1. Although the start of a new millennium has seen the shipping industry attain new heights of technical sophistication in the design and building of vessels, and in navigation and meteorology, the industry remains deeply anchored in tradition.1 There are sociological and legal reasons for this. The shipping industry is populated by master mariners from a limited number of specialist maritime academies and lawyers from a limited number of established law schools, which leads to a certain conservatism and its reputation as a 'boys' club'. Admiralty law, or lex maritima,2 which governs the shipping industry and maritime activities, is one of the oldest bodies of law in the world, carrying with it a legacy acquired over many centuries.

2. The resolution of disputes relating to the carriage of goods by sea raises specific jurisdictional and procedural issues, which in former times led to the establishment of special state courts in coastal cities. The matters over which these courts had jurisdiction are helpful in defining what constitutes a maritime claim. The ancient French Ordonnance de la Marine of 1681,3 for instance, described the jurisdiction of admiralty courts as covering disputes arising out of charter parties, bills of lading, contracts of affreightment and 'généralement de tous les contrats concernans le commerce de la Mer'.

3. Since the nineteenth century, maritime arbitration has developed strongly in Europe, America4 and Asia as an alternative to litigation in the courts. Arbitration is expressly referred to in a number of international maritime conventions, such as the 1978 Hamburg Rules, the 1989 International Convention on Salvage and, more recently, the 2009 Rotterdam Rules,5 which devotes its entire chapter 15 to the subject. When opting for institutional arbitration (as opposed to ad hoc arbitration), parties generally choose arbitration institutions that have a strong reputation in the maritime field or in international trade. They look for a modern and reliable set of rules that offer the possibility of appointing professionals from the shipping sector or who practise maritime law. The International Chamber of Commerce (ICC) has long been involved in setting standards for contracts of carriage by sea, notably through the creation and regular revision of instruments such as its Incoterms rules and Uniform Customs and Practice for Documentary Credits.6 Through its International Maritime Bureau, ICC collaborates closely with the maritime community to combat maritime crime and malpractice. Although a set of rules specially designed for resolving maritime disputes was drawn up by ICC and the Comité maritime international in the 1970s, these rules are no longer in use and disputes relating to the shipping industry, like those of any other sector, are today resolved under the ICC Rules of Arbitration. The question one is led to ask is whether the ICC Rules of Arbitration provide an adequate framework for conducting maritime arbitrations. The answer will be found in the following commentary of a selection of ICC awards relating to maritime matters, extracts from some of which are reproduced later in this issue.7

4. The range of matters dealt with in these awards reflects general trends in the shipping industry with respect to arbitration. In shipbuilding and ship maintenance, frequent use is made of contract forms8 containing arbitration clauses, which accounts for the significant number of awards relating to disputes over the design, construction and equipment of merchant vessels.9 Arbitration clauses are frequently found in charter parties,10 hence the presence of awards relating to charter parties, affreightment and freight forwarding.11 Disputes relating to the carriage of goods, on the other hand, are usually submitted to state courts on the basis of jurisdiction clauses contained in bills of lading. Only occasionally are such disputes submitted to arbitration.12 Finally, in the maritime field as in other fields, disputes over letters of guarantee are increasingly submitted to ICC's DOCDEX procedure, and some are occasionally submitted to arbitration. [Page33:]

5. The ICC awards studied also demonstrate the cultural diversity found in maritime arbitration. This diversity is set to grow in the coming years with the expansion of shipbuilding and chartering activities in Asia. London's monopoly as a seat of maritime arbitrations is receding. Now, it is not unusual for the seats of maritime arbitrations to be set in continental Europe (e.g. Geneva, Paris, Zurich or The Hague), or even in the United States or the Netherlands Antilles. When selecting the seat of an arbitration, the quality of the procedural law at the seat is undoubtedly a more important criterion than the mere vicinity of a port. Here, there is an important difference between arbitration, where the seat may be chosen by the parties on the basis of legal criteria, and court proceedings, the localization of which may be determined by fortuitous events such as the arrest of a ship. In maritime arbitration, the law applicable to the merits is usually unconnected with the law of the seat.

6. Academics13 sometimes point to the singularity of admiralty law as a reason for considering it as an autonomous branch of law. In arbitration, it has likewise been posited that maritime arbitration should be isolated from international commercial arbitration. However, authors from different legal traditions have rejected this argument.14 Several reasons explain why the specificity of maritime arbitration does not amount to autonomy. For one thing, despite its peculiarities, maritime arbitration is a part of international commercial law and, as such, is governed by international conventions and trade usages. Further, no specific legal framework has been created for maritime arbitration, which is consequently governed by the Federal Arbitration Act in the USA, by the Arbitration Act 1996 in the United Kingdom, and by the Code of Civil Procedure (recently amended by decree of 13 January 2011) in France. Paradoxically, the specificity of maritime arbitration is guaranteed by general rules, as illustrated by the following two examples.

7. Firstly, like most arbitration rules, the ICC Rules of Arbitration allow parties to choose either a sole arbitrator or a panel of arbitrators to decide on their dispute. In the case of a purely commercial dispute arising from a charter party, the appointment of a sole arbitrator from the shipping community will help to ensure that trade usages are not misunderstood. When a dispute raises legal, commercial, nautical and technical questions, a panel of arbitrators allows different profiles and talents to be combined, which will help to ensure that the dispute is understood in its entirety and does not drift into a purely legal15 or a purely technical affair.16Secondly, urgent matters can be efficiently addressed by combining the resources of the arbitration rules, the procedural law at the seat of the arbitration, and the laws of the ports of call. For instance, parties may seek the arrest of a vessel17 under the laws of the port of call prior to the constitution of the arbitral tribunal, and apply to the arbitral tribunal for conservatory or interim measures, such as a security for costs, under Article 23 of the current ICC Rules of Arbitration.

In this article, the application of the 1998 ICC Rules of Arbitration to maritime disputes will be considered from a procedural perspective (I) and then from the perspective of substantive law (II). [Page34:]

I. Matters of procedure in maritime arbitrations under the ICC Rules

8. Maritime contracts are commonly part of a group of related contracts. To establish the arbitral tribunal's jurisdiction over a dispute, an interpretation of the arbitration clause and its scope will be required (A). Maritime disputes often have a technical aspect requiring surveys to be carried out and experts appointed. How the expertise is controlled will need to be determined by the arbitral tribunal (B).

A. Arbitral jurisdiction over related maritime contracts

9. The existence of related contracts in a maritime chain raises two questions: whether they come within the scope of the arbitration clause (1), and whether they require third parties to be joined to the proceedings (2).

1. Scope of the arbitration clause

10. Frequent use is made of back-to-back contracts in the shipping industry. Examples of such situations are the chartering and sub-chartering of a vessel, or the incorporation by reference of the terms of a charter party in a bill of lading.18 The question that commonly arises is whether the sub-charterer or the consignee is bound by the arbitration clause. In ICC case 12550,19 the principal transaction was the sale of coal by a producer to a broker under the Incoterms rule FOB. The coal was to be resold by the broker to a sub-buyer on the basis of the Incoterms rule CIF. After two shipments, the initial seller decided to cancel the third shipment for lack of credit insurance. The cancellation of the main contract had consequences beyond that contract, for the coal broker had already made arrangements for transportation of the coal pursuant to the CIF sub-sale contract. The broker was consequently accused of breach of contract. The question facing the arbitral tribunal was whether it had jurisdiction over the consequences that the cancellation of the main contract had on subcontracts, given that the former contained an arbitration clause stating that 'any dispute which may arise in connection with this contract and which cannot be settled by mutual accord between the Buyer and the Seller … shall be referred to arbitration'. In light of the parties' mutual expectations, the arbitral tribunal decided that it did have jurisdiction over the contract of affreightment, which was closely related to the main contract. An extensive reading of arbitration clauses is not peculiar to Europe but is also found amongst US authors and courts.20

11. Another common situation that may call the scope of the arbitration clause into question is the assignment of the contractual rights of the initial party to its insurer, since much maritime litigation is conducted by insurance companies. The assignment may result from a statute or from the contract. In either case, the question arises as to the law applicable to the assignment. In ICC case 8383,21 the dispute was between, on the one hand, the owner of a liquefied natural gas (LNG) vessel and its insurer and, on the other hand, a shipyard. The respondent submitted that the insurer was not entitled to seek compensation for the damages suffered by the shipowner, whose rights had not been validly assigned. The arbitral tribunal found that the law applicable to the insurance contract established a right of subrogation of the insurer and therefore awarded damages. In this particular case the damages suffered by the shipowner were only partially covered by insurance and the shipowner had undertaken to transfer to the insurance company part of the damages to be recovered from the respondent. Consequently, the arbitral tribunal awarded a lump sum leaving the shipowner and the insurer to divide it between themselves. Besides marine insurance, another area in which the assignment of rights is encountered is insolvency.

12. Chronological issues may have a bearing on the interpretation of arbitration clauses in maritime contracts, as when new terms are negotiated between the same contracting parties, for example. After the shipwreck of the Estonia ferry, a lawsuit was brought by the families of the victims against the classification society. The original agreement for the vessel's classification contained a forum selection clause providing for litigation in the state courts whereas a later version [Page35:] contained an arbitration clause. A prima facie review by the French Court of Cassation was sufficient to determine that the arbitration clause was clearly inapplicable.22 However, arbitrators are sometimes faced with more subtle situations. In ICC case 10341,23 the dispute was over the extension of a time charter party. The original charter party, made in 1973, included an arbitration clause and a clause allowing the charterer to opt for the acquisition of the vessel at scrap value. At the end of the original charter party period, the charterer took up the option, which was refused by the shipowner. The parties then conducted negotiations and reached agreement on most of the clauses of a new extended charter party, which differed from the original charter party with respect to the hire structure and the arbitration clause. It was necessary for the arbitrators to determine the scope of their jurisdiction based on the arbitration clause in the original charter party. The arbitral tribunal found as follows:

The main dispute in the Original Charter Party revolved around the Option Clause in that Charter Party but developed into a dispute on the Transitory Period. Notably on the question how the Parties should settle their accounts over that period. That part of the dispute is therefore clearly so connected to the original dispute between the Parties that it falls under the scope of the Arbitration Clause in the original Charter Party. […] Therefore, a distinction should be made between that part of the dispute and other disputes which may not be so closely related to the original Charter Party and /or the Transition Period thereafter but purely to the extended Charter Party.24

2. Third parties and related arbitrations

13. Maritime contracts are often closely related to other contracts (e.g. insurance, transport, sales and supply, affreightment, chartering and shipbuilding contracts and subcontracts), which may lead to complex, multi-focussed situations that may have repercussions on disputes.25 A typical problem is when two arbitrations concerning the same or a similar dispute are initiated separately. In order to prevent conflicting or inconsistent decisions, it might be desirable to consolidate these parallel arbitrations and to vest a single arbitral tribunal with the power to decide all aspects of the dispute, 'from stem to stern'. This is a matter of consolidation. Another difficulty appears when one of the existing parties to an arbitration-usually the respondent-wishes the arbitral tribunal to call a third party to be held liable. Alternatively, a third party not bound by the arbitration agreement may wish to enter the existing procedure. This is a matter of joinder, which is far more complex.

14. The construction of sister ships by the same shipyard for different buyers offers a perfect example of a situation calling for consolidation. In ICC case 10364,26 four companies incorporated under the laws of Bermuda and belonging to the same group had ordered four similar roll-on/roll-off vessels from an Italian shipyard. After attempting to cancel the shipbuilding contracts, the four companies initiated four separate arbitration proceedings under four file numbers (ICC cases 10490, 10488, 10493 and 10364). Upon the proposal of the arbitral tribunals and with the agreement of the parties, the ICC International Court of Arbitration decided to consolidate the four cases. Consolidation occurred in accordance with Article 4(6) of the ICC Rules of Arbitration before the Terms of Reference were approved. As party autonomy is an underlying principle of the ICC Rules of Arbitration, an arbitral tribunal cannot order consolidation of its own motion, but only if it is sought by the parties. Usually, the ICC Court will require the consent of all parties to the different arbitrations, as in case 10364, so as to give a consensual basis to the consolidation. This is as it should be, because the consolidation of several proceedings will require all the parties involved to share information and endorse the same strategy. [Page36:]

15. The joinder of a third party is the addition of a new person to the arbitration proceedings initiated between the two original disputants. By agreeing to arbitration, the original disputants may have wished to submit to private and confidential proceedings. This means that, although it may be in the interest of one of them subsequently to request or accept the joinder of an outside party, the joinder is unlikely to be acceptable to the other party. In the eyes of the third party, the joinder is likely to be seen differently depending on whether it has been requested by the third party or by one of the original disputants. In any event, the third party is not normally bound by the arbitration agreement between the original disputants. Most scholars27 therefore concur that privity of contract and party autonomy prevent compulsory joinder by way of an award on third party notice. The 1998 ICC Rules of Arbitration contain no specific provisions on the question of joinder, which therefore depends on the provisions of the national law governing the proceedings. Neither the 1996 English Arbitration Act, the French Code of Civil Procedure or the Swiss federal statute on private international law specifically regulates joinders. It is therefore interesting to look at the reasoning of the arbitral tribunal in ICC case 12171.28 A Croatian shipyard was in dispute with one of its subcontractors over the delivery of deck cranes to be installed on a vessel it was building. The shipyard (claimant) requested the arbitral tribunal to bring the end-customer B into the proceedings. The arbitral tribunal used three tests to decide whether it was appropriate to order joinder. The first test was to characterize the application with reference to the procedural law at the seat of the arbitration. Under the rules of civil procedure in the Canton of Zurich (which Swiss courts had already applied to arbitration in previous cases), 29the compulsory joinder requested by the claimant amounted to a request for third party notice. The second test was to check that all parties to the arbitration had agreed to such collateral intervention: although the end customer had already been involved in expertise operations during the arbitration, the arbitral tribunal took the view that 'a third party notice towards [B] lacks the necessary approval of [Respondent] since such approval neither derives from the involvement of [B] in the Expert Agreement nor does [Respondent] approve of [Claimant]'s request in the present arbitration'. The third test was the legal and practical advantage to be gained from joining a third party:

The Arbitral Tribunal recognizes that the assistance of the shipowner or its owner [B], respectively, may bring [Claimant] in a better position to provide the tribunal-appointed expert with the necessary documentation and information. However, the Arbitral Tribunal does not see why such assistance requires that [B] join the proceedings as collateral intervener. [B] and/or [A] can support and assist [Claimant] internally. The Arbitral Tribunal has no objection against such assistance. In addition, it is in the discretion of [Claimant] to call any persons from [A] or [B] as a witness.

Therefore, the ordering of joinder is conditional upon the parties having agreed to this and the absence of any other procedural measures that could achieve the same practical or legal ends.

B. Control over expert investigations into technical aspects of maritime claims

16. The complexities of merchant vessel design, the multiplicity of maritime usages in force in different ports, and the economics of operating a vessel in the shipping market will often mean that surveys are required or experts are appointed to assess relevant facts (1). Once the facts have been established, the arbitral tribunal will need to determine whether the damages and the relief sought have been correctly evaluated (2). In either case, the arbitral tribunal will be required to exercise control over technical or financial findings. [Page37:]

1. Assessing relevant facts

17. Article 20 of the 1998 ICC Rules of Arbitration leaves the field open for the arbitral tribunal to establish the facts by 'all appropriate means'. One possibility available to it is to assess the quality of the expertise by hearing the experts appointed by the parties (Art. 20(3)) or simply by comparing divergent expert reports submitted by the parties. To this end, it will need first to analyze the conditions of the expert's mission from a legal perspective, paying particular attention to independence and impartiality, and then to assess the coherence and the plausibility of the experts' findings. Depending on the results obtained, the arbitral tribunal will either rely on or discard the expertise.

18. In ICC case 9103,30 the dispute involved the joint owners of a competition catamaran and the shipyard that had designed and built the vessel. While sailing, the catamaran suffered damage. The shipyard sought an award declaring that it was not responsible for such damage. The question arose as to whether the results of an expertise ordered by the French courts at the request of the owners could be taken into account. On the basis of the ICC Rules of Arbitration and case law, the arbitral tribunal refused to dismiss the expertise on the ground that a state court could be requested to order investigatory measures even after the constitution of the arbitral tribunal. On the merits, the arbitral tribunal accepted most of the experts' conclusions showing that there were design and construction defects in the hull.

19. In ICC case 12171,31 as mentioned earlier, the dispute was between a shipyard and a subcontractor over the supply of four deck cranes for lifting cargo, which were to be installed on a merchant vessel. The end customer notified the shipyard of defects in the cranes, which led the shipyard and its subcontractor to set up expertise proceedings. An expert was commissioned to check the cranes and relevant documentation and suggest solutions. The expert issued a report in which he found that the crane problems had been caused by operating errors. The shipyard criticized the expert's findings and relied on another survey carried out by the Salvage Association. The subcontractor argued that the shipyard was contractually bound by the findings of the report issued by the first expert commissioned. In its award, the arbitral tribunal noted that the finality of the first expert's report was a procedural question to be determined in accordance with the procedural rules of the law at the seat of the arbitration. It found that the original survey report was affected by procedural defects, namely violation of the principles of independence, impartiality, equal treatment of the parties and their right to be heard. Ex parte communications had taken place between the expert and the subcontractor, who was also allowed to submit additional documentation. Furthermore, the expert had misunderstood the scope of his mission, resulting in a report that was 'obviously incorrect' and had to be cancelled. Expert reports may sometimes prove to be inconclusive. In ICC case 8383,32 the superstructure of an LNG ship was damaged by fire while the vessel was being repaired in a shipyard. The experts' reports could not convincingly establish whether the fire was caused by welding or a short circuit in the vessel's electrical system. The arbitral tribunal had to take into account the legal consequences of this factual uncertainty.

20. Another means of establishing facts is for the arbitral tribunal to appoint an expert when the parties have failed to do so. In ICC case 11024,33 the dispute related to the maintenance of an LNG ship. Waste had got into the boiler circuit when the shipyard carried out chemical cleaning. Since none of the parties had sufficiently established the facts, the arbitral tribunal rendered a procedural order appointing a maritime expert and defining his terms of reference pursuant to Article 20(4) of the ICC Rules of Arbitration. The expert heard the parties and their witnesses and found that the chemical cleaning had not been properly carried out. The arbitral tribunal then drew the legal consequences resulting from the expert's technical findings. [Page38:]

2. Assessing the amount of damages

21. Once the facts and their legal consequences have been established, the resulting damages need to be calculated. This is not a purely mathematical exercise. Firstly, damages must be assessed in accordance with applicable law, e.g. to determine whether they are limited to compensation alone or whether the law allows for punitive damages too.34 Secondly, any contractual provisions for compensating damage must be applied.35 In the shipping sector, these may be particularly complex. For example, in the case of a charter party and depending on its nature, the charterer or the shipowner may have to bear some of the costs and may therefore be entitled to seek compensation for these. In such cases, the arbitral tribunal may need to appoint both technical and financial shipping experts, as in ICC case 5008 36 where damages were sought for the consequences of a defective loading pump that had been newly installed on LNG ships. It was first necessary to decide what kind of damages these were, i.e. direct (shipyard costs, bunker costs for journeys to and from the shipyard, other disbursements) or consequential (loss of revenue caused by the vessels' immobilization). A second issue was to assess the exact amount of damages. The discussion on operating costs (e.g. ship maintenance, crewing, insurance, prorata of the company's annual seat costs) clearly shows how important is the classification of damages. The shipowner (claimant) hired out its LNG ships to a sister company (respondent) under a time charter. The time charterer was contractually bound to cover repayments and financial charges due by the shipowner to the banks, but did not pay these due to the vessels' unavailability. Was the shipowner entitled to recover the unpaid sums directly from the respondent, or were they unrecoverable since they were normally for the account of the shipowner? The arbitral tribunal decided that they were not recoverable per se because they were part of the financial scheme. The damages had instead to be calculated on the basis of the shipowner's amortization of its capital investment in the ships while they were being operated.

22. Rather than appointing maritime experts, arbitrators may themselves decide commercial issues if one of their number comes from the shipping community. Sometimes, the arbitration clause even expressly states that: 'The arbitrators shall be commercial men conversant with shipping matters and not lawyers, barristers, attorneys, or members of the legal profession.' In ICC case 9142,37 the dispute arose under a contract of charter for the carriage of 10,000 tons of copper from Canada to China. According to the contract, the disponent owner named a vessel ready for loading within the defined laytime, but the charterer failed to confirm the ship, with the result that the disponent owner had to make alternative arrangements to hire out its vessel and so mitigate its damage. The disponent owner sought damages for wrongful cancellation. On the basis of an analysis of the market and his own experience, the arbitrator awarded compensatory damages corresponding to the shortfall between the income that would have resulted from the aborted contract and that earned from the substitute contract. [Page39:]

II. Substantive matters in maritime arbitrations under the ICC Rules

23. When it comes to deciding on the merits of a dispute, the particularities of admiralty law have to be taken into account when determining the applicable rules of law (A) and analyzing contracts (B).

A. Applicable rules of law

24. When resolving disputes in the shipping sector it may be necessary to rely on a combination of instruments-international maritime conventions, national statutes and usages. Article 17 of the current ICC Rules of Arbitration allows arbitral tribunals both to select relevant international conventions and national statutes (1) and take account of relevant trade usages (2).

1. International conventions and national laws

25. Which international conventions and national laws are relevant will depend on the type of contract that has given rise to the dispute. As far as the carriage of goods is concerned, a distinction is usually made between carriage of goods over a regular route under a bill of lading (known as 'common carriage'), and carriage by charter party under a contract of affreightment (known as 'private carriage'). Although sometimes criticized,38 a similar distinction is made in civil law between 'contrat de transport' and 'contrat d'affrètement'. At the heart of this distinction is the fact that common carriage or contrats de transport are governed by mandatory rules established in international conventions whereas private carriage or contrats d'affrètement depend on party autonomy. Therefore, the applicable rules of law are determined differently in each case. In private carriage, international maritime conventions are not applicable per se, although there may be times when a clause paramount expands common carriage rules to private carriage. Otherwise, one generally finds customary choice-of-law clauses in contracts of affreightment.

26. The list of international conventions that may apply in common carriage is extensive. They include the Hague Rules of 1924,39 the Hague-Visby Protocol of 1968,40 the DTS Protocol of 197941 and the Hamburg Rules of 1978.42 Recently, a number of states have signed a new convention called the Rotterdam Rules.43 The result is a multitude of legal regimes each setting its respective balance between the interests of the shipper and the carrier. Some states have ratified conventions and protocols without denouncing those adhered to previously. Further complication may be caused by a given convention being in force in the country where the port of loading is situated but not in the country where the port of discharge is situated. In such cases, we may be confronted with a conflict of international maritime conventions.44 When resolving a conflict between the Hague-Visby Rules and the Hamburg Rules, a state court would first check whether the forum has ratified both conventions and, if so, whether the substantive and territorial criteria for applying each instrument have been met. If both conventions have been ratified and are applicable, the court would then select the relevant convention by applying the methods of interpretation used in public international law. Only thereafter would consideration be given to the parties' expectations as a secondary criterion. In the event of arbitration, the approach adopted is necessarily different, since an arbitral tribunal does not belong to a national legal system. Here, the prime criterion is no longer whether or not a state has ratified the convention in question. In ICC case 6573,45 the dispute arose from wrongful delivery of the goods by the carrier to persons who did not hold or present a bill of lading. The arbitration clause stated that: 'The arbitration shall in all respects (i.e. both as regards the procedure, and the merits and substance of the dispute) be governed by Swiss Law.' At the time, Switzerland had ratified the Hague Rules and the Hague-Visby Rules. The bill of lading contained a clause paramount that 'does not provide for the application of the Hague-Visby Rules, but does provide that whenever the Hague-Visby Rules apply compulsorily they are deemed incorporated into the bill of lading'. The arbitral tribunal therefore first considered the choice of the parties and observed that they had not specifically chosen the Hague-Visby Rules. The tribunal then observed that the criteria for applying the Hague-Visby Rules were not met and that the Hague-Visby Rules did not provide a clear answer to the question of statutes of limitation, which was at issue. Accordingly, the arbitral tribunal applied Swiss statutes. [Page40:]

27. In shipbuilding contracts, choice-of-law clauses are frequent. Sometimes, the chosen law is that of the place of construction, as in Article XX.1 of the form issued by the Shipbuilders' Association of Japan. Some contracts leave the choice of law to the arbitral tribunal. In ICC case 11024,46 for example, a ship repair contract between a Spanish shipyard and an Algerian customer contained an arbitration clause stating that the arbitral tribunal would determine the law to be applied. As the arbitration was seated in Geneva, the arbitral tribunal applied the rules of Swiss private international law, which pointed to Spanish law. In other circumstances, the arbitral tribunal may take an inductive approach rather than simply apply rules of conflict. The issue of time bars offers a good illustration of the use of various legal paths, both substantive and procedural, to determine the applicable law. In certain countries (e.g. France (Article 8 of the law of 3 January 1967); Italy (Article 240 of the Italian Code of Navigation)), marine cargo claims are barred after a very short period of time. In ICC Case 7154,47 a number of ship repair contracts were made between a French shipyard and an Algerian company. The laws of Algeria were applicable pursuant to Article 1 of the contract. The Arbitral Tribunal applied Algerian law, pointing out that the time bar was 15 years, whereas it would have been only one year if French law had been applicable. The Algerian customer was not barred from bringing its claim.

2. Trade usages

28. According to Article 17(2) of the ICC Rules of Arbitration: 'In all cases the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages.' When faced with a contract of affreightment, a good understanding of trade usages is needed to assess whether the parties have properly performed at all stages of the contract. The main stages of a voyage charter party may be summarized as follows: the charterer is empowered to nominate the port of loading48 (which will be a port within reach of the ship); once the ship has proceeded to the loading place and is ready, the shipowner issues a notice of readiness to load (NOR) according to the provisions of the contract;49 the charterer then has a limited period of time in which to load the cargo (laytime), after which the charterer will be required to pay demurrage; once the voyage has been completed and the cargo discharged in due time, the charterers must redeliver50 the ship to its owners. In ICC case 12534,51 an agreement for the supply of cement provided for 'partial shipments equally spread throughout the year'. The forwarder, a Liberian company, filed a claim against the buyers for demurrage in respect of five of the voyages. The sole arbitrator's knowledge of the shipping industry proved very useful when ruling on the definition and evaluation of the damages claimed. As noted by the arbitrator: 'Although the claims were put forward as ones for demurrage, they would more accurately be categorized as claims for damages for detention because they were claims for wrongful delay. They were not claims for demurrage, which represent contractually agreed liquidated damages, calculated in accordance with the laytime/demurrage provisions of a contract'. The arbitrator again relied on his shipping experience when calculating the damages and interest: 'It is both reasonable and customary in shipping to allow 28 days for the checking and settlement of invoices.'

In ICC case 8365,52 the dispute arose out of a demand guarantee provided to finance a fishing vessel. The guarantee contract referred simply to 'international law'. Pursuant to Article 13(5) of the 1988 ICC Rules of Arbitration (superseded by Article 17(1) of the 1998 Rules), the arbitral tribunal decided that the parties had explicitly excluded national laws and that it was their implied intention to make the demand guarantee subject to trade usages and lex mercatoria. The arbitral tribunal noted that the ICC Uniform Rules for Demand Guarantees could be considered as a part of lex mercatoria. Similarly, the 2004 York-Antwerp Rules governing general average53 'owe their existence and authority to the agreement of merchants, and may therefore be seen as an example of a modern international lex mercatoria, founded upon ancient sources, but still operative today'.54

B. Analysis of maritime contracts

29. Article 17(2) of the current ICC Rules of Arbitration requires arbitral tribunals to 'take account of the provisions of the contract', in other words to give effect to party autonomy. The exercise of party autonomy in maritime contracts will be considered first in relation to their negotiation and conclusion (1) and then in relation to their interpretation (2). [Page41:]

1. Negotiation and conclusion of the contract

30. Maritime contracts are usually made after a period of negotiation. In some situations, the negotiation may be conducted informally through telephone calls, emails and faxes. This is commonly the approach adopted for contracts of affreightment, where a broker is entrusted with the task of finding a ship in the market that matches the criteria defined by the charterer. Alternatively, negotiations may be conducted through a more formal and sophisticated process. In any event, the arbitral tribunal will have to determine what representations were relied on by the parties.

31. ICC case 649055 offers a good example of a prolonged period of negotiation between a shipowner and a time charterer. A refinery in Venezuela needed two tugboats to service its terminals and entered into negotiations with a joint-venture company from the Netherlands Antilles, which owned a small fleet of tugboats. The charter party was executed first by the shipowner and then by the time charterer after the port authority in Venezuela had announced publicly that it would give the exclusive right of tug assistance only to a local company. The decision of the port authority was an impediment to the performance of the contract since the shipowner was a foreign company. There were exchanges between the parties about the legal possibility for the shipowner to operate the tug service either by way of a bareboat charter party or by operating under the umbrella of the licence held by the time charterer. Ultimately, the charter party did not come into operation, so tugs could not sail. Interpreting the contract in accordance with the Dutch Civil Code, the arbitral tribunal found that the shipowner had justifiably relied on the charterer's representations. However, the charterer signed the contract 'with full knowledge of the port authority's position that the performance of tug services in Venezuela required its permission'.56 Therefore, the shipowner was entitled to damages.

32. Time is of the essence when the conclusion of a charter party extends over a long period. This was the situation in ICC case 1034157 where an LNG vessel had been chartered from 1978 for a period of twenty years. The original charter party gave the charterer the possibility of extending that period or opting to purchase the vessel. In 1996, the parties entered into negotiations that lasted for two years. In the end, assuming that the negotiations had failed, the charterer decided to exercise its option to purchase. The shipowner objected to the exercise of this option on the grounds that 'an agreement was reached-eventually-on all elements of the extended Charter Party but the option (and the insurance clause linked to it), the negotiations on the extension of the Charter Party did not fail and/or Claimant did not act in good faith when it made the non-acceptance by Respondent of the new purchase option the breaking point and then exercised its Purchase Option under Clause 2 of the old Charter Party'.58 The question was to know whether the parties had come to an agreement over the extension of the charter party under the new conditions that had not been embodied in a final document. Applying Belgian law, the arbitral tribunal conducted an in-depth analysis of the negotiation process to find out whether there had been a meeting of the minds. It found that the negotiations had been unsuccessful. It then considered whether the behaviour of the parties under the old charter party complied with the requirement of good faith, which is especially important in chartering.59 It decided that, in the circumstances of the case, the exercise of the purchase option by the charterer was not bona fide.

2. Interpretation of the contract

33. In maritime arbitration as in any other kind of arbitration, contract wording and good faith are two essential principles of contract interpretation.60 With respect to many issues, the interpretation of a maritime contract does not differ fundamentally from that of any other contract. An illustration can be found in ICC case 946661 relating to a force majeure clause in a charter party. A fleet of seven tuna fishing vessels were chartered and then sub-chartered. Unaware that the vessels had been mortgaged, the sub-charterers were taken by surprise when the vessels were arrested, preventing the sub-charterers from fulfilling their contractual obligations. The first charterer (acting as shipowner vis-à-vis the first sub-charterer) gave notice of termination on the basis of the force majeure clause. The notice read as follows: 'This is to inform you that due to the force majeure circumstances (the arrest of vessels), the charter party for the tuna vessel dated March 1995 is terminated from July 1996.' The force majeure clause was worded as follows: 'The parties will be free from the obligations of the present contract, including the payment of the charter fee, in [Page42:] the event of loss of ship or for any other force majeure circumstances, duly documented, including the break down of the basis mechanisms of the vessel, the equipment and fishing gear. The party which cannot comply with its obligations due to said circumstances should inform the other party immediately about said circumstances, its [sic] beginning and termination, and will afterwards send the corresponding documentation.' First, the arbitral tribunal found that the arrest of a ship was not equivalent to the loss of a ship, which was 'to be understood as the material loss of the vessel (such as, for instance, because of the vessel's sinking) and does not extend to the very different case of the "loss of availability". . .'. Second, the arbitral tribunal found that the unforeseeability requirement inherent in a situation of force majeure was not met, since the arrest was the result of a mortgage that was known or should have been known.

34. ICC case 12534,62 referred to earlier, offers another good example of methods of interpretation used by arbitrators. A claim was made for demurrage on the basis of charter parties concluded in connection with a contract for the supply of cement. To know whether the claimant forwarding company had standing to sue, the arbitrator had to determine which party was liable for demurrage under the cement supply contract. Although the overall contractual set-up logically placed the burden of demurrage on the buyer, there was a clause stating that 'Seller shall pay Buyer demurrage'. In accordance with general rules of contract interpretation,63 the arbitrator gave effect to the common intention of the parties, even if this differed from the literal meaning of the isolated clause. He also considered the contract as a whole, giving special consideration to the CFR Incoterms rule, which required the buyer to bear the costs: 'it is quite clear from the terms of the Cement Supply Agreement and Appendix I and the whole scheme of the Agreement and Appendix that, no doubt as a result of a clerical error, the words "Seller" and "Buyer" had been inverted in Clause 1 of Appendix I. An obligation on the seller to pay demurrage to the buyer was completely inconsistent with the other terms that had been expressly agreed by the parties and the overall scheme of the Cement Supply Agreement under which cargoes were to be sold and delivered to the buyer at its terminal/silos, the sale price being fixed at "[sum of money] per metric ton CFR (Free out) Buyers Silo".'

35. In other situations, the interpretation of a maritime contract requires more specific knowledge and an analysis of technical documents. Disputes arising out of shipbuilding contracts often raise the question of what falls within the terms of the original contract and what constitutes extra work subsequently imposed by the buyer. In ICC case 1036464 relating to the construction of roll-on/roll-off vessels, both parties attempted to cancel the contracts and the shipyard claimed additional compensation for extra work alleged to have been requested by the buyers. The contracts contained a definition of extra work in the following terms: 'An item of work has to be qualified as extra if it is neither covered by the Contracts nor by the Specifications or the further enclosures to the Contracts.' A close examination of the contracts led the arbitral tribunal to conclude that several items could be considered as extra work according to this definition and to list each of these items.

Similarly, the legal characterization of a repair contract usually requires the parties' respective duties to be closely analyzed. In ICC Case 11024,65 a repair and revision contract was made between an Algerian shipowner and a Spanish shipyard. One of the tasks placed upon the shipyard by the contract was the chemical cleaning of the vessel's boiler. The boiler circuit subsequently failed due to the circulation of waste. The arbitrators had to determine whether the contract, which was governed by Spanish law, was a contrato de servicio, which simply established a duty of skill and care, or a contrato de obras, which created an obligation to achieve a certain result. After analyzing the contract and its annexes, the arbitrators decided that the shipyard was under an obligation to achieve a given result because the repair contract was a contrato de obras.

36. Our review of ICC awards shows that the ICC Rules of Arbitration already offer a suitable framework for resolving maritime disputes. In their current form, they allow the necessary attention to be given to international conventions, contractual provisions and trade usages in the shipping sector and provide a set of procedural measures that are able to adequately address the requirements and peculiarities of maritime scenarios. Their suitability to the shipping sector will be further enhanced through the addition of new provisions on consolidation, joinder, multiple parties and interim measures in the revised Rules to be launched later this year.



1
W. Wordsworth & S.T. Coleridge, 'The Rime of the Ancient Mariner' in Lyrical Ballads 1798, ed. W.J.B. Owen (Oxford University Press), suggesting that a genuine mariner is a man of experience who has traversed the perils of the sea.


2
W. Tetley, 'The General Maritime Law-The Lex Maritima', (1994) 20 Syracuse Journal of International Law and Commerce 105.


3
Ordonnance de la Marine, ed. Charles Osmont, 1714, part 2, chapter II.


4
T.J. Schoenbaum, Admiralty and Maritime Law, 4th ed. (Thomson & West, 2004) at § 19-15, pp. 1114ff.


5
O. Cachard, 'Jurisdictional Issues in the Rotterdam Rules: Balance of Interests or Legal Paternalism', (2010) 1/2 European Journal of Commercial Contract Law 1.


6
C.M. Schmitthoff, Export Trade: The Law and Practice of International Trade, 11th ed. by C. Murray (London: Sweet & Maxwell, 2007) at 184ff.


7
Extracts from some of the other awards to which reference is made may be found in the ICC Dispute Resolution Library, <www.iccdrl.com>.


8
E.g. Article 15 of the AWES Form of the Association of European Shipbuilders and Shiprepairers and Article 19 of the Norwegian Standard Form of the Norwegian Shipbuilders' Association.


9
See e.g. ICC cases 7285 and 11372 at <www.iccdrl.com> and cases 11024, 10364 and 12171 hereinafter. See also ICC case 7154, Journal du droit international, 1994, 1059.


10
W. Tetley, International Maritime and Admiralty Law, 4th ed. (Montreal: Yvon Blais, 2002) at 173, footnote 251, noting the considerable delays and costs of arbitrating in London.


11
See e.g. ICC cases 6490 at <www.iccdrl.com> and 8384, 10341, 13906, 14113 and 14269 hereinafter.


12
12. See e.g. ICC case 6573 at <www.iccdrl.com>.


13
E.g. J. Bonnecase, Le particularisme du droit commercial maritime (Bordeaux, 1931); G. Ripert, Précis de droit maritime, 6th ed. (Paris: Dalloz, 1952) at § 5.


14
R. Jambu-Merlin 'L'arbitrage maritime' in Etudes offertes à René Rodière (Paris: Dalloz, 1982) 401; W. Tetley, supra note 9 at 441ff.; C. Jarrosson, 'La spécificité de l'arbitrage maritime international' [2004-2] Il Dirritto Marittimo 83.


15
See P. Lalive, 'Dérives arbitrales', (2005) 23 ASA Bulletin 587, (2006) 24 ASA Bulletin 2.


16
S. Curtis, The Law of Shipbuilding Contracts, Lloyd's Shipping Law Library (Informa, 2002) at 208: 'It may, of course, be extremely difficult in practice to categorise a particular dispute as either technical or non-technical: if, for example, the buyer alleges that he is not obliged to accept the vessel when she has been tendered to him, the issues arising may be both legal (e.g. as to the correct interpretation of the contract) and technical.'


17
O. Cachard, 'Les mesures conservatoires dans l'arbitrage maritime', Le droit maritime français, March 2004, 220.


18
O. Cachard, 'La force obligatoire vis-à-vis du destinataire des clauses relatives à la compétence internationale stipulées dans les connaissements, Plaidoyer pour un renouveau des considérations maritimistes' in Vers de nouveaux équilibres entre ordres juridiques, Mélanges en l'honneur de Hélène Gaudemet-Tallon (Paris: Dalloz, 2008) 189.


19
Unpublished.


20
T.J. Schoenbaum, supra note 4 at § 19-15, p. 1117: 'Even a narrow arbitration clause shall be construed liberally and the court should not consider only specific words or phrases of limitation but also the tone of the clause as a whole.'


21
(2005) 16: 1 ICC International Court of Arbitration Bulletin 92.


22
Cass. Civ. 1re, 27 April 2004, Navire Estonia, Journal du droit international, 2005, 349 (Annot. O. Cachard); O. Cachard, 'Le contrôle de la nullité ou de l'inapplicabilité manifeste de la clause compromissoire', Revue de l'arbitrage, 2006, 893.


23
See hereinafter.


24
Final award, §§ 40-41; see also § 32 below.


25
R. Bamforth & K. Maidment, '"All join in" or not? How well does international arbitration cater for disputes involving multiple parties or related claims?' (2009) 27 ASA Bulletin 3.


26
See hereinafter, partial award, §§ 38-42; see also § 35 below.


27
M. de Boisséson, Le droit français de l'arbitrage interne et international (GLN/Joly, 1990) at § 289; C. Jarrosson, Case Comment on Cour d'appel de Paris, 27 February 1997, Revue de l'arbitrage, 1998, 159 ; G.B. Born, International Commercial Arbitration, 2d ed. (Kluwer Law International, 2001) at 673; J.-B. Racine, Case Comment on Cour d'appel de Paris, 18 September 2003, Revue de l'arbitrage, 2004, 311.


28
See hereinafter. See also § 19 below.


29
Obergericht Zurich, 11 September 2001, (2002) 20 ASA Bulletin 694: 'In the presence of a compulsory joinder of parties on the basis of substantive law, the parties must also act jointly in procedural matters. Consequently, the parties of the joinder must also designate a common arbitrator. Only this solution takes into account the principle of sufficient guarantee for an independent arbitral tribunal.' (Quoted by C. Müller, International Arbitration, A Guide to the Complete Swiss Case Law (Unreported and Reported), (DUS/Bruylant/Schulthess, 2004) at 55. See Swiss Federal Tribunal, DFT 129 III 727.


30
Unpublished.


31
See hereinafter.


32
Supra note 23.


33
See hereinafter.


34
For a refusal to order enforcement of a US court decision ordering excessive punitive damages against a French manufacturer of sailing vessels, see Cass. Civ. 1re, 1 December 2010, appeal no. 09-13.303, Le droit maritime français, April 2011, 331 (Annot. O. Cachard).


35
The Golden Victory, [2007] 2 Lloyds Report 164.


36
Unpublished.


37
Unpublished.


38
S.M. Carbone, 'Conflits de lois en matière maritime' in Collected Courses of the Hague Academy of International Law (Martinus Nijhoff, 2010).


39
This instrument entered into force on 2 June 1931 and has more than seventy contracting states.


40
This instrument entered into force on 23 June 1977 and has more than thirty contracting states.


41
This instrument entered into force on 14 February 1984 and has more than thirty contracting states.


42
This instrument entered into force on 1 November 1992 and has more than thirty contracting states.


43
The instrument has been signed by twenty-three states (including France, Greece, Luxembourg, the Netherlands, Switzerland and the USA) but ratified only by Spain.


44
P.-Y. Nicolas, 'Les conflits de conventions internationales dans le transport maritime de marchandises' in Etudes de droit maritime à l'aube du XXIème siècle, Mélanges offerts à Pierre Bonassies (Moreux, 2001) 265 ; W. Tetley, International Conflict of Laws-Common, Civil, Maritime (Montreal: Yvon Blais, 1994) at 316-319.


45
See ICC Dispute Resolution Library, <www.iccdrl.com>.


46
See hereinafter.


47
Journal du droit international, 1994, 1059 (Annot. Y. Derains).


48
On the consequences of changing the nomination of the port of loading and the resulting increase in bunker costs, see The Antiparos, [2008] 2 Lloyd's Report 237.


49
E.g. ICC Case 14113 at § 66, see hereinafter.


50
On the late redelivery of a ship by the charterers, see The Achilleas, [2008] 2 Lloyd's Report 275; A. Mandaraka-Sheppard, 'Damages for Late Redelivery Revisited: Is the Achilleas Decision Bad Law?' (2008) 14:1 Journal of International Maritime Law 49.


51
Unpublished.


52
Journal du droit international, 1997, 1078 (Annot. J.-J. Arnaldez).


53
According to the English Marine Insurance Act of 1906: 'There is a general average when any extraordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purposes of preserving the property imperilled in the common adventure.'


54
W. Tetley, supra note 9 at 367-368.


55
See ICC Dispute Resolution Library, <www.iccdrl.com>.


56
Final award, §§ 10.1-11.6.


57
See hereinafter. Partial award, §§ 32-45.


58
Partial award, § 28.


59
W. Tetley, 'Good Faith in Contract. Particularly in the Contracts of Arbitration and Chartering', (2004) 35 Journal of Maritime Law and Commerce 561.


60
E. Gaillard & J. Savage, eds., Fouchard Gaillard Goldman on International Commercial Arbitration (Kluwer Law International, 1999) at § 1469ff.


61
(2002) XXVII Yearbook Commercial Arbitration 170.


62
Unpublished.


63
See especially Articles 4.1 and 4.4 of the UNIDROIT Principles of International Commercial Contracts; Articles II.-8:101 and II.-8:105 of the Principles, Definitions and Model Rules of European Private Law, Draft Common Frame of Reference (Sellier, 2009).


64
See hereinafter, partial award, §§ 54-63.


65
See hereinafter.