
formation of the Intergovernmental Maritime Consultative Council (IMCO)14 later to become the
International Maritime Organisation (IMO) and other United Nations bodies whose activities touch
on maritime affairs,15 the Comité Maritime International (CMI) played the leading role in the
development of international conventions and rules concerning maritime law. It was clearly after the
Torey Canyon incident that a necessity was felt by the IMP to undertake the drafting of maritime
treaties, conventions and standards dealing with safety, environment and technical issues. The CMI
remains influential with respect to the same matter. However it’s role has been redefined to co-
operation with assistance of intergovernmental organisations seeking to harmonise maritime law.

It was only after the formation and development of UNCITRAL AND UNIDROT in 1966 and 1926
respectively that there was development of conventions, model codes and model laws dealing with
private and commercial law specifically. After which there has been a steep development of
international commercial law jurisprudence over the past 20 to 30 years. Currently there are many
model laws, international restatements, directives and other instruments on many aspects of maritime
law contracts like: International Maritime Satellite Organization, 1976 ; The Torremolinos
International Convention for the Safety of Fishing Vessels, 1977 ; International Convention on
Standards of Training, Certification and Watch keeping for Seafarers, 1978; International Convention
on Standards of Training, Certification and Watch keeping for Fishing Vessel Personnel, 1995;
International Convention on Maritime Search and Rescue, 1979. Marine pollution: International
Convention for the Prevention of Pollution from Ships, 1973, as modified by the Protocol of 1978
relating thereto; International Convention Relating to Intervention on the High Seas in Cases of Oil
Pollution Casualties), 1969; Convention on the Prevention of Marine Pollution by Dumping of
Wastes and Other Matter, 1972; International Convention on Oil Pollution Preparedness, Response
and Cooperation, 1990; Protocol on Preparedness, Response and Co-operation to Pollution Incidents
by Hazardous and Noxious Substances, 2000; International Convention on the Control of Harmful

14
Established by convention in 1948 which came into effect in 1958.
15
The United Nations Conference on Trade and Development (UNCTAD); UNCITRAL: The United Nations
Commission on Uniform Trade Law created by unanimous resolution of the General Assembly of the United Nations
on 20 December, 1966; UNIDROIT: The International Institute for the Unification of Private Law was established by
multilateral treaty in 1926.
Page 9 of 35
Anti-fouling Systems on Ships, 2001; International Convention for the Control and Management of
Ships' Ballast Water and Sediments, 2004.

With respect to liability and compensation: International Convention on Civil Liability for Oil
Pollution Damage, 1969; International Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage, 1971; Convention relating to Civil Liability in the Field of
Maritime Carriage of Nuclear Material, 1971; Athens Convention relating to the Carriage of
Passengers and their Luggage by Sea, 1974; Convention on Limitation of Liability for Maritime
Claims, 1976; International Convention on Liability and Compensation for Damage in Connection
with the Carriage of Hazardous and Noxious Substances by Sea, 1996; International Convention on
Civil Liability for Bunker Oil Pollution Damage, 2001. Other subjects: Convention on Facilitation of
International Maritime Traffic 1965; International Convention on Tonnage Measurement of Ships
1969; Convention for the Suppression of Unlawful Acts Against the Safety of Maritime Navigation,
16
1988; International Convention on Salvage, 1989, goods, agency and distribution,17international
credit transfers and bank payment undertakings,18 international secured transactions,19 cross-border

16
The United Nations Convention on Contracts for the International Sale of Goods done at Vienna April 1980 (“CISG”)
which superseded the Uniform Law on the Formation of Contracts for the International Sale of Goods, 1964 and the
Uniform Law on the International Sale of Goods, 1964; and the ICC Official Rules for the Interpretation of Trade Terms
(Incoterms 2000), replacing earlier versions.
17
The First Company Directive (EEC) (1968); the EEC Directive on Commercial Agents (1986); the UNIDROIT
Convention on Agency in the International Sale of Goods done at Geneva 17 February 1983; and the UNIDROIT Model
Franchise Disclosure Law (2002).
18
UNCITRAL Model Law on International Credit Transfers (1992 ); ICC Uniform Customs and Practice for
Documentary Credits (1993) (UCP 500) and electronic supplement (EUCP); ICC Uniform Rules for Demand Guarantees
(1992); International Standby Practices (ISP 98) by the Institute of International Banking Law & Practice Inc; UN
Convention on Independent Guarantees and Stand-by Letters of Credit done at New York 11 December 1995; ICC
Uniform Rules for Contract Bonds (1993).
19
The European Bank for Reconstruction and Development (ERBD) Model Law on Secured Transactions (1994); the
Model Inter-American Law on Secured Transactions (2002); the various maritime conventions dealing with security: on
Maritime Liens and Mortgages (1926 and 1993) and on Arrest (1952 and 1999); the Convention on the Unification of
Certain Rules Relating to the Precautionary Attachment of Aircraft done at Rome on 29 May 1933; the Convention on
the International Recognition of rights in Aircraft done at Geneva on 19 June 1948; the UNIDROIT Convention on
International Financial Leasing done at Ottawa 28 May 1988; the Convention on International Interests in Mobile
Equipment on Matters Specific to Aircraft Equipment and Protocol done at Cape Town on 16 November 2001; the
UNIDROIT Convention on International Factoring done at Ottawa 28 May 1988; the UN Convention on the Assignment
of Receivables in International Trade done at New York 12 December 2001.

Page 10 of 35
insolvency,20 securities settlement and securities collateral,21 conflict of laws, international civil
procedure,22 and international commercial arbitration.23

Despite some of the instruments being not legal operative at level of public or domestic international
law, but still there is a sense of obligation commanded with these instruments within the international
community. Hence the same model laws and principles are many times referred as “soft power” in
the economy. Such instruments have a greater degree of international acceptance as the they provide
rules and principles with respect to:
1. Contracts
2. Sale of Goods
3. Payment
4. Credit
5. Civil Procedure
6. Arbitration
The same instruments are constantly used by various persons in the field of Arbitration, including
Maritime Arbitrators, as they provide a variety of protocols and procedures for the conduct of
maritime arbitration as framework of substantive law. Hence these instruments provided basis for
international approaches to common international transactions.

Even the principles governing the procedure for the conduct in maritime litigation is also included.
The best example for the same would be American Law Institute and UNIDROT Principles of

20
The UNCITRAL Model Law on Cross-Border Insolvency (1997); the European Union Convention on Insolvency
Proceedings; and the EC Council Regulation NO 1346/2000 on Insolvency Proceedings.
21
The EC Settlement Finality Directive (1998), 98/26/EC; and the EC Directive on Financial Collateral Arrangements
(2002), 2002/47/EC.
22
The European Convention on State Immunity done at Basle on 16 July 1972; European Community Council Regulation
No 44/2001 of 22 December 2000 on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and
Commercial Matters; a MERCOSUR Convention and Protocol on jurisdiction in civil and commercial matters; the
Buenos Aires Protocol to the Treaty of Asuncion signed on 26 March 1991, on International Jurisdiction in Contractual
Matters done at Buenos Aires on 5 August 1944; the Convention on the Service Abroad of Judicial or Extra-judicial
documents in Civil or Commercial Matters done at the Hague on 15 November 1965; the European Community Council
Regulation No 1348/2000 of 29 May 2000 on the service in the Member States of Judicial and Extrajudicial Documents
in Civil or Commercial Matters; the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters done
at the Hague on 18 November 1970; European Community Council Regulation No 1206/2001 of 28 May 2001 on
Cooperation of Courts of Member
States in the Taking of Evidence in Civil or Commercial Matters; and the American Law Institute and UNIDROIT jointly
developed Principles of Transnational Civil Procedure.
23
The Convention on the Recognition and Enforcement of Foreign Arbitral Award adopted in 1958 by the United Nations
Conference on International Commercial Arbitration at its 24th meeting (the New York Convention); the Inter-American
Convention on International Commercial Arbitration done at panama City on 30 January 1975; the UNCITRAL Model
Law on International Commercial Arbitration (1985); the UNCITRAL Arbitration Rules (1976); the ICC Rules of
Arbitration (1998); and the London.

Page 11 of 35
Transnational Civil ProcedurE, which is clearly a harmonisation of civil and common law dispute
resolution procedure24. The important issues common to the two dominant legal systems are
consolidated in such principles. As there was a need to form a bridge between these two different
legal systems, hence these principles and instruments provide a common and fair basis for hearing of
international disputes. The same is a major achievement as they also provide for a procedural
foundation that can give confidence to parties in litigation including arbitration between parties of
different jurisdictions.

2.5 Effect of Harmonisation on Arbitration

The relevance of such transnational principles as a form of non-domestic law, or lex mercatoria is
still a matter of debate. The question of law that is still debated between the proponents and opponents
is that whether lex mercatoria exists, if in conformity, what are it’s advantages and disadvantages. It
is only in well-known contracts, that one would know about the well identified law to govern maritime
disputes concerning chartering, insurance, shipbuilding, or insurance. So, it is the well established
legal systems which form the strong opponents of lex mercatoria. But one has to observe that maritime
disputes sometimes arise from circumstances not limited by standard form contracts with london
arbitration applying English law. What cannot be denied is the utility to parties and arbitrators of
understanding how the respected authors and proponents of model laws and principles, and how state
parties in coming to agreement in international conventions, have addressed issues of relevance. For
instance when the parties have failed to identify the relevant law, the availability of relevant rules and
principles would enable an arbitrator to chase an available body of substantive and procedural rules
to be applied in resolution of disputes. Rather than recourse to conflict rules to choose one particular
law the reference of available unattached “soft” law would be done.

It is important to note there is wide scope for recognition of maritime affairs in consensually agreed
dispute resolutions. They arise from the rich diversity of activity concerning the affairs of the sea like:
1. Financing,
2. Building,
3. Sale and Acquisition of ships,
4. Deployment of ships,
5. Carriage of goods by sea,
6. Fishing,
7. Insurance of ships,

24
IA Olsson, Four Competing Approaches to International Soft Law, (Scandinavian Studies in Law-2015), p 180
Page 12 of 35
8. Cargo
and other marine adventures and the other ad hoc contractual relationships arising from the use of
ships, for example salvage. It is between relatively equal commercial partners that many of the
contracts about these subject maters are made whereas other are characterised as contracts of
adhesion. It is the different approach that the law takes to charter parties and bills of lading where
the difference is demonstrated.

It becomes necessary and important to have a definite legal system and proper law governing the
maritime relationship given the instability of markets such as those for chartering of working ships
and the frequency of transactions of various contracts like Shipbuilding. However, the development
of fundamental common legal principles of contract, sale of goods, agency, international credit, bank
undertakings and the like will, in all likelihood, have a harmonising effect on international maritime
and commercial contracts and also provide for the arbitrator a norm of international principles that
can guide him or her. Irrespective of experience of an arbitrator, there is high value attached to
internationally recognised standards of procedure25.

2.6 Scope of International Commercial Arbitration

There have been changes to dispute resolution that reflect the growth of international commerce and
transnational principles in recent decades. There has been a shift to commercial arbitration from
municipal courts. This is particularly so in the resolution of international commercial and maritime
disputes. The same shift has occurred due to parties to commercial litigation changing their
consumption patterns and the recognition of such change in the public policy, which occurred due to
many reasons including: flexibility, expertise, party autonomy, control or a sense of control,
confidentiality, perceived greater speed, perceived or real lower cost and better or wider enforcement
of the arbitral system. The same is a clear reflection of inadequacy of domestic court systems.
Although there would always be a conflicting opinion towards the speed, skills and cost of arbitration
over Judicial Courts but nevertheless, the arbitral process remains significantly dominant in
contemporary world.

It is only with the setting up of a world wide delocalised private (or semi-public) dispute resolution
system (a surrogate worldwide private court-system) made up of a large number of self-created and
self-administered, largely non-governmental, organisations that there has been a growth and
development of commercial arbitration in no more or less than the setting up of international

25
Justice James Alison, International Maritime Arbitration: Legal and Policy Issues, (World Maritime University-2007) p
5
Page 13 of 35
commerce that we recognise the growth and devlopement of commercial arbitration. There are now
numerous arbitral institutions worldwide catering for international commercial arbitration, including
maritime arbitration.26 In many countries, the legislatures and the courts themselves have recognised
the need for efficient skilled commercial and maritime courts.27 In some countries, it must be said,
the quality of the national legal systems is less than internationally acceptable. Commerce, however,
will not wait for the antecedent development of skilled, unbiased and efficient commercial courts. In
countries where the national courts are not seen as adequate, arbitration is not seen as a better
alternative than a local commercial court, but as the only viable alternative. In such places, the
availability of commercial arbitration is essential to underpin investor confidence and economic
development. These issues of quality of dispute resolution raise important policy questions. It is
possible that countries at various levels of development display disconformities’ between the skill of
participants in commercial arbitration and national court systems.
The two systems are, however, closely related. The court system can be vital for the health and
well being of arbitration in any country. Skill and efficiency of the courts in supervision, enforcement
and collateral assistance to the arbitration process taking place on the territory in question can
substantially assist the arbitration process. In that sense, arbitration and the court system have, to
a degree, a symbiotic relationship28.

CHAPTER 3: LEGISLATIVE POLICY

The base of supervision and scope for independent existence of arbitral process is an important policy
area of concern between courts and arbitration. Arbitration has over the years has obtained efficiency
through certainty in arbitral awards and national recognition mediated through international
agreements in the New York Convention and Model Law. Arbitration clause needs to be enforced by
the domestic courts which is required as per New York Convention and Model law. One has to rely
on the courts and governmental systems of different states by which the result of a of a dispute can

26
For example, the International Court of Arbitration, the London Court of International Arbitration, the Inter-American
Arbitration Commission, the Singapore International Arbitration Centre, the Australian Chamber of International
Commercial Arbitration, the Chartered Institute of Arbitrators, the American Arbitration Association, the London
Maritime Arbitration Association, various national associations of maritime arbitration, the Paris ChambreArbitrale
Maritime, the Regional Centre for Arbitration Kuala Lumpur, the Association of Maritime Arbitrators Canada, Vancouver
Maritime Arbitrators Association, the Society of the Maritime Arbitrators Inc, the Houston Maritime Arbitrators, the
Japan Shipping Exchange, the Tokyo Maritime Arbitration Centre, the China Maritime Arbitration Commission, the
Australian Maritime and Transport Arbitration Commission.
27
The National Arrangement used by the Federal Court of Australia in which nominated judges (13 in all) undertake the
first instance and appeal work in maritime matters is, in effect, a working maritime court. China has a system of dedicated
maritime courts. England has an Admiralty Court and a Commercial Court. Malaysia is to set up a maritime court. Many
other courts have specialist maritime judges.
28
Ibid., p 7-8

Page 14 of 35
be translated into enforcement of monetary judgement. In the following areas, the New York
Convention and Model Law set out circumstances in which states and the court can operate:
1. The state where the arbitration took place if an attack on the arbitration process or award made
2. The states where the awards will be recognised and enforced against the assets of the defendant29

It is only by ensuring fairness and honesty that a control framework of national court systems can act
as an enhancement of arbitration. Many times it has been observed that to disrupt the resolution of
the dispute by the arbitral forum, the court system also act as a mechanism. It s only to lessen the
grounds available for crucial supervision which is the aim of modern national arbitration. It is not
sufficient to justify redress just because the arbitrator makes an error of law. It is without appeals,
arbitrators reach conclusions based on the law of a particular country, but have a possibility to make
mistakes about the law or it’s interpretation without the supervision of the courts, hence independence
or autonomy of the arbitration process may lead to a lessening or weakening of the arbitration
doctrine. If X country wants its law applied in contracts and wants arbitration business within its
borders using its law, there is a tension – keep a light hand on arbitration and risk fraying of the
chosen national law, or tighten supervision to maintain purity of legal doctrine at the risk of overly
interfering with the freedom of the parties to choose their own method of dispute resolution. Such
type of issues are clearly not straightforward. Lex Mercatoria has an important role to supplement or
complement any chosen national law, with respect to supervision and interpretation by arbitrator30.

With such form of issues the problem that arise in a country is with respect to issues involving subtle
questions of sovereignty and value of any particular country in the international public. Other
questions that are involved are with respect to degree of supervision by the courts or the foreign party
commercial confidence in the process of arbitration as a transnational institution or structure. Issues
of domestic sovereignty can also arise from the operation of autonomy of the parties in other ways.
One important aspect of the government is it’s ability to resolve or assist in the resolution of disputes
that affects citizen’s rights. Contract of Adhesion manifests the very free contractual will of the parties
under the control of foreign interests. Arbitration clauses may be contained in the liner bills of lading
which require even smallest disputes to be resolved through arbitration. however there may be many
miles carried out by the carrier out for delivery and the liner trade may well be part of a recognised
cartel of carriers, hence these are the circumstances in which the effective remedy would be clearly
denied as such modest claims would not be arbitrated.

29
Zhang Yunyang & Zhao Ziyu, China: Enforcement Of International Arbitral Awards In China,(Monad.com-2017)
30
Ravi Shankar Sathiyamoorthy, India: When Courts Can Interfere In The Awards Passed By An Arbitral Tribunal As Per
The Law In India?, (Mondaq.com-2015)
Page 15 of 35
One can clearly see form the United States case laws to know how jurisdictional and arbitration
clauses in contracts have been viewed. With respect to forum section clauses, one has to refer Bemen
v. Zapta Offshore Co. where there was an international towage contract for grilling rig for towing
from Louisiana to Italy. The parties had entered into London jurisdiction with respect to dispute. The
court was in the same discussion about the national judicial authority in all cases on one side and the
enforcement of contractual autonomy in matters of policy on the other hand, along with emphasis on
selection clauses. Such an approach was based on the prima facie vailidity of arbitration clause unless
it was shown to be unreasonable in the circumstances. With backing of such an approach, power is
given to Court to check it there was a contract of adhesion or contract freely entered between the
above parties, in order to review the reasonableness of the contract.

It was only 20 years later in Carnival Cruise Lines Inc. v. Shute31, where a contract for cruise existed
between the parties and both had designated the courts of Florida for the resolution of disputes. The
same was not a negotiated contract. Supreme Court refined the Bremen doctrine and rejected the view
of the Court of Appeals for the Ninth Circuit that a non-negotiated forum selection clause in a so-
called “form ticket” is never enforceable simply because it was not the subject of bargaining. The
considerations as to reasonableness were diverse and included the interests of both sides to the
bargain. It was recognised that there might be good reason for non-negotiated terms and for
channelling litigation into one place.

Court years later, the Supreme Court of United States in “The Sky Reefer”32, dealt with the issue of
foreign clauses in a bill of lading. In the following case, a chartered Japanese carrier damaged a fruit
distributor’s produce in transit from Morocco to Massachusetts, in the same agreement there was a
Tokyo arbitration clause. It was argued that the same clause was void as the inconvenience and costs
of proceeding in Japan would lessen the liability of the carrier under the US Carriage of Goods by the
Sea Act, 1936. The same argument was rejected by the Supreme Court. Majority of the SC
Judgements rejected this and expressed itself in terms of the doctrine of comity and party autonomy.
However in the following case Justice Stevens dissented that foreign arbitration clauses provide cost
barriers to deny remedy to claimants and strip down claimant’s right under COGSA, thereby being
void by the equivalent of Article 3 r 8 of the Hague/Hague-Visby Rules.

31
499 U.S. 585 (1991)
32
515 U.S. 528 (1995)
Page 16 of 35
Jurisdiction or Dispute resolution with respect to cargo claims has never been discussed in The Hague
nor Hague-Visby Rules, hence the same has to be dealt by national law. If only a broad view is taken
of Article 3 r 8 of the Hague/Hague-Visby Rules, it is then that some interpretations would come. A
choice of place to sue is provided to the litigant in the Hamburg Rules. Article 21 of the said rules
clearly provide for the place where the opposite party/defendant reside or where the contract was
made between parties or the port of loading/dischrage would be the place where the claimant can sue.
There may be a possibility of of arrest of the ship in a different place only for the purpose of security,
under the same. Article 22 of the Hamburg Rules deal with arbitration and provide for a regime where
the cargo interests may seek arbitration in the same place as mentioned in Article 21. In both regimes
provided for by Article 21 and 22, party autonomy is modified as a choice is given to the cargo
claimant to not be contained by the terms of the agreement.

Exclusive jurisdiction clauses in bill of lading carriage, the national legislation of a number of
countries deal with exclusive jurisdiction like that under the Australian Carriage of Goods by Sea
Act, 1991, in which clauses which preclude or limit the jurisdiction of Australian courts are
considered invalid. Such provisions would also be found in various Nordic territories, Canada, South
Africa, New Zealand and South Africa, which are considered by many to be a a sabotage of
jurisdiction. Hence such jurisdictions provide for protecting country’s cargo interests by providing a
forum for redressal of disputes33.

Such statutes have however no recognition in other jurisdictions. In the case of OT Africa Line Ltd
v Magic Sportswear34 the English Court used anti suit injunction to enforce a British Arbitration
clause in a bill of lading with the English Choice of law clause in circumstances where Canadian
legislation gave the claimant a right to sue in Canada. These issues clearly have important policy
questions attached with them like:
1. Degree of importance to party autonomy
2. Protection of Cargo Claimants
3. Insurers interests
Hence an emphasis must be placed on Party Autonomy. The terms of Article II contain within them
the fundamental architectural framework of the New York Convention: party autonomy, arbitrability
and court enforcement. Likewise, Arts 34 and 36 of the Model Law dealing with setting aside, and
recognition and enforcement of, awards pick up this notion. It is a central balancing conception in the

33
P Murgia, Vicarious Liability in contracts of international carriage of goods by sea: A comparative study of the
evolution of liability through the main international conventions and market practice, (University of Osla-2015), p 10
34
[2005] 1 Lloyd’s rep 252; and [2005] 2 Lloyd’s Rep 170
Page 17 of 35
Convention’s limiting of the reach of party autonomy. The decision as to what is “capable of
settlement by arbitration” or “arbitrable” has been left by both the New York Convention and the
Model Law to contracting states.

The question that has to be understood is what kind of dispute is arbitrable in the New York
Convention and the Model law. Article II of the New York Convention have characterised disputes
that are capable of settlement by Arbitration, hence an award made by a Tribunal would be set aside
if the same is not arbitrable as per the convention.

Disputes such as intellectual property, anti trust, competition disputes, securities transactions and
insolvency are the type of disputes which the domestic legislation would probably would not see as
arbitrable and would be set aside. There is an element of legitimate public interests in such matters
their enforceability outside the court as a three to public policy. Identification and control of such
matters are upon the Government and the Judiciary of that jurisdiction35.

Hence on one side one can see a conflict between legitimate national interests being protected and
recognition of common good in promoting international arbitration and party autonomy. The latter
hence provides for giving effect to national legislation providing the following:
1. Stay of Court Proceedings for contravention of arbitration agreement between parties
2. Issuance of Anti-Suit Injunctions for the same
3. Restraining Party for commencement or continuation court proceedings in contravention of the
arbitration agreement.

The notions of arbitrability and public policy have been encompassed with legitimacy of particular
national policy inhibiting arbitration. Such a provision can be seen in Section 2C of Australian
International Arbitration Act, 1974 which inhibits International obligations of the New York
Convention and Model Law within the Australian domestic law. The same section does not effect
Section 11 of Carriage of Goods by Sea Act, 1991, hence to prevent cargo claims being bought in
Australia, foreign arbitration with respect to Bills of Lading are ineffective. The policy questions
inherent within these issues are being discussed at an international level at the UNCITRAL Working
Group Meetings on Transport Law and the Draft Convention on the carriage of goods [wholly or
partly] [by sea], and on Arbitration.36 There are other policy questions for domestic governments.

35
ME McNerney, International Commercial Arbitration: The UNCITRAL Model Law, Boston College (International and
Comparative Law Review-1986)
36
See UNCITRAL website http//www.uncitral.org for the papers of Working Group II on Arbitration and Working
Group III on Transport
Page 18 of 35
What priority, if any, in the organisation and development of the national judiciary should be given
to developing judicial skill in maritime law? Should this be left to the courts themselves? Should
policy be developed to encourage the growth of skilled professional arbitration? Such policies may
have their roots in educational reform of the legal profession and judiciary and may extend to
encouraging overseas practitioners appearing in local arbitrations (as an advocate or an arbitrator).
These are questions of policy for the legislative and executive branches of government. They should
be addressed not only by reference to perceived national needs, but also by reference to the
recognition of the importance of international arbitration to international commerce and thus domestic
well-being37.

3.1 Judicial Policy

Judiciary of different jurisdictions needs to address, how far can it interfere in arbitration awards with
respect to questions of domestic public policy. United States Supreme Court have shown different
strands of national interests which have a necessity of being protected. Such a protection to domestic
interests would be given if the same is protected under the national laws, but convicts arise if the
same is not clear as per the domestic laws.

In the New York Star38 judgement, Justice Stephen observed that the question before the court was
whether it was Australia’s interest to take a generous approach to enforcing Himalaya Clause, to
permit carriers to widen the protected circle of all agents and subcontractors when Australia relied on
foreign carriers to bring in, and take out, it’s imports and exports. Similarly with respect to Arbitration
such questions would also arise for courts with respect to construction of arbitration clause. In case
of an Arbitral forum which is overseas in which there is a part local to it’s jurisdiction, there is obvious
preference towards the local party by the Domestic Court to litigate before it as the chosen local forum
in reference to the foreign arbitral forum. Such a preference would be heightened by a local statute
relevant to such a claim which may not be recognised by the foreign arbitral tribunal giving effect to
relevant choice of law rule governing the arbitration.

There is clear stand that courts must avoid such a tendency unless otherwise provided by the Statute.
The first tendency is the desire of courts to intrude national public policy within maritime law, which
would reflect to the world a failure to understand the essential character of maritime law. Such a
tendency was also reflected within United States Supreme Court Judgement in “The Lottawanna” as
follows:

37
Alternative Dispute Resolution: Mediation and Conciliation, (Law Reform Commision-2010), p 37
38
54 A.L.J.R. 552
Page 19 of 35
Each state adopts the maritime law, not as a code having any independent or inherent force, pro
priovigore, but as its own law, with such modifications and qualifications as it sees fit. Thus adopted
and thus qualified in each case, it becomes the maritime law of the particular nation that adopts it.
And without such voluntary adoption it would not be law. And thus it happens, that, from the general
practice of commercial nations in making the same general law the basis and groundwork of their
respective maritime systems, the great mass of maritime law which is thus received by these nations
in common, comes to be the common maritime law of the world.

Same clearly reflects that the recieved maritime law may differ in different countries without affecting
the general integrity of the system as a Harmonious Whole. Similarly Lord Justice Scott said in
“Tolten”:

The language of Lord Watson there echoes many previous judicial opinions that British maritime
law derives originally, and continues to get inspiration from the general law of the sea prevailing
amongst maritime nations; e.g., of Lord Mansfield who in 1759 said in Luke v. Lyde (1759) 2 Burr.
882, 887 “the maritime” law is not the law of a particular country, but the general “law of nations,”
meaning that admiralty judges should still look for inspiration to the parent source.

Such an ignored character of Maratime Law must be recognised. A diversity must exist within
the Judicial System of the country to prevent further conflicts. Conflicting commercial laws would
prevent the smooth maritime transactions in the country. Such fragmentation increases transaction
costs, mistrust and uncertainty in the market, it would only lead to increase in lengthy and costly
negotiation of international agreements.

The second tendency that of courts to give in to the temptation to keep part of the case within
the chosen local jurisdiction, fails to pay sufficient respect to the importance of the efficient
disposition of international commerce. The New York Convention and the Model Law deal with one
of the most important aspects of international commerce – the resolution of disputes between
commercial parties in an international or multinational context, where those parties, in the
formation of their contract or legal relationship, have, by their own bargain, chosen arbitration as
their agreed method of dispute resolution39.

The chosen arbitral method or forum may or may not be the optimally preferred method or
forum for each party; but it is the contractually bargained method or forum, often between parties

39
F Bachand, Court Intervention in International Arbitration: The Case for Compulsory Judicial Internationalism
Symposium, (Journal of Dispute Resolution, Issue 1, Volume 2012), p 2-3
Page 20 of 35
who come from very different legal systems. An ordered efficient dispute resolution mechanism
leading to an enforceable award or judgment by the adjudicator is an essential underpinning of
commerce. Disputes arising from commercial bargains are unavoidable. They are part of the activity
of commerce itself. Parties therefore often deal with the possibility of their occurrence in advance
by the terms of their bargain. Unreliable or otherwise unsatisfactory decision making, or the fear of
such, distorts commerce and makes markets less efficient, raising the cost of commerce40.

Similar effects can occur if parties can be forced to submit to forum of which they may have no
or little knowledge, in circumstances where they have agreed to enter the overall bargain on an
entirely different basis of anticipated dispute resolution. It may be of no, or little, comfort for such
parties to be assured that any particular forum is reliable and otherwise satisfactory (as may be the
case). It was not what was agreed. If parties can be forced to submit to fora different to those which
they have chosen, a significant unstable variable is introduced into the performance of the
international bargain – the uncertainty as to the legal system and the law to govern an international
dispute, including doubts about venue and departure from what may be familiar procedures, or at
least procedures in which they have sufficient confidence to agree as those to govern the resolution
of any dispute.

These considerations are especially important in well-understood and stable markets, such as
the chartering of working commercial ships as in the present case. It is another illustration of the
importance of consistency in the working of international commerce illuminated so clearly by Lord
Diplock in the ‘Maratha Envoy’41 in his discussion of the role and place of well-known or usual forms
of contract in international commerce and the place of courts in their consistent interpretation. This
approach can be seen to be part of the law of international commerce.42

The above considerations ground the importance to be given to party autonomy and holding
parties to their bargains in international commerce. Yet, balanced against these considerations are
the entirely legitimate considerations of nations for their own citizens and their own commerce in
areas such as bill of lading carriage especially in liner trade. Within boundaries that are recognised

40
Pon Staff, What are the Three Basic Types of Dispute Resolution? What to Know About Mediation, Arbitration, and
Litigation, (Program on Negotiation, Harvard Law School-2018)
41
[1978] AC 1 at 8
42
Premium Nafta Products Ltd v Fili Shipping Co Ltd [2007] UKHL 40; Threlkeld& Co Inc v Metallgesellschaft Ltd
(London) 923 F 2d 245 (2d Cir 1991); and Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR
45.

Page 21 of 35
internationally as reasonable, legislatures may legitimately protect national interests in the way
earlier described.

In Armada (Singapore) Pte. Ltd v. Ashapura Minechem Ltd.43 the Bombay High Court had before
it two arbitration petitions filed under Part 2 of the Act seeking recognition of two New York
Convention arbitrtion awards arising out of two London Maritime Arbitrators Association
arbitrations with their seat in London. Ashapura, the respondent, was a public listed Indian company
that had filed a scheme before the Board of Industrial and Financial Reconstruction (BIFR) pursuant
to Sick Industries Companies Act (SICA). Section 22 of SICA provides temporary relief while a
company is before the BIFR and is seeking to be rehabilitated by imposing, inter alia, a bar to
proceedings for execution, distress or the like against any of the properties of a sick industrial
company in India without the BIFR’S permission. Ashapura opposed the Bombay High Court hearing
the petitions on the basis of Section 22 of SICA. The court held that it is satisfied that the foreign
award is enforceable that the award is deemed to be a decree of that Court and if the proceedings
in execution are initatited under Section 22 of 1985 Act, and proceedings under Section 46 to 48
would not be the proceedings in execution or distress as contemplated under Section 22 of 1985
Act. In fact Section 49 of 1985 Act empowers the court to declare such foreign award as enforceable.
An enforcement would be refused only if such enforcement is found contrary to:

1. Fundamental Policy of Indian Law

2. Interests of India

3. Justice or Morality

Whereas in this case the High Court observed that the petitioner had already applied for
appropriate directions from BIFR. The respondent had not furnished any proof, as to why the
enforcement of the foreign award may be refused. All policy, however, should recognise that
commercial law, maritime law and dispute resolution between parties from different countries
require an international perspective based on underlying commonality of principle and approach.

CHAPTER 4: LEGAL FRAMEWORK OF MARITIME DISPUTES

International Court Arbitration is one of the leading institutions in Arbitration, which was
established in Paris, 1923. Arbitration is complex process requiring the assistance of trained
professionals known as Arbitrators as the same gives results within a complex legal framework.

43
2015 Indlaw MUM 1127
Page 22 of 35
Similarly in India we see Arbitration Act, 1996 being applicable. Arbitration is a recourse currently
taken in various forms of maritime contracts such as affreightment, shipbuilding contracts and
salvage and other tort liabilities. With respect to affreightment and collision disputes, the use of ad
hoc arbitration is prevalent in the industry Ad hoc arbitration is necessary linked with statutory rules
of procedure in which arbitration will take place, it is necessary to summarise the arbitration rules
in force in a number of representative civil and common law countries.

There are 2 kinds of arbitration provided for shipbuilding contracts, a technical one during the
progress of construction and the other relating to performance and interpretation of contract.
Article 15 of Association of Western European Shipbuilders (AWES) provides:
Reference to expert. Save as provided in Article 1 (e) should any dispute arise between the
parties in regard to the construction of the vessel, engine materials or workmanship it shall forthwith
be referred to an expert nominated by agreement between the parties or failing such agreement by
the (the name of the authority is left in blank) and his decision shall be final and binding upon both
parties hereto.
Such clauses are also usual in Japanese Contracts, which are as follows:
Should any dispute arise between the parties in regard to the construction of the vessel, engines,
materials, or workmanship it shall forthwith be referred to Lloyd's Classification Society in London or
Japan whichever be more convenient.
Purpose of such clauses is to avoid any delay in the process of construction and to refer the disputes
of technical nature to relevant experts, existence of 2 different modes of settling disputes by
arbitration therefore leads to dispute on jurisdiction of the two types of arbitration. The question
of jurisdiction must prevail with the arbitration tribunal if specifically provided in the agreement

4.1 United Kingdom

Arbitration governed by Arbitration Act, 1975 which gave effect to the New York Convention. The
authority of an arbitrator is irrevocable as per the following act, unless otherwise agreed by the
parties. On application of either of the party is not compelled to stay the proceedings if no sufficient
reasons for why matter should not be referred in accordance with the agreements. Hence clearly a
discretionary right of the court to to interfere and stay the proceedings clearly exists for sufficient
reasons as provided by the party to the dispute. The same problem was examined in respect of
arbitration clauses by Justice Brandon who stated as follows:

Page 23 of 35
“The basic principle in cases of this kind is not in doubt. It is that a party who has promised for good
consideration to submit a claim or a dispute to a foreign tribunal for decision should be held to his
promise unless there is strong reason for allowing him to depart from it; or, to use the language of
Lord Denning, M.R. in YTC Universal v. Trans Europa Compania de Aviacion, [19731 1 Lloyd's Rep.
480 at p. 481, unless the c for siase is exceptional.”

The question of balance of convenience was decided in Adolf Warski case, in which on appellate
court upheld the opinion of Justice Brandon:
“in those circumstances, when the questions of the feasibility, convenience and the cost of
placing before a Court the main evidence necessary to enable the present claims to be decided justly
were looked at in all their aspects, there was a strong balance of arguments in favour of a trial in
England rather than in Poland.”
Hence it is clear that stay of proceedings would be granted in a case where the place of
arbitration is in England. Section 1 of the 1975 Act gives discretionary power to the courts to refuse
stay of proceedings with respect to agreement providing for arbitration elsewhere, as it provides:
“and the court, unless satisfied that the arbitration agreement is null and void, inoperative or
incapable of being performed or that there is not in fact any dispute between the parties with regard
to the matter agreed to be referred, shall make an order staying proceedings”
The change which had occurred is pointed out by Lord Denning, M.R., in the The Fuohsan
Maru44, where he said in his dissenting opinion:
“It is against this background that I consider the effect of the Arbitration Act, 1975. It does not
apply to domestic arbitration agreements, but only to international arbitration agreements like this
one. Under the 1950 Act the decision of whether or not to stay the action is at the Court's discretion.
The 1975 Act takes away any discretion in the Court. It makes it compulsory to grant a stay when
the matter in dispute comes within the Act. The word "shall" is used imperatively.”45

Only where there is no dispute between the parties that the proceedings would not be stayed.
Hence it is wrong to say that there would be no dispute between the parties, but rather the claim is
not disputable and is not disputed although the other party may have other claims and wants to set
them off against its debt. Browne, L.J., in The Fuohsan Maru46 says:

44
[1978] 2 All E.R. 254
45
[19781 1 Lloyd's Rep. 24, at 27.
46
[1978] 2 All E.R. 254
Page 24 of 35
 “Where a claim (admittedly within the arbitration agreement) consists of separate indentifiable
and quantified items, for example, the case put by Mr. Justice Kerr of an admitted claim for freight
and a disputed claim for demurrage, the Court would in my view be entitled to hold that there was
"not in fact any dispute" as to the admitted item and to refuse a stay in respect of that part of the
claim”
Arbitration Act, 1950 provides that unless a contrary intention is expressed every arbitration
agreement shall be deemed to include a provision that reference shall be to a single arbitrator.
Alternative reference that is provided by the said act is to two arbitrators and an umpire who enters
on the reference if the 2 arbitrators cannot agree. Whereas in the French system the third arbitrator
must decide in conjunction with the other two and must adopt opinion of one of them but in English
system the Umpire decides alone in their place and has discretion. In the Italian system, default
provision of odd number of arbitrators exist, to prevent conflict, otherwise providing a nullity for
reference to two arbitrators. Section 9(1) of the said act provides:
Where an arbitration agreement provides that the reference shall be to three arbitrators, one
to be appointed by each party and the third to be appointed by the two appointed by the parties,
the agreement shall have effect as if it provided for the appointment of an umpire, and not for the
appointment of a third arbitrator, by the two arbitrators appointed by the parties. (2) Where an
arbitration agreement provides that the reference shall be to three arbitrators to be appointed
otherwise than as mentioned in subsection (1) of this section, the award of any two of the arbitrators
shall be binding.

English law however in general provides no solution in a situation where the arbitrators ar not
appointed in time, i.e. 7 days from receipt of notice of appointment of the other party’s arbitrator.
In such event a sole arbitrator would be appointed by the first party and the award made by such
arbitrator is binding on the parties. This is another indication of the preference English law has for
a single arbitrator, although power of the party is subject to control of the court. Court will
automatically appoint arbitrators when even a single arbitrator or umpire is not appointed by the
parties, unless the arbitration agreement provides otherwise. Court makes appointment after
serving of written notice to appoint arbitrator, umpire or third arbitrator by one of the parties.

The High Court under the 1950 Act is empowered to remove an arbitrator or umpire who fails
to make an award in reasonable period of time, a time limit fixed by the parties can be enlarged by
the court. A leave of the High Court has similar enforceability as any other judgement and as per

Page 25 of 35
Middlemiss v. Hartlepool47 leave should only be granted by the courts only when there is clear error
or doubt in the award made by the arbitrator.

A common law remedy to enforce an award is to bring action on the award and rests on the
basis that a reference to arbitration followed by an award gives rise to a contractual obligation by
the loosing party to comply with the terms of the contract. Such a remedy can also obtained in Italy
with respect to what is called “Arbitrato Irrituale”, in which the parties instruct one or more
arbitrators to settle for their account a dispute which has arisen between them.

Unlike the law of most of the countries the 1950 Act provides an arbitrator or umpire to state
any question of law arising in the form of a special case for the decision of the court. 2 different
situations in which the decision of the court may be sought is:
1. Arbitrator or Umpire suo moto seeks advice of the court of law
2. When one of the parties requests arbitrator or umpire to make his award in form of a special
case, stating the points of law for the decision of the court in order to avoid that final decision
on a point of law rests with him. The arbitrator or umpire can in his discretion agree or refuse to
make his award in the form of a special case, but if he refuses to do so the parties may apply to
the court for an order requiring the tribunal to comply with their request. Pursuant to the
decision of the Court of Appeal in Halfdan Greig & Co. A/S v. Sterling Coal & Navigation Co. (The
Lysland)48 the tribunal should be ordered to state a special case whenever a point of law arises
which is (per Lord Denning, M.R.):
a) real and substantial and open to serious argument, and appropriate for decision by a court
law,
b) clear-cut and capable of being accurately stated as a point of law, and
c) of such importance that its resolution is necessary for the proper determination of the
dispute.
What is undoubtedly and deservedly popular among commercial men is commercial
arbitration. There is no doubt that such popularity would continue to exist so long as law retains
sufficient hold over the same and prevent and redress any injustice on the the part of the arbitrator,
hence to secure substance of law of the land rather than home made law of particular arbitrator is

47
[1973] 1 All E.R. 172
48
[1973] 1 Lloyd's Rep. 296, at 306-307.

Page 26 of 35
administered. In the case of Orion Camponia v. Belfort Maatschappi49 which held that the power
of courts to control arbitration clause cannot be excluded from an arbitration clause in order to
promote obligations to follow strict rules of law, hence impartiality. Hence such a system has
obvious disadvantages of submitting their disputes to arbitration which would lead to substantial
delays and expenses in the resolution of disputes.

4.2 India
Arbitration is perceived by the commercial class as a alternative better mechanism than
domestic courts. However the perception among the International Arbitration community with
respect to the Indian Judiciary is always critical, as Indian courts always have a tendency to show
there interference in foreign awards, as seen in Bhatia International v. Bulk Trading SA(2002) ,
which held that Part I of the Indian Arbitration Act is applicable to foreign seated arbitration unless
the parties have specifically excluded it from the Arbitration Agreement. Moreover criticism is not
only with respect to granting interim measures in Bhatia Case but also with respect to appointment
of arbitrator, setting aside foreign arbitral awards and granting other interim measures.

The same controversial approach of the Indian Judiciary was corrected by the BALCO judgement
where the court made it clear that Part 1 of the 1996 Act, would not be applicable to foreign seated
arbitrations. Many argue that since the BALCO Judgement the attitude of the Judiciary has been pro
arbitration with least interference in such awards. For instance in the N Radhakrishnan v. Maestro
Engineering where it was clearly held by the courts that Indian courts have no jurisdiction to set
aside an award rendered in London. Similarly in Enercon (India) Ltd. v. Enercon Gmbh it was held
by the courts that arbitration agreement cannot be avoided on the basis that there is no concluded
contract between the parties. In the context of international commercial arbitration a reference to
arbitration can only be avoided when the arbitration agreement is null and void, inoperative or
incapable of being performed. Similar proposition is provided in Article II of the New York
Convention which states that each contracting state must resist from interfering on the arbitration
agreement unless the same clauses are null and void, inoperative or incapable of being performed.

The Law Commission of India in it’s 246th Report made the following recommendations:

49
[1962] 2 Lloyd’s Rep. 257
Page 27 of 35
 1. Explanation 2 should be added to Section 11(6A) of the act so that the High Court or the
Supreme Court while performing their functions of appointment of arbitrator, should encourage
the parties to refer the matter to institutional arbitration. The Commission also sought legislative
sanctions of institutional rules for recognising ‘emergency arbitrator’.
2. It was also noted by the commission that more arbitral institutions like FICCI, Delhi High
Court International Arbitration Centre etc. must be established.
3. Central Government to take intuitive for promotion of Institutional Arbitration, through a
specialised body like Arbitral Commission of India.

Similarly in the judgement of ONGC Ltd. v. Western Geco International Ltd the court
interpreted the meaning of the term “fundamental policy of Indian Law”, for which the court
included the following attributes:
1. Judicial Approach which involves reasonable and non-arbitrary decision
2. Adhering to the Principles of Natural Justice
3. Decision of High Threshold of Reasonableness
In Steel Authority of India v. British Marine PLC a three member arbitration committee passed
an award against SAIL, the same was challenged by SAIL on the ground that 2 arbitrators were
disqualified from functioning as Arbitrators. It was held by the High Court that the parties had
consciously agreed to arbitration to be governed by MAC(Maritime Arbitration Committee) Rules,
in terms of which the Arbitrators were appointed. Moreover the conduct of the Appelant was
derogatory as it was only after passing of the final award that it raised objection to the appointment
of the two arbtrators.
Hence to determine patently illegal, the court has to look into the merits of the case. Even with
respect to Maritime Arbitration cases the courts have been reluctant to interfere with the
arbitration awards unless there has been a grave error apparent on the face of record. Such an
attitude of the court can be seen in M.V. Nicolas A. v. Indian Farmers Fertilizers Cooperative, where
the applicant questioned if ever an arbitration agreement existed between the parties, the court
held that on the initiation of first charter party agreement, there can be no question with respect
to intention of the parties to the dispute. The suit itself was based on bill of lading, and same matter
was to be referred for arbitration in this case. Similarly in Steel Authority of India v. Great Eastern
Shipping Co. the Arbitral Tribunal gave an award in favour of the Respondent, the enforcement of
the same award was challenged by the Appellant under Section 34(2)(b)(ii) of 1996 Act, the Delhi
High Court went into the merits of the following case and found that there was nothing in the award

Page 28 of 35
that was against the fundamental policy of India, the Appelant failed to prove it’s contentions before
the court.

4.2.1 Hardy Judgement

It was recently held by the Supreme Court of India that the Indian Government can pursue an
application in Delhi to set aside an UNICITRAL award in favour of a Scottish-owned oil and gas
company after finding there had been no agreement on the arbitral seat despite the selection of
Kuala Lumpur as the venue of arbitration. The same judgement arose out of an appeal of the order
of Delhi High Court which declined jurisdiction over Indian Government’s challenge to award in
favour of an Indian subsidiary of London listed Hardy oil and gas.

The Central Government revoked Hardy’s exploration licence for block in 2009 after deciding
the company had discovered crude oil rather than natural gas, and had thus failed to appraise the
commercial viability of the site and develop the discovery within the shorter time period allowed
for crude oil discoveries. The dispute was referred to UNCITRAL Tribunal, which gave an award in
favour of Hardy. The Indian government was ordered to reinstate the licence of Hardy and pay
compensation of 78.2 Million USD. But Indian government refused to comply with the same award,
hence made an application under Section 45 of 1996 Act, to set aside the award, on the contention
that the arbitration clause did not mention a juridical seat. However the court refused to interfere
with the award. it held:
“Where an arbitration award had been issued and signed in Kula Lumpur, it can be safely
presumed that this was the seat of arbitration”
However the Supreme Court overruled the decision of the High Court and held that signing of
the same award did not equate to a determination of the seat by the tribunal, as provided by
UNCITRAL Model Law in the absence of party agreements. Court held that a place of arbitration
does not ipso facto assume the seat of arbitration

Hence in the following case, the court ignored various factors like the intention of parties to
choose a non-Indian, neutral seat. Court failed to observe that both the parties in this case had
agreed to be governed by UNCITRAL Model rather than indian Arbitration Act. There was simply on
meaningful analysis by the Supreme Court or attempts to justify its conclusion that India was the
seat of arbitration and had the closet jurisdictional connection to the case. The same judgement is
a reflection of the pro government attitude of the judiciary, because such a judgement would reduce

Page 29 of 35
confidence of foreign parties with respect to impartiality of the court with respect to foreign parties.
As there was no necessity for the Courts to interfere just because of a mere technicality, such a
judgement would reduce Commercial Confidence for enforcement of the Arbitration of Foreign
Awards in future.

4.3 United States

It is only with respect to any dispute arising in the course of maritime transaction or transaction
involving interstate or foreign commerce is the subject of United States Arbitration Act, 1925. 9
U.S.C. §1 defines “Maritime Transaction” as:
Charter parties, bills of lading of water carriers, agreement relating to wharfage, supplies
furnished vessels or repairs to vessels, collisions or any other matters in foreign commerce which, if
the subject of controversy, would be embraced within admiralty jurisdiction.
The same act modifies common law principles under which an arbitration agreement would be
revoked by the parties before award is made. 9 U.S.C. §2 provides:
A written provision in any maritime transaction.., to settle by arbitration a controversy
thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part
thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of
such a contract, transaction or refusal, shall be valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.
Implementing this provision, 9 U.S.C. §3 Provides that if in any issue referred to arbitration
under a written arbitration agreement, is bought before any United States Court, the court shall
stay the proceedings on an application by the parties. The same act provides gives preference for
arbitration by a single arbitrator as it is provided that, unless otherwise specified arbitration shall
be by a single arbitrator. Similar provision can be seen in English Arbitration Act, 1950. Hence one
can appoint more than one arbitrator in the arbitration agreement, but if agreement is silent or
parties fail to appoint more than one arbitrator in accordance with the agreement. Although the
arbitrator have no power to order security measures or seizure of vessels but the same act permits
warrant of maritime attachment by any of the parties to arbitration agreement subject to merits of
the dispute.
U.S.C. §8 provides in fact as follows:
If the basis of jurisdiction be a cause of action otherwise justiciable in admiralty, then,
notwithstanding anything herein to the contrary, the party claiming to be aggrieved may begin his
proceeding hereunder by libel and seizure of the vessel or other property of the party according to

Page 30 of 35
the usual course of admiralty proceedings, and the court shall then have jurisdiction to direct the
parties to proceed with the arbitration and shall retain jurisdiction to enter its decree upon the
award.
9 U.S.C. §10, indicates the reasons for setting aside an award in the following language:
In either of the following cases the United States court in and for the district wherein the award
was made may make an order vacating the award upon the application of any party to the
arbitration:
(a) Where the award was procured by corruption, fraud, or undue means.
(b) Where there was evident partiality or corruption in the arbitrators, or either or them.
(c) Where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon
sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or
of any other misbehaviour by which the rights of any party have been prejudiced.
(d) Where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter submitted was not made.
(e) Where an award is vacated and the time within which the agreement required the award to
be made has not expired the court may, in its discretion, direct a rehearing by the arbitrators. An
arbitration award may be enforced, pursuant to 9 U.S.C. §9 by means of an order of the court
confirming the award, provided, however, that the parties had agreed that a judgement of the court
should be entered upon the award. The agreement of the parties does not need to be expressed in
the arbitration clause itself or even in a document incorporated therein by reference.50

4.3 Dispute Resolution on High Seas

Arbitration has served as a common tool for impartial settlement for many decades. In New
York, the large amount of informal personal contact, limited number of people and the
concentration of the Maritime Industry led to a conducive atmosphere with respect to amicable
resolution of disputes without interference of the courts. With the shipping industry made up of
different stakeholders consisting of large groups of person in different states which results in a loss
of close personal contact which facilitated arbitration in the past. Such changes resulted in demand
for lawyers consultation whenever problem arises. Irrespective of such trends the maritime
arbitration is still considered a popular mechanism to resolve maritime disputes, especially with the
speedy disposal and less transaction costs involved. Maritime Arbitration emanates from an

50
In re I/S Stavborg v. National Metal Converters, Inc., supra, at 1023-1024.
Page 31 of 35
agreement to arbitrate disputes which may also contain provisions pertaining to site of arbitration,
procedure of arbitration.

4.4 Interim Measures in Maritime Arbitration

Interim measures serve multiple goals in supporting maritime arbitrations, including the
preservation of assets, insuring satisfaction of an award, preventing the removal of property from a
jurisdiction, and conservation to ensure the enforceability of an award. In the application of interim
measures, the granting body wants to protect the rights of the parties while also addressing urgent
matters in an effort to protect the status quo. The traditional requirements for the granting of
interim measures consist of a showing of urgency and prejudice to the rights of the party requesting
the measures. The need for preserving the status quo and ensuring the award is especially
compelling in maritime cases involving vessel arrest and attachment as the property in question is
highly mobile.
In maritime arbitrations, the primary interim measure sought is generally attachment of the
vessel concerned. When a party to a maritime dispute subject to arbitration wants to attach a vessel,
it is not entirely clear to whom that party should look. The arbitration clause itself may provide the
answer as it can broaden or narrow the scope of the powers of the tribunal and provide for the
provision of interim measures.
When the arbitration clause does not speak to the provision of interim measures, "it is likely
that there will be a balance struck to achieve a shared power between the court and the arbitral
tribunal in order to promote the effectiveness of arbitration." Three general views prevail as to court
ordered interim measures when dealing with an arbitration clause: (1) by opting for alternative
dispute resolution, the parties have waived all court use of interim measures; (2) the parties
involved should go to the tribunal to request interim measures, but if the tribunal is not yet formed,
the court should consider implementing interim measures and should tailor any measures ordered
to account for the later formation of the arbitral tribunal; and (3) the court should take any measures
necessary to promote effective arbitration and protect the rights of the parties.

4.5 Interim Measures under the New York Convention and the United States Arbitration Act
The 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral
Awards was adopted in 1970. Under Article 11(3) of the convention, the courts must uphold
arbitration agreements and refer the parties to arbitration. New York Convention specifically dealing
with commercial matters within the scope of the convention. Where there is a question of interim
relief for arbitration proceedings, the controlling law regarding would be state court’s law, because
Page 32 of 35
the New York convention is silent with respect to question of interim measures. Federal Arbitration
Act, governs the applicability of New York Convention in United States. Section 8 of the said act
provides:
”If the basis of jurisdiction be a cause of action otherwise just if able in admiralty, then,
notwithstanding anything herein to the contrary, the party claiming to be aggrieved may begin his
proceeding here under by libel and seizure of the vessel or other property of the other party according
to the usual course in admiralty proceedings, and the court shall then have jurisdiction... to enter its
decree upon the award.”
The same act permits a party to pursue libel in admiralty to seize a vessel, and then proceed
with arbitration. Despite no opinion of the courts, different authorities in maritime arbitration have
agreed that there is compatibility between New York Convention and preserved right of attachment
for maritime transactions contained in the terms of the FAA. United States Arbitration Act, 1925
clearly states agreements to arbitrate maritime transactions as “vaild, enforceable, irrevocable as
any other contracts.” The United States Arbitration Act does not state whether preliminary
injunctive relief can be granted by a court where there is an arbitration agreement. For a fair, just
and effective method of dispute resolution some extent of judicial actions would be necessary for
enforcement of arbitration agreements and have effective arbitration.

4.6 Forum Selection and Maritime Arbitrations

Bills of Lading are governed by Carriage of Goods by Sea Act, in the United States, a court will
not enforce any clause in a bill of lading that lessens or relieves the liability of carrier. COGSA is the
enforcement of Hague Rules, which was originally adopted by International Law Association, 1921.
Hague Rules gave uniform rules to govern international bills of lading. Hague Rules standardised
most provisions contained in bills of lading while giving freedom of contract in other areas to
shippers. Although Harter Act was replaced by COGSA but domestic commerce involving waterways
is still governed by Harter Act. Goal of Hague Rules by extension of COGSA as US enactment, “is to
create clear and uniform allocation of responsibility of cargo losses on an international scale,
symmetry, certainty and fairness unto system. Certainty in the shipping industry as to the treatment
provisions of bills of lading is the result of major maritime nations adopting Hague Rules. Under the
following act, a United States Court will not enforce a clause in a bill of lading that acts to lessen or
relieve the liability of the carrier some courts have interpreted language of COGSA under Section
3(8) as invalidating forum selection clauses in bills of lading stating that forum selection clauses tend
to lessen liability of carriers.

Page 33 of 35
 4.7 Forum Selection Clauses under Indussa and the Bremen Judgement
Uniform treatment of forum selection clauses does not exist under COGSA. In the case of
Indussa Corp. v. S.S. Ranborg, the second circuit held that due to reducing liability of the carrier,
there is a per se invalidation of forum section in bills. It was held by the court that Congress intended
to invalidate any commercial provision that acts to prevent a shipper from gaining jurisdiction in
United States for a shipment covered by COGSA. The 4th, 5th, and 11th Circuit Courts currently
follow the per se rule promulgated by Indussa Court disallowing any forum selection clauses in
maritime contracts.

The Bremen had promulgated another approach to forum section clauses in bills of lading under
COGSA is the Rule of Reason approach promulgated. Bremen involved a bill of lading not covered
under COGSA, however the decision provided an incentive for other courts to adopt a more
reasonable approach than the Indus per se rule when considering the enforceability of forum
selection clause bills of lading under COGSA. Court noted “the provision for a neutral forum
alleviated the ‘uncertanity and possibly great inconvenience to both parties’ that might arise if a suit
could occur.” This approach seeks a determination of reasonableness of the forum selection clause
in the context of the facts of a particular case. Court held forum selection clauses valid absent any
evidence of undue influence, fraud, or unequal bargaining power. The Bermen, most federal courts
have upheld forum selection clause in bills of lading requiring foreign arbitration under the rule of
reason approach.

4.8 Forum Non Convenience Approach to Forum Section Clauses

The determination of a proper forum for a case, it is necessary for the court to balance private
interest and public interest factors. The same application would be done by the Judiciary to
determine if the law of another country would lessen or relieve a carrier’s liability under COGSA.
However there would be a great burden placed on moving defendant to provide the basis for relief,
as the same doctrine has a discretionary nature.

Moreover as the current stand is, there is no per se invalidation under COGSA with respect to
bills of lading. However it may be presumed that Courts would not invalidate such clauses where
lessening of liability is due to increased costs associated with the process of resolving the issue in
the forum. Courts would only interfere when the lessening of liability would result in substantive

Page 34 of 35
legal differences if the forum selection clauses is invalidated. While Sky Reefer clarified Court’s
desire to uphold forum section clauses.

CONCLUSION AND SUGGESTION

2.1 Developing specialised law on maritime disputes
Country like India, in the developing world needs serious engineering with respect to its
legislation on Maritime Disputes. We see countries like USA already having Carriage of Goods by Sea
Act, which deal specifically with maritime disputes, hence resolution of such disputes through
arbitration would be more easily possible as there are specific legislations dealing with the same.
But in a country like India, the whole jurisprudence of Maritime Arbitration is based on Contractual
law principles under Indian Contract Act along with Arbitration and Conciliation Act, 1996.

There is no law specifically dealing with Maritime disputes except in the matter of insurance
which is Marine Insurance Act and India being a naval power in Indian Ocean only next to China
requires an eminent need to develop legislation specifically dealing with Maritime Disputes and
Arbitration for better resolution of disputes. The Shipping building Industry is a big industry in India
is bounded with respect to disputes in shipping and requires a legislation to create a clear cut right
and duties of parties in case of a dispute.

2.2 Courts to resist from Arbitration

In the Indian context we have seen a tendency of the Indian courts to interfere in matters with
respect to Arbitration of disputes. There is a sense of universal obligation that the courts in India,
take with respect to arbitration of disputes. From the various case laws discussed by the author, we
see that the Indian Courts more or less are behaving like English courts during the British Era, where
all disputes having a foreign element were decided purely on English law principles without
respecting the law and statutes of the foreign country.

However the Indian courts are not respecting the conscience of the 1996 law on Arbitration and
it’s intent. The Hardy Judgement which was delivered in 2018, and decided by a 3 judge Bench, is a
clear cut example of how courts can many times give judgements showcasing it’s Judicial authority
and not being impartial with respect to Foreign Parties. Such judgements would clearly give a
message to the world that Indian courts would always favour Indian parties with respect to
enforcement of foreign awards within its jurisdiction.

Page 35 of 35