Athens, 7 June 2018

Following the welcome remarks of Nicolas A. Vernicos (President, Vernicos Maritime Group; Chair, ICC Greece, Athens), the first panel, comprised of Emily O’Connor (Head of Policy Commercial Law and Practice Commission, ICC, Paris) and Marina Comninos (Chief Operations Officer, essDOCS; Member of the ICC CLP Commission), discussed the role of Incoterms rules in the maritime trade. The second panel, moderated by arbitration lawyer Anna P. Mantakou (Managing Partner, Law Office A.P. Mantakou; ICC Court Member, Athens), comprised of Alexander G. Fessas (Secretary General, ICC International Court of Arbitration; Director, ICC Dispute Resolution Services, Paris), as well as the arbitration lawyers Alexander J. Marcopoulos (Counsel in International Arbitration practice, Shearman & Sterling, Paris) and Antonios Tsavdaridis (Partner, Rokas, Athens), discussed ICC’s role in arbitrating cases related to maritime contracts.

The Incoterms rules and the maritime trade: a survey of their current uses and look ahead at future revisions

In the first session, the speakers briefly presented the Incoterms rules and their role in ensuring the smooth execution of international maritime trade in goods. The Incoterms rules stand for ‘International Commercial Terms’ and were first released in 1936 by ICC, reflecting good practice for international and domestic contracts for the sale of goods. Τhe Incoterms rules were revised in 1953, 1967, 1974, 1980, 1990, 2000 and 2010. The 2020 Incoterms version is currently in preparation.

The Incoterms rules explain 11 three-letter trade terms. For instance, ‘FOB’ stands for Free on Board, ‘CIF’ stands for Cost, Insurance and Freight, etc. Each three-letter trade term is presented in two columns, one describing the seller’s obligations and the other the buyer’s with respect to significant aspects related to transport and delivery of goods under a contract of sale. The speakers pointed out that the Incoterms rules do not provide a complete contract of sale, but need to be supplemented by other contract provisions related to issues as to the price, quantity, transfer of title, time of delivery, governing law, jurisdiction, etc.

The current revision of the Incoterms rules involved discussions on the following maritime issues:

  • whether the FOB rule is appropriate for carriage of goods using containers;
  • whether CFR (Cost and Freight) and CIF (Cost, Insurance and Freight) should be modified in order to allow for an inland place of destination; and
  • whether the insurance cover provided by CIF and CIP (Carriage and Insurance Paid To) should be modified in order to provide for a higher level of insurance coverage.

The speakers ended the session with a few tips on how to select and efficiently include Incoterms rules in contracts. When drafting a sales contract, practitioners should:

  • specify the version of the Incoterms rules applicable to the contract;
  • indicate with precision the place of delivery of the goods;
  • make sure that the parties can comply with the obligations undertaken;
  • select an Incoterms rule which is appropriate to the type of transport;
  • ensure consistency with other ancillary contracts such as transport or insurance contracts.

Dispute resolution in international maritime contracts: ICC’s experience and role in arbitrating cases with a maritime nexus

In the second session, the speakers focused on the specificities of maritime arbitration and the dispute resolution tools provided by ICC within maritime commercial arbitrations.

Maritime arbitration has distinct features and trade practices have revealed a uniform regulating framework of arbitration in various shipping documents. For instance, charter-parties are ‘vehicles’ of arbitration clauses which most likely provide for London as place of arbitration. Bills of lading contain arbitration clauses incorporated, most usually, by reference to the arbitration clause included in the charter-party under which the bill of lading is issued. The validity conditions for an arbitration clause by reference are set forth by domestic legislation which ensures the need of consolidated cases in back-to-back contracts.1 Further, salvage disputes enjoy a unique level of uniformity since LOF (Lloyd’s Open Form) clauses direct all disputes to Lloyd’s institutional arbitration in London.2 Finally, ship sale and shipbuilding contracts contain standardized arbitration clauses, while marine insurance contracts often contain P&I (Protection and Indemnity) Club clauses.

Maritime arbitration has traditionally been ad hoc. Some arbitration associations only act as appointing authorities and there are no rules for conducting the arbitration. This quasi-institutional arbitration system is due to historic reasons and was implemented when maritime and commodities disputes were arbitrated on a case by case basis, i.e. on equity and quantity. However, institutional arbitration is relevant for maritime disputes, notably for complex and high value charter disputes and shipbuilding disputes.

Among the several maritime arbitration centres, LMAA (London Maritime Arbitrators Association) is the leading centre based in London and accounts for 70-90% of the entire volume of maritime arbitrations worldwide. LMAA does not administer arbitrations. Other Asia-Pacific regional institutions are taking the lead, since 40% of the world’s shipping tonnage is owned or controlled by Asian interests and nine of ten of the world’s busiest container ports (handling 70% of global container throughput) are in Asia.

The speakers pointed out that the ICC Rules could serve the practitioners’ needs in maritime industry. Some of the most important characteristics of ICC Arbitration were mentioned during the conference: (i) the existence of the International Court of Arbitration (ICC Court) which only administers the proceedings, while the Arbitral Tribunal settles the dispute and renders a decision on the merits of the case; (ii) the role of the ICC Secretariat; (iii) the provision for the scrutiny of the awards under Article 34 of the ICC Arbitration Rules; (iv) the timeframe for rendering the awards under ICC proceedings, (v) emergency arbitrator proceedings for rendering an urgent relief; (vi) the ICC acts also as an appointing authority providing for the proposal, appointment and challenge of arbitrators; (vii) the expedited procedures provisions adopted by the 2017 ICC Rules for settling smaller disputes and limiting time limits and costs. The audience also referred to the terms of reference as one of the most valuable features of ICC Arbitration, as well as the role of ICC national committees which enables to gain knowledge on who is who in international arbitration and appoint experienced arbitrators (avoiding the problem of having commercial men or women as arbitrators).

Another interesting feature of the ICC Rules is the detailed guideline as to the consolidation of the cases, requested upon strategic decision of at least one of the parties. This issue arises frequently in certain maritime sectors where complex contractual arrangements involve related contracts and same or different parties. This is the case in a carriage of goods context (where different persons are involved: the seller, the buyer, the carrier, the shipowner, probably shipping brokers and a consignee) as well as in shipbuilding cases (where a number of related sub-contracts exist). The question is whether it is possible to consolidate related cases (assuming that one party desires to do so). Article 10 of the ICC Rules provides for the criteria according to which the ICC Court (i.e. comprised of experienced legal practitioners) decides a true consolidation, resulting to one case, before a single tribunal and resolved by a single award.

Other arbitration institutions also provide for consolidation. For instance, section 2 of the SMA (Society of Maritime Arbitrators) Rules provides for consolidation; however, the decision on consolidation is taken by centralised decision-maker body which is comprised of ‘business men’ and not necessarily lawyers. LMAA, the most commonly used arbitration institution for maritime cases, does not provide for consolidation, but only for ‘concurrent proceedings’. In this context, the documents can be disclosed and be available to the related cases, expert witnesses from the related arbitration procedures can be heard in a single hearing, but there is not a single award on the outcome of the case.

To conclude, it was agreed that the ICC Rules are flexible enough to meet the needs of users in the maritime industry and that the ICC works and initiatives in this field are welcomed by the arbitration and maritime practitioners.


1
See PhD Thesis, M. Papadatou, ‘La convention d’arbitrage dans le contrat de transport maritime de marchandises : étude comparée des droits français, hellénique et anglais’, available at https://docassas.u-paris2.fr/nuxeo/site/esupversions/7f047087-94ed-4037-bf1b-83533a40dba2?inline, pp. 173-302.

2
https://www.lloyds.com/market-resources/lloyds-agency/salvage-arbitration-branch/lloyds-open-form-lof