A Primer on Marine Arbitration

Recently I had the opportunity to testify as Expert Witness during a a charter hire arbitration.  It was my first time being involved in a case like this and I learned a lot about the process.  I wanted to share the lessons learned for the benefit of others who have not yet had the experience.

What is Arbitration?

Simply stated, an arbitration is a legally binding means to solve a dispute.  It is often used during commercial disputes, especially those of an international nature.  Rather than getting into a full-blown litigation, complete with lawyers and a judge, an arbitration hearing is presented to a panel, or tribunal, consisting of either one or more persons; known as arbitrators.  They serve as impartial mediators and will review the evidence presented until finally imposing a legally binding decision.  More on the panel in a moment.

Each side has the opportunity to present evidence, call witnesses, and make opening and closing statements just as they would in court, however the rules regarding the presentation of evidence and general conduct are not as stringent as it would be during a classic judicial proceeding.  Likewise, the panel itself may be composed of people with a specific industry background, not necessarily a legal one.  Although they must all take arbitration training.

An arbitration decision will be legally binding and there are limited rights of review and appeal; which is part of the reason that it is a popular method of resolving disputes.  Some advantages and disadvantages of arbitration:

Pros

  • Can be resolved faster than a traditional court case
  • Proceedings are not public, allowing the issue to remain confidential
  • Ability to choose the panel.  This ensures they have the requisite technical knowledge required to judge the case effectively
  • Limited rights to appeal keep the process shorter
  • Can be (theoretically) wrapped up faster and cheaper than litigation

Cons

  • Lack of appeals make it difficult to overturn erroneous decisions
  • Because arbitrators typically do this work part time it can be difficult to schedule hearings
  • Rights to Discovery of evidence can be limited
  • Although arbitrators have a duty to be neutral, if they depend on a corporation for repeat business there may be an incentive to rule for that corporation

The Arbitration Tribunal

The tribunal’s duty is to listen to the case presented by either side and then make a ruling on it.  It may consist of a variety of configurations such as a single arbitrator, two or more, with an umpire or without.  They have a duty to act fairly and impartially, and to adopt procedures appropriate to the case to provide a fair means of resolution.

The tribunal will either be appointed by a professional arbitration association or by the parties themselves.  In the case I was involved with the tribunal was appointed by the Houston Maritime Arbitrators Association (HMAA).  The arbitration itself must then proceed according to the associations rules, which are more detailed than would be in an Ad Hoc arbitration, but less so than a true litigation.

In the case of an odd number of arbitrators, typically three, one will be appointed as the chairman and will direct the proceedings.  In the case I was involved with the other two arbitrators said very little, except to ask clarifying questions of the various witnesses called.

Arbitrators are quite often lawyers, however that isn’t a requirement.  The various arbitration associations will offer training courses which teach such skills like how to moderate an arbitration, coming to a decision, and awarding remuneration to the winning party.  Speaking with somebody from the HMAA it seems that they are keen to have people with various technical backgrounds become arbitrators.  In this way they can build a tribunal of specialists in order to better mediate a dispute.

Role of the Expert Witness

I became involved in the whole affair following a call from the lawyers representing the vessel operator in this dispute.  Following a number of interviews and preliminary discussions they retained a colleague and I to look at the vessel in question.

This examination was based entirely off a document review and reminded me of an incident investigation.  In the marine industry there is a requirement to document everything, so the information available to us painted quite a clear picture.  Following this initial review we drafted a lengthy report commenting on various aspects of how the vessel was managed and conclusions drawn from that.

While we were doing this, there was an expert for the opposing council drafting his own report.  When the deadline for report submission was reached we received a copy of his, and he got a copy of ours.  This kicked off the second phase; the rebuttal report.

Part of the reason for having expert witnesses in the first place is to drill down to the main issue in dispute outside of arbitration.  Full court cases can take so long because everything must be presented in front of a judge, but an arbitration has a lot more leeway in how they operate, so long as it upholds the law and provide a fair resolution to the dispute.  By comparing reports it is then possible for the experts to see what points they agree on, and which they disagree on.  In this way the agreed on points don’t need to be hashed during arbitration.

Following the rebuttal reports we participated in a call with the opposing witness, ultimately delivering a joint statement that specified what items remained in dispute.  It was these that went to arbitration.

My Day in Court

First, it wasn’t in court….

The arbitration was held at the office of a legal firm actively involved with the HMAA.  They provided conference rooms for each side, a larger conference room for the arbitration itself, plenty of coffee, and a great view.

Quite often these cases never make it to a trial or arbitration, but are settled out of court as it were.  In these cases an expert witness would give a deposition; a sworn statement based on their research; and that would be the end of it.  So giving live testimony is a much rarer experience in marine disputes.

The experts testify near the end of the proceedings.  Prior to this they had already been at it for a number of days, with each side calling witnesses and the other side cross-examining them.  We were able to see the last of these examinations prior to our turn, which gave a feel for how it would go.  It was certainly a formal occasion, with a court stenographer and room full of lawyers, yet didn’t feel much different than any other large meeting in a conference room.

Finally it was our turn.  My colleague first testified, followed by me.  My particular offshore experience was the reason for having us both speak, and the questions were tailored accordingly.  I was sworn in, questioned by our council, then cross examined by the opposing council.

While I can’t expand on what was said, the thing that struck me about it was how civilized the conversation was – even when under attack.  One person speaks, then the other.  Nobody talking over everybody else as is common in a room full of offshore workers!  I was allowed the time to consider the questions and frame my response.  I’ll admit that I was a little nervous going in to this initially, but the way the room was managed made it very easy to speak when it was my time.

Finally the opposing expert took the stand, was questioned by his team and crossed by ours.  It was getting late at this point and everything was shut down for the day.

The Days After

The next course of action for the tribunal was to review all evidence presented and come up with an award on the winners behalf.  This process can apparently be quite lengthy and a final decision wasn’t expected to be made for a number of weeks.

So our work was done.

During the months that I worked on this case I certainly became invested in the outcome, as a portion of the decision rested on my analysis of the situation as regards the vessel.  So walking out of the office that day was a little anti-climatic.  However we also developed a good relationship with the excellent legal team that represented our side so am sure that we will hear the final decision when it is made.

Until then I’ll just keep doing what I love; going down to the docks to look at ships.

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