The Arbitration clause
The arbitration clause contained in the charter party or other relevant
contract constitutes the parties' agreement to submit their disputes to
arbitration. Although the nature of the clause differs from agreement to
agreement, there are basic elements that should be a part of every
arbitration clause. They may be outlined as follows:
- The clause should identify the location of the proceedings,
such as New York, London, or elsewhere. Where the hearings are
to be held and under what law are extremely important conditions
for both procedural and substantive reasons. The arbitration decisions
regarding speed,, overlap, contract frustration, and so forth
are often different, depending on which side of the Atlantic the
panel is situated. The question of which approach is more correct
or contractually sound is often a matter of perspective. Nevertheless,
there are practical differences to the approach, and it is simply
imprudent for the parties not to be aware of them. There are
also vast differences involving the roles of appointed arbitrators,
the conduct of the proceedings, and the judicial appeal system.
These factor must be considered when deciding whether to arbitrate
disputes in New York or London.
- The clause should indicate the number and type of arbitrators
who are to make up the panel. For example, should the panel be
tripartite or a sole arbitrator will be acceptable? Should the
panel be made up of commercial persons, attorneys, or a combination
of the two? There are obviously advantages and disadvantages
of any combination of arbitrators: therefore, when the parties
agree to an arbitration clause, they should consider what it is
they want to achieve.
- The procedure of appointing arbitrators should be spelled
out and must be clearly understood. Usually each of the parties
appoints an arbitrator and the two select a third. However some
charter party arbitration clauses provide otherwise.
- How is the arbitration panel to make a decision? Is it by a majority
or must it be unanimous? Although this issue may appear inconsequential,
problems may arise if the panel consists of an even number of arbitrators,
or some times when the arbitration clause provides for a two arbitrator
panel.
- The arbitration clause should also provide for confirmation
of the award in a court of competent jurisdiction. Most clauses,
especially in tanker charter parties, contain phraseology that
allows for the arbitrator's decision to be confirmed by a court
having jurisdiction in the premises.
The difference between charter party arbitration clauses can become
evident when one compares the clauses contained in tanker charter
parties with those found in the New York Produce Exchange form.
Although both contain the basic elements described above, there
are substantial differences in the wording of the clauses. As
an example, the Exxonvoy charter party clauses are more detailed
and provide the arbitrator's right to assess cost, attorneys'
fees, and so on. The arbitration clause in the Produce Exchange
form does not mention this point, but allowing the arbitrators
similar powers. This has been accepted as a proper exercise of
the panel's authority.
The arbitrators derive their authority from the arbitration clause
and their authority does not extend beyond the specifics of the
clause. Failure of the panel to do so may nullify the award. <