When parties negotiate and draft maritime contracts, they inevitably consider whether and, if so, how to define the process for dispute resolution. While arbitration is practically universal in “blue-water” charterparties, it is also common in other maritime agreements, such as vessel sale, construction and repair, supplies, commodity sale, towing, stevedoring and terminal agreements, among many others. Even though some parties and lawyers generally oppose arbitration, the “pros” often outweigh the “cons,” and most specific concerns can be resolved by careful drafting of the arbitration provision. As stated by the U.S. Supreme Court, arbitration “is a matter of consent, not coercion.” Stolt–Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 681 (2010). Parties may structure their arbitration agreements as they see fit.
Efficiency and Flexibility
Perhaps the most important consideration for any commercial party is that an arbitration is (or should be) more efficient than litigation. Arbitrations tend to be quicker and less costly. While it is true that the parties must pay for the arbitrators’ time, this is offset by the streamlined and more flexible process. Unlike some of the broader international arbitration organizations (such as the ICC and AAA), the established maritime arbitration organizations (e.g., the Society of Maritime Arbitrators of New York and the Houston Maritime Arbitration Association) do not impose administrative fees.
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