The maritime sector’s influence on international arbitration

The maritime and insurance sectors have had an enormous influence on the development of international arbitration in recent decades. Ciarb President Jonathan Wood FCIArb reports.  

It has been intriguing to observe, over the past 40 years or so, the impact that the maritime and insurance sectors have had on the development and shaping of international arbitration. Arbitrations, that is, where the parties are from different jurisdictions, even when the seat has been England and associated proceedings have been brought before the English courts and beyond.  

The maritime and insurance industries have something of a symbiotic relationship. A recent reminder of their impact arises from the English Commercial Court decision, handed down on 6 October 2023, in London Steamship Insurance Ltd v Kingdom of Spain. The case arises out of the sinking of the oil tanker MV Prestige in 2002 off the Atlantic coast, resulting in an oil spill of 60,000 tonnes, causing extensive environmental damage to the coast of France and Spain.  

Proceedings relating to this were complex, bouncing as they did between arbitral tribunals, the English courts and the Court of Justice of the European Union.  

In June 2022, the CJEU concluded that, although arbitration falls under the general exclusion of the Brussels I Regulation embodied in Article 1(2)(d), that does not preclude a judgment relating to an excluded matter from coming within the scope of Article 34(3). So a judgment in the form of an arbitral award made in a Member State could prevent the recognition and enforcement of a judgment given by another Member State, if they are irreconcilable.  

The CJEU, however, decided this did not apply in the present case.  

Taking a purposive approach to interpretation, the decision established that a judgment entered by a court of a Member State in the terms of an arbitral award does not constitute a ‘judgment’ within the meaning of Article 34(3) of the Brussels I Regulation where a judicial decision resulting in an outcome equivalent to the outcome of that award could not have been adopted by a court of that Member State without infringing the provisions and the fundamental objectives of that regulation, in particular as regards the relative effect of an arbitration clause included in the insurance contract and the rules on lis pendens contained in Article 27 of the regulation. The decision caused considerable debate among scholars and practitioners.  

When the issue came before Butcher J in the Commercial Court in relation to the insurers’ case that the Spanish judgment should not be enforced by the English court, in a judgment running to 369 paragraphs of detailed reasoning, he found that he was not bound by the decision of the CJEU. The Spanish judgment was not enforceable. This too caused considerable comment, with one commentator calling it a “pretty bold move”.  

During his judgment, reference is made to two other significant marine and insurance related arbitration cases. They both concern the Brussels Convention and subsequent regulations and they have both occupied international arbitration practitioners over the past few decades. The first is Marc Rich & Co AG v Società Italiana Impianti PA (‘The Atlantic Emperor’), one of the earliest cases to go before the European Court in relation to the Brussels Convention. The decision was rendered in 1991, deciding that arbitration is excluded in its entirety, including proceedings brought before national courts. The second is West Tankers Inc v Allianz SpA (‘Front Comor’) in 2009, where the CJEU held that the validity of arbitration agreements falls within the scope of the Brussels Regulation, but that antisuit injunctions restraining a party from commencing or continuing proceedings in the court of another Brussels Regulation Member State cannot be granted.  

But the cases do not just involve wrangles under the Brussels Convention and subsequent regulations. One of the best known decisions is the House of Lords decision in Fiona Trust v Privalov in 2007, involving the owners of Russian ships that were chartered; it was alleged the charterparties were said to have been rescinded (including the arbitration clauses within them) on the grounds they had been induced by bribery. The charterers commenced arbitration proceedings but application was made by the owners seeking a stay under Section 9 of the Arbitration Act 1996. The House of Lords upheld the Court of Appeal decision that the arbitration clause was wide enough to encompass a fraud claim.  

More recent is the Supreme Court case of Halliburton v Chubb, a case arising out of the Deepwater Horizon offshore incident where Halliburton brought a claim against its insurers under a Bermuda Form policy, governed by New York law, seated in England. It is regarded as being the leading English case on arbitrator conflicts and bias. It was notable for the interventions by the London Court of International Arbitration, International Chamber of Commerce, Ciarb, London Maritime Arbitrators Association and the Grain and Feed Trade Association.  

The recent Law Commission review and report on the Arbitration Act 1996 expressly considered this issue. Its findings and recommendations have been embodied in the Arbitration Bill, legislation that King Charles III announced in his speech before Parliament, giving it a place in the current legislative season.  

There is no denying that maritime and insurance arbitration has had a significant influence on the development and shaping of international arbitration, or that the stakes therein are often enormous. 

ABOUT THE AUTHOR: Jonathan Wood FCIArb is President of Ciarb. He is a fulltime arbitrator with 40 years’ experience in international dispute resolution, arbitration and mediation acting for government departments, insurers, banks and traders. He sits as an arbitrator for ad hoc, ICC, LCIA, LCAM and other institutions. 

Read Jonathan's full biography 

This article was first published in Resolver, December 2023. Resolver is Ciarb’s quarterly digital magazine for its members.

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