Originally from Navigating Maritime Arbitration: The Experts Speak

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Maritime arbitration is as ancient as the industry we serve, with roots that can be traced back to the Phoenician shipowners and Greek traders.

New York’s first known maritime arbitration award was decided in July 1826. It involved a dispute between the Greek government and two New York shipbuilders regarding the building, equipping, arming and manning of two 44-gun frigates – the LIBERATOR and HOPE - constructed under the supervision of the U.S. Navy. While the Greek government urgently required these warships in its Mediterranean naval campaign against the Ottoman Empire, it refused to make final payment on completion of building. One of the defenses it raised was the legality of the project - as the United States was then at peace with both nations. The arbitrators found in favor of the shipyards and sold the LIBERATOR to the U.S. Navy to satisfy the shipbuilders’ recovery. Title to the HOPE was conveyed to the Greek government, she was renamed the HELLAS, and sailed off to do battle against the Turks.

While rendered over 190 years ago, the award addressed contemporary issues of transactional illegality, confidentiality, publication, arbitral and legal fees and costs, timeliness, impartiality and finality. U.S. Courts were initially generally hostile toward arbitration until 1925 with the enactment of the Federal Arbitration Act (“FAA”) that specifically focused on “maritime transactions”. Arbitration is considered today as a leading means of alternative dispute resolution and very much a favored child of an overburdened judiciary. In the words of the U.S. Court of Appeals: Arbitration is an especially important and efficient means of dispute resolution in the maritime field and has largely taken the place of litigation in disputes arising out of charter parties. New York, as a major international port and trading hub, soon emerged at the forefront of international maritime arbitration, second only to London, as is the case today.