Originally from Law and Practice of Arbitration - 4th Edition

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1. Maritime Arbitration: A Private-Sector Creation

The resolution of maritime disputes through arbitration is a classical usage of the remedy.1 Maritime transactions are fraught with risk. Unexpected changes in the weather and the ferocious moods of the sea make maritime transport hazardous. A host of problems can arise that threaten the safety of the ship, crew, and cargo. Moreover, enormous vessels with substantial space and capacity require constant management and extensive maintenance in port and at sea.2 Labor conflicts3 can cripple operations; foreign government regulations4 can bar or restrict access to harbors and piers or even prohibit trade itself; and piracy on the high seas5 is a resurgent phenomenon, especially off the coast of failed States. Shipping contracts represent inter-connected transactions that involve a number of parties, their insurers,6 and substantial sums. In order to ameliorate the transactional climate and temper risks, the maritime sector acted on its experience with recurrent circumstances and created uniform practices.7 Needless to say, maritime transport8 is vital to the global oil industry and the sale of other commodities that are essential to the vitality of national and regional economies.

The long-standing recourse to arbitration in the maritime context9 has been, and continues to be, motivated by what have become the standard reasons for seeking to arbitrate disputes. The basic objective is to avoid lawyer traffic and juridical conundrums in a commercial sector’s business activities. Merchants want to avoid the costs, delays, and distortions of judicial litigation. While they believe that contract disputes should be resolved equitably, they prize even more dearly the efficacy achieved through economy, expedition, and enforceability.10 They see little value in pursuing the legal method’s venerable threshold considerations—challenging the venue of the proceeding, contesting the court’s jurisdiction to rule on the matter, and determining which law should govern the resolution of the parties’ disagreement.