There is no better example of the long reach of London's maritime arm, than the activities of its legal sector. English law and the London Maritime legal community dominate the dispute resolution process, irrespective of how they arise, or who is involved, or where they happen. Why is this so? The answer lies squarely within the default clauses of standard forms.
The great majority of charter parties, sale and purchase forms, insurance policies, and a whole suite of BIMCO standard forms, provide for London arbitration, in the event dispute resolution is required. While there is nothing to preclude a party from amending this, it is rarely done, because this clause is simply not a priority in the business acquisition and conclusion process. So, the default clause reigns supreme, and certainly the London legal community isn't complaining. So it has been, for as long as one can remember.
All of this, of course, made a great deal of sense, while Europe dominated the shipping market. The parties in dispute were mostly within a short flight of London, if not based in London. The available expertise of specialist solicitors, silk in abundance, banking and business support infrastructure, all supported an explosion in the amount of maritime legal work, especially after the Second World War. The growth in world trade, the advent of new and modern tonnage, the unprecedented amount of cargo movement, all contributed, with the help of the default clauses, to generate a multimillion-dollar maritime legal industry.
Today, that industry continues to dominate maritime dispute resolution in the world. It is flourishing, with the help of the vast congregation of maritime ancillary services in and around London, and of course, with the unwavering support of the default clauses.
This, notwithstanding one very significant change in the equation. The centre of gravity in ship owning has moved to Asia. More than 40 per cent of the world's total tonnage is now owned by Asians, sitting some 12 flying hours or so, from London.
Nine of the top 10 busiest container ports in the world are located in Asia. Quite apart from this, it is patently obvious that the business world is now Asia-centric.
So, if Asia dominates shipowning, and cargo activity is highest east of the Suez, why are maritime disputes still being remitted to London for adjudication? If the principal parties, and the evidence are all to be found out of the United Kingdom, why are we shipping everything back to London, at extra costs, for adjudication? Well, stand up default clause, while the charges are read!
The Asia-based shipowners today are looking for a dispute resolution forum that is more reflective of their contribution to the maritime world. A location that is more geographically convenient and familiar, and less costly as a result of the savings brought about by proximity. Why, for example, is a dispute involving a Singaporean owner and a Korean charterer being sent to London for arbitration? Would it not be cheaper and more convenient for the parties to have the dispute resolved in, say, Hong Kong, or Kuala Lumpur?
It must be remembered that arbitration in a Far East location does not mean that the law of that jurisdiction is to apply. This is a common misconception held by businessmen. There is no reason why a contract with English law as the governing law cannot be resolved by arbitration in Kuala Lumpur, if that is the chosen location. In fact, that makes eminent sense, where the parties are both in the Far East. Further, there is nothing that precludes a party to arbitration, from using lawyers of their choice. So again, Far East arbitration does not mean lawyers of local nationality must be used.
So, all said, the reason why cases such as the above keep going to London, which has absolutely no connection with the dispute, is because the default arbitration clause in the standard form contract provides for it.
How do we change this? Well, we need to ascertain who owns the standard form in question. Is it an organisation such as BIMCO, or a Trade Association maybe? It is up to the owner of the form to introduce the change. It is up to them to come to terms with the reality of the ship owning and operating forces, and do what is appropriate to assist and facilitate the parties to have a less costly and equally effective resolution process.
International maritime lawyers with a good knowledge of English law can be found in most of the major port cities. The renowned maritime lawyers of the world now have branches in Singapore, Hong Kong and Shanghai. So, the access to good legal representation to assist parties in English law governed cases is not an issue. They are there, in the Far East. Going back to London for these services is therefore a non-issue.
In short, there is no reason why alternative jurisdictions to London cannot be promoted, to reflect the true personalities of the parties that are in dispute these days. The largest block is from Asia, and the default arbitration clauses should reflect that.
I would say that the time has come for the owners of the many standard-form contracts used in the maritime world, to revisit the clause that has been cast in stone for so long, and recast the mould.