Arbitration is increasingly thrust upon us, and the concern is whether it offers an adequate path to justice.
Unlike mediation, arbitration is an alternative to the courtroom. When agreed upon it is binding on the parties. Arbitration rules have considerable variation. For instance, the Society of Maritime Arbitrator’s rules differ from the American Arbitration Association’s rules in both substance and process. Thus, while charter parties, towage agreements and lots of other salty documents may include arbitration terms, it’s worth drilling down to understand under which forum’s rules a potential arbitration may be conducted.
An arbitration term that does not specify a maritime arbitration forum may mean much larger fees and expenses, but it could also mean you have expanded rights of appeal. On the other hand, where a maritime arbitrator may listen, understand and allow you to obtain discovery from your opponent on issues unique to the maritime industry, a more restrictive discovery rule may prevent such critical investigation. An arbitrator that lacks commercial maritime experience may similarly fail to grasp the custom and practice elements of your claim or defense leaving you at a disadvantage from the moment you sign the contract.
What should you do? Ask yourself what’s the forum and will this forum be adequate to handle a potential dispute? Consider too, editing the arbitration language to identify a specific maritime arbitration forum, or to identify the parties’ right to select an arbitrator with commercial maritime experience. If you’ve got the time, have your admiralty attorney give you a quick summary of whatever arbitration program is named in the contract you’re about to sign. If it’s not a maritime arbitration and you’re worried the forum might not understand how your work gets done should things hit the fan, I’ve had success simply calling the other side and suggesting a maritime arbitration program.
Pay attention to the details. Arbitration is a detail that’s easy to skim past, but when the ship is aground and the tide’s falling, you’ll wish you had given it a little more consideration.
