Shipping Arbitration Agreements

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Drawing up effective contracts is an essential part of carrying out a thriving and successful shipping business. But even with the best intentions and the most rigorously drawn up agreements, contentious issues may arise. If this happens, you need the best and most incisive legal advice from a top maritime law firm that understands your needs. Award-winning Bahamas law firm ParrisWhittaker specializes in shipping and maritime law and stands ready to advise.

Do you require expert legal advice regarding arbitration agreements in shipping law, or any other contract issue? Contact award-winning Bahamas law firm ParrisWhittaker now.
Drawing up effective contracts is an essential part of carrying out a thriving and successful shipping business. But even with the best intentions and the most rigorously drawn up agreements, contentious issues may arise. If this happens, you need the best and most incisive legal advice from a top maritime law firm that understands your needs. Award-winning Bahamas law firm ParrisWhittaker specializes in shipping and maritime law and stands ready to advise.

Need for Clarity

As a recent case in the English Commercial Court demonstrates, parties should ensure that any arbitration agreements drawn up as part of contract negotiations are phrased explicitly and clearly. In Shagang South Asia (Hong Kong) Trading Co Ltd v Daewoo Logistics, Daewoo chartered a ship from Shagang. The fixture note provided that any arbitration would be held in Hong Kong and, crucially, that English should be applied.

When Daewoo subsequently brought a claim, they began arbitration proceedings against Shagang in London, but Shagang failed to respond to a notification of the proceedings and the appointment of the arbitrators. Shagang then went on to query the arbitration itself, claiming that the seat of the arbitration was Hong Kong and that Hong Kong law should apply, making the arbitration subject to the Hong Kong Arbitration Ordinance.

The arbitrator issued an award, stating that the arbitration was subject to English law. Shagang applied to the English Commercial Court to have the award set aside, and the arbitration proceedings declared not properly constituted.

Jurisdiction

The key issues for the court to consider were whether the arbitration was subject to English or Hong Kong law, and whether a sole arbitrator was valid.

The arbitration clause had two parts – the location of the arbitration (Hong Kong) and the law to be applied (English). This was an unusual construction. The court concluded, contrary to Daewoo’s argument, that the agreement that the arbitration would be ‘held in Hong Kong’ implied that since Hong Kong was the seat of arbitration, Hong Kong procedural law would apply.

It was therefore also the case that the appointment of the sole arbitrator had been invalid, having been appointed under the standard form scheme, which did not apply (since this would have been the application under English Law).

This case demonstrates the need for clauses to be very clear regarding choice of law. If a particular geographical location is stipulated, that location is likely to be sufficient to imply that it would be the seat of the arbitration, with that jurisdiction’s law being applied.

How Can We Help?

If you require legal advice on matters relating to contracts in shipping or any other sector, it is imperative you seek legal advice. At Bahamas law firm ParrisWhittaker, our award-winning lawyers have many years of experience in commercial and shipping legislation, including complex contract negotiations and interpretations.

Contact us now, and we can give you the incisive, expert legal help you need.