Arbitration - an arbitrator's perspective

With the majority of shipping and offshore charters and contracts now selecting some form of arbitration as the dispute resolution forum, understanding the nuances of that process is of great importance. Resolving legal disputes quickly and easily is typically in all parties’ interests and, as a number of legal disputes are picked up under the P&I cover, of significant interest to the club. The more familiar parties are with the litigation process, the more likely it is that disputes which cannot be resolved directly between the parties, can proceed swiftly and sensibly in a more formal setting. With that in mind, in this issue of The Field, we offer some insight into arbitration proceedings from the perspective of an international shipping arbitrator, Steffen Pedersen.

Arbitration from an Arbitrator’s Perspective

It is common to hear lawyers discuss arbitration, less so to hear arbitrators talk about it. Understanding matters from the decision-maker’s perspective can be of benefit to users of arbitration and therefore to the arbitration process itself. 

Practicing as a lawyer in the maritime field for nearly 15 years, and having been involved in well over 100 maritime arbitrations, the perspective from the arbitrator’s chair is very different. It has been an eye-opener to say the least to sit in the arbitrator's chair and see the world from that perspective.

Arbitration has in recent years become a far more prevalent form of dispute resolution. The flexibility of arbitration proceedings compared to traditional litigation, combined with the ability to select an expert or experts in a particular field, and an alacrity perceived as not possible in a court setting have been among the factors driving this growth. With this in mind, more and more frequently charter parties and contracts tend to favour one form or another of arbitration as the dispute resolution forum.

While both arbitrators and lawyers must know the substantive, procedural and evidential law the skill- and mindsets required in each role is very different. A lawyer must argue a client’s case and try to defeat the case put by the other party, whereas an arbitrator, under English law, and indeed most other laws typically selected to govern shipping and offshore arbitrations, is under a duty to act fairly and impartially between the parties. This includes giving each party a reasonable opportunity to put its case and to respond to the other parties’ case. The duty must be complied with in every aspect of the arbitration (procedure, evidence, interim applications etc.). Any hint of bias or partiality may give cause to set any award aside, which explains why many proceedings in default of a party appearing often proceed very slowly. An arbitrator therefore has to be very careful and especially so in maritime arbitration (such as under LMAA or SCMA Rules) where arbitrators really are in charge with no institutional secretariat involved.   

That said, arbitrators are human beings, and not robots. As with everything else in life perceptions and impressions will matter.  Arbitrators tend to be people with extensive experience who have been involved in dispute resolution for a very long time, they will know all the tricks, and will not be easily swayed. Whilst every arbitrator is necessarily different and will perceive matters differently from each other, my experience so far has given me the following impressions of what can be effective, and what is less effective, in convincing a tribunal:

  1. Aggression does not convince
    Some parties like their lawyers to be very aggressive, for example battering witnesses, writing aggressive or rude messages or refusing to be reasonable in agreeing the simplest procedural steps (like short time extensions). This does not look constructive. The tribunal’s job is to determine the dispute on the merits. The arbitration procedure, and every step in it, is meant to get the tribunal closer to the point where it can do that. That is the tribunal’s only concern. Aggression most likely impedes that procedure and is therefore not conducive to getting the tribunal to the point where it can do what it has to do. Aggression is therefore unhelpful and counterproductive. Generally, why do anything that does not assist the tribunal? It should also be borne in mind that aggression rarely adds anything to the merits of a case. A tribunal will make great efforts to cut through any aggression to decide the matter on the actual evidence. Aggression will not get an experienced tribunal to deviate from its duties. If anything, it can actually come across as a lack of confidence and/or garner sympathy for the other side.

  2. Point-scoringis not the point
    Winning the war, not every battle is the key. A withdrawal of, or acquiescence on, a point can be used as a tactical masterstroke, can give you the appearance of reasonableness, and can help to focus on the truly vital issues in dispute. This helps the tribunal and will also save costs.

  3. Do not give the tribunal orders
    Most arbitrators are fully aware of the provisions of the relevant Acts covering arbitration, the Rules governing the arbitration and/or what their duties are.  They are not likely to deviate from them because one party demands they do so, especially when they have a duty to not favour any side.

  4. Keep it simple
    Present your case in plain language. Do not use five words if you can use one. Simple messages are easier to digest and will better stick. If you have a simple claim, keep the pleading simple. The more verbose and long-winded a pleading, and the more alternative claims it puts forward, the less straightforward a claim appears. This may create doubt about a party’s conviction in its own case. Bad presentation, or throwing everything at the opponent, can put an otherwise great claim in the background.

  5. Be clear
    The tribunal has to keep an open mind. You should not presume that, however obvious and just your case is to you, it will also appear that way to the tribunal. Leave nothing to chance.  If there is a key passage in a document be sure to draw attention to it and explain why it is key. Do not presume the tribunal will pinpoint that as a key passage on its own. It may have other ideas.

  6. First impressions matter
    Always greet the tribunal. Treat the tribunal like parents you are asking for pocket money. You need to convince them why they should give it to you rather than the other side. If you come in demanding it, what impression will that leave?

  7. Show respect to both the tribunal and the other side
    Being disrespectful to, or in front of, someone in power will not help you convince them to exercise a discretion in your favour. 

  8. Be reasonable
    It is pointless not agreeing a step which a tribunal will almost certainly grant, such as a short time extension. In fact, in view of the issues with enforceability which may arise from a party claiming it was not able to put its case properly resisting might actually work against you in the long run. It should also be borne in mind that the tribunal has wide discretion which also covers costs.

  9. Be flexible
    Bruce Lee famously advocated being “like water”, by which he meant malleable and adapting perfectly to your surroundings. This is good advice in an arbitration setting too.

Arbitration(1) has its origins in parties wanting to take matters out of the hands of courts and away from rigid court procedures to have their peers (as trusted experts in their field) making binding, final decisions. Court procedures and rigid processes were not a part of the original arbitration landscape and the arbitration process remains much more flexible than court.  Technical points that might work in court will rarely be determinative in an arbitration. It is better to accept that the procedure might not be entirely predictable from the beginning and prepare to adapt as may be required.

In a world where establishing maritime arbitration centres is gaining popularity (e.g. Dubai’s EMAC, the Nordic Arbitration centre in Oslo, KCAB in Seoul and CMAC in Hong Kong) arbitration promises to be around for a long time and to remain the main dispute resolution mechanism in maritime claims.  Parties are increasingly spoilt for choice but in any setting understanding the whole process is vital.  

(Steffen Pedersen is on the panel of arbitrators for SCMA (Singapore), KLRCA (Malaysia), GMAA (Hamburg), EMAC (Dubai), BANI (Jakarta) and MIAC (Port Louis). He is on the Reserve List at SIAC (Singapore) and an overseas Supporting Member of the LMAA. He is qualified in Hong Kong, England & Wales, Tuvalu, Kiribati and Niue.