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Professional Talk

September, 2019


This decision of the Hong Kong Court illustrates one of the potential risks associated with acting as a Non Vessel Owning Common

Carrier and the importance of protecting time in all potential jurisdictions when it comes to claiming indemnity.

An NVOC (Herport) issued bills of lading in Hong Kong for carriage of cargo on ‘MOL Comfort’ from Hong Kong to Le Havre. Ocean bills were issued (by NYK) also in Hong Kong, indicating Herport as the shipper.
Unfortunately, the ship fractured amidships in the Indian Ocean, split into two halves and drifted for several days before sinking together with all goods on board.
Cargo interests and their insurers claimed against Herport under the NVOC bills; Herport issued a third party indemnity notice against NYK.

The main issue was conflict of law arose due to the exclusive clauses added in both B/L.
The Herport’s B/L provided exclusive jurisdiction to Hong Kong Courts whereas NYK’s B/L provided exclusive jurisdiction to Tokyo District Court in Japan under the following terms:
The contract evidenced by or contained in this bill of lading shall be governed and construed by Japanese law except as may be provided for herein, and (b) notwithstanding anything else contained in this bill of lading or in any other contract, any and all actions against the carrier in respect of the goods or arising out of the carriage shall be brought before the Tokyo District Court in Japan to the exclusion of jurisdiction of any other courts whilst any such actions against the merchant may be brought before the said Court or any other competent court at the carrier’s option.
NYK argued over the jurisdiction of the case stating that as per the clause in their Bill of lading the Jurisdiction would be Tokyo District in Japan and shall be governed and construed by the Japanese Law, also there were already two legal proceedings in Tokyo in relation to the subject damage thus NYK submitted that Hong Kong had no jurisdiction over the matter.
Herport disputed that the clause mentioned on the NYK BL is not valid as the clause is restricted only to claims under Japanese law and no other indemnity claims would fall under the same provision. They had placed the burden on NYK to prove that Hong Kong was not the right forum for the case.

Judge went by NYK’s contention stating that the clause on NYK bill of lading was very clear and it carried no ambiguities. The Court Stated that Herport had not submitted strong reasons to prove that the Court had jurisdiction and also Herport had to be aware that he may have to proceed against NYK in Tokyo as expressed in the Bill of Lading. The argument of Herport on forum non conveniens was also not accepted by the Court. The Court took a generous interpretation of the exclusive jurisdiction clause.
Thus the case was ruled in favour of NYK. The decision was inconvenient for Herport as the claim was time barred under Tokyo jurisdiction.
Having said the above, the judgement has missed out addressing if the claim can be acceptable under Tokyo Court as per 3 (6 bis) of Hague Visby Rules, to which both Japan and Hong Kong are signatory and this clause would have assisted Herport to fight the issue.

July, 2019


Rennell Island, one of the country’s outlying islands in its southern Rennell and Bellona Province, is geographically remote with little infrastructure and few services. The Solomon Islands is part of the marine biodiversity-rich Coral Triangle and has one of the world’s most important coral reef systems, home to 485 coral species and 1,019 fish species.

On February 5 2019, a Hong Kong-based bulk carrier, the MV Solomon Trader, ran aground off a remote island in the Solomon Islands. It spilled heavy fuel across coastal waters, beaches and a sensitive coral reef system not far from a UNESCO World Heritage Site., eventually spilling more than a hundred tonnes of heavy fuel oil into the ocean.

The country’s president has described it as the worst man-made environmental disaster in recent times. Although the International salvage crews has now contained the oil spill, a massive clean up operation is still underway following which questions of liability and damages is also put forward. However, the scale of damage is still being reckoned. Scientists report that oil spills can kill fish and invertebrates directly, while toxic compounds can curtail coral growth and reproduction and diminish coral and fish biodiversity.

In the latest twist of events the Indonesian miner Bintan Mining Corporation, which chartered the stricken MV Solomon Trader, is suing the ship’s owner King Trader Ltd. And says they were suing the shipping company as the charterer on behalf of the people of the island.

The Rennell islanders were having a hard time availing consumable water and has thence been relying on clean water shipments. The Solomon Islands Maritime Safety administration acting director Jonah Mitau said the government is looking at changes to the Shipping Act following the incident. He said currently the laws only cover safety but will be extended to cover insurance and commercial responsibility for damages.

Reports suggested the damage is estimated to be over $US50 million and the Solomon’s caretaker Prime Minister Rick Hou has confirmed that a review of environmental and mining laws is needed to deal with such emergencies.

The World Heritage Centre is determined to support Solomon Islands and Australia in exploring all options to hold the responsible company, owners and insurers to account.

What is an Oil spill? It is basically when large quantity of liquid petroleum hydrocarbon is released into the water bodies. Oil wastes that enter the ocean comes from various sources. These spills mainly occur due to human activities in coastal areas, shores and oceans, more specifically, the activities involving tankers carrying crude oil, drilling rigs, wells and offshore platforms. These oil spills have adverse ill effects on the ocean and the life in the ocean, which can last for decades. The largest oil spill occurred in 1991, in Gulf of Mexico, in which around 240 million gallons of crude oil was spilled. The oil spilled in this accident went deep into the sea, burrowing up to 40cm in the sand and mudflats, it remains there to this day. This is only one example of how oil spills can be such a menace. In the year 2018 alone, six incidents of oil spill occurred, three large oil spills and three medium oil spills. The oil spill at Solomon Islands leaked 600 tonnes of heavy fuel oil, which implies that it is a medium oil spill. Even though it is a medium spill, it cannot be taken lightly, because it has occurred in one of the UNESCO World Heritage sites, which also happens to be the world’s largest raised coral atoll. The spill is likely to cause long term significant damage to the coral reefs and the local ecosystem. When the corals come in contact with the oil, it can sometimes kill it directly or effect its reproduction and growth. The International Maritime Organisation is a United Nations specialised agency which focuses on the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. IMO plays an important role in promoting the Sustainable Development Goals of the UN. The IMO regulates principles that can be used in situations like these.

May, 2019


General Average is a principle of maritime law, whereby all stakeholders in a sea venture proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo to save the whole in an emergency.

The principle underlying General Average is generally regarded as having been first codified, in the Rhodian Law sometime in the 9th century B.C based on the principle “That which has been sacrificed for the benefit of all shall be made good by the contribution of all”.

In recent times, recognizing the need to formulate the principle to create uniformity across seafaring nations, a set of rules were laid down following conferences in York and Antwerp in the late 19th century, resulting in the York-Antwerp Rules, which is the standard rules relating to General Average in modern times.

The one crucial element that makes all the difference, when a General Average is declared is whether the cargo is insured or not and whether such insurance cover General Average and Salvage Claims. Marine Cargo Insurance can make all the difference in a General Average. The importance of Marine Cargo Insurance is twofold. The same not only indemnifies the policyholder for loss or damage to the cargo, but will also respond to General Average and Salvage Claims.

When a General Average is declared, an Average Adjuster is appointed to co-ordinate the claims, who formulate the extent of the loss which can include repairs to the vessel, salvage and towage costs, loss or damage to cargo survey costs etc. These costs, whilst not impacting directly on some parties, needs to be shared. The Average Adjuster approaches the parties to the voyage for contribution towards these costs in line with the principle of General Average.

If the cargo is insured, the insurers will deal with the Average Adjuster and provide a Guarantee to satisfy the claims of the General Average; leading to the release of the undamaged goods to the owner.

On the other hand, if the cargo is not insured, the Average Adjuster will request a cash deposit from the owner before releasing the undamaged goods. In certain circumstances, this can be a significant amount of money, which can put a great strain on the cargo owner.

It is therefore of paramount importance that the cargo is insured, prior to the shipment and special care should be taken to ensure that such insurance covers General Average and Salvage Claims. This will not only protect you for loss or damage to the cargo themselves, but will deal with any General Average and Salvage Claims, should such a situation arise.

March, 2019

Release of The Cargo without The Presentation of Original Bill of Lading

Risk Factors Involved in Non-Presentation of OBL
It is quite evident by now that there is risk associated with delivery of cargo with the Letter of Indemnity and not the original Bill of Lading. The below listed are some of the basic risks that are involved in the same:

1. Mis-delivery of Cargo:
It is well understood a bill of lading, amongst other functions, acts as a “key” to the warehouse which, when available at the discharge port, is presented to the Master in order to release the cargo to the “bearer” of the bill of lading. Where such a “key” is not available at the discharge port, it must be remembered that an LOI will not absolve the carrier from liability if the cargo is delivered to the wrong party.

2. Insurance Cover:
It is well understood that liabilities arising as a consequence of mis-delivery are not covered under all P&I Club rules unless the Directors of the club in question otherwise agree. The LOI is designed to try to alleviate such risk, so far as it can, but it must be understood that an LOI effectively substitutes an Owner’s P&I cover for mis-delivery claims and there are certain insurance policies that do not cover the claims arising out of non- presentation on BL.

3. Creditworthiness of the Party:
This is one of the most important factors while delivering cargo with letter of indemnity. In some cases, the party that presents the letter of indemnity may not be related or connected to the cargo or the shipment in actual. In other cases, the parties may represent themselves as the agent of the cargo interest, but they could be deceitful and later the carrier may be held liable by the actual cargo interest. In some cases, the consignee may have failed to pay the shipper the value for the cargo which could also lead to non- receipt of the Bill of lading. So, the carrier/ shipping line must always ensure to check the creditworthiness of the party claiming the cargo with the letter of indemnity.

Reasons for non-presentation of BL:

  • Consignee has not received the Bills of Lading from the shipper in spite of cargo on board.
  • Consignee has only received an electronic copy or the telex message.
  • Consignee has not paid the buyer yet for the cargo bought and has existing dues.
  • Consignee or agents have misplaced the documents or the Bill of Lading.
  • The party representing the consignee or the cargo interest may be fraudulent and not acting in good faith.

The practice of delivery of cargo without presentation of original bills of lading is very familiar, and is here to stay as long as shipping exists. Delivery of cargo without presentation of an original bill of lading, although not recommended, is a reality of international trade and if the parties act cautiously then no one would suffer a loss in the business. It is therefore important to remember the risks involved in such operations and to act cautiously in order to minimise risks to shipowning interests.

January, 2019

Release of The Cargo Without The Presentation of Original Bill of Lading

A bill of lading is a document issued by a carrier (or their agent) to acknowledge receipt of cargo for shipment. Although in England, the term once related only to carriage by sea, a bill of lading may be used for any type of carriage of goods. A bill of lading must be transferable and serves three main functions:

  • It’s a conclusive receipt i.e. an acknowledgement that the goods have been loaded;
  • It contains or evidences the terms of the contract of carriage; and
  • It serves as a document of title to the goods.

As much as it is the most important document for shipment of goods from one place to the other, it has become very common for the cargo interest or their agents to demand the release of cargo without submission of the original bill of lading.

At the outset, the answer to whether the cargo can be released without the presentation of the OBL is a big NO! as this involves a lot of risk both for the carrier and the cargo interest since the reasons for the non-presentation are enormous. In spite of this being wrongful there are some carriers and P&I that do release the cargo, subject to certain exclusions and exemptions.

P&I releasing the cargo without presentation of OBL
In general P & I club exclude cover for release of cargo without production of Original Bill of Lading by incorporating an exclusion in their policy. However, certain P&I clubs include an omnibus clause in their Rules which do permit some flexibility by allowing the members to provide cover in some circumstances. At the same time with respect to commercial insurers providing P&I cover, this flexibility is not available to override any specific exclusions provided in the policy wordings.

P&I will be involved in such cases under various roles and various circumstances. When P&I represents the carrier, if the Principals or their agents have released the cargo without the OBL the shipper would be the claiming party. On receiving the claim from the shipper P&I club would reject the claim on the ground that there was no personal negligence. Similarly, when P&I represents the cargo interest, the carrier may have released the cargo without the OBL yet P&I would continue to reject the claim as the fault is off the carrier.

Thus, certain P&I clubs provide a wider cover with respect to release of cargo with Bill of Lading subject to certain specific exclusions already mentioned in the Insurance policy.

Carrier/Shipping Line releasing cargo without the presentation of OBL
When it comes to the carrier, they deny taking responsibility of the cargo that is to be discharged without the presentation of the Bill of lading as it causes a lot of trouble for the shipping line/ carrier eventually.

Although the above is what the carrier mostly follows, there are some cases where the carrier releases the cargo without the Bill of Lading for the following reasons:

  • To maintain a cordial and business relationship with the customer.
  • To reduce the unavailability of the containers.
  • To avoid the destruction cost that would eventually fall on the Carrier in case the consignee has not taken delivery.
  • The time and cost the carrier/ shipping line has to invest in claiming the detention and demurrage charges.

The carrier/ shipping line accept a document called the Letter of Indemnity in which the party including the consignee, delivery agent or any other accepts to indemnify the consignor in case of any consequence that arise in the future.

Letter of Indemnity
It is common in a lot of trades, whether bulk or oil, to accept a Letter of Indemnity (“LOI”) for non-production of bills of lading. A letter of indemnity (LOI) is a document which the shipper/ consignee indemnifies the shipping company against the implications of claims that may arise from the issue of a clean Bill of Lading when either the goods were not loaded in accordance with the description in the Bill of Lading or when the original document is not available.

It is absolutely essential that Members get the wording of the LOI right and ensure that proper procedures are in place to demonstrate compliance with the LOI.Members must also actively weigh up the counter party risk of accepting an LOI. An LOI is only as secure as the party providing it.

When this occurs, the carrier invariably agrees to deliver the cargo in consideration of receiving a Letter of Indemnity (LOI) from their charterer/ receiver. In many cases, a delivery of cargo in this way will proceed without incident. However, whilst the practice is familiar, familiarity can sometimes lead to complacency.

to be continued…

November, 2018

Redefining Indian Law On Arrest of Non-Owned Ships: Sunil B. Naik V. Geowave Commander:- A Review

The Supreme Court of India, on 9th March 2018, marked a milestone in the field of Admiralty law while deciding the case, Sunil B. Naik v. Geowave Commander by incorporating the principle that there cannot be an arrest or restraint of a vessel in possession of a non-owner, but owned by a complete third party, for a maritime claim against the former. The Admiralty law in India regarding this was silent. It was this huge uncertainty that was set aside by the apex court through the above decision.

The facts of the case are as follows-Oil and Natural Gas Corporation Ltd. awarded a contract to one Reflect Geophysical (a Singapore based company) to carry out seismic survey off the coast of Gujarat near Okha port in 2012. Reflect Geophysical then entered into a bareboat Charter Party Agreement dated 29.06.2012 to charter the vessel ‘Geowave Commander’ from Master and Commander AS, registered in Norway, for 3 three years.

Later, Reflect Geophysical contracted with one Yusuf Abdul Gani (on 01.10.2012) and one Sunil B Naik (on 30.10.2012), to give on hire the vessel ‘Orion Laxmi’ to work in support (like towage duty) and 24 fishing trawlers being the chase vessels to assist in survey operations to be conducted by chartered vessel Geowave Commander respectively. When payments due to Yusuf Gani and Sunil Naik were defaulted by Reflect Geophysical, they approached the Bombay High Court to enforce their claim against Reflect Geophysical by arresting the vessel Geowave Commander. Even though the court gave an ex parte decree to arrest the vessel, later it refused to order arrest, holding that Reflect Geophysical was not the owner of the vessel Geowave Commander, and hence the claims against Reflect Geophysical could not be enforced through the arrest of the chartered vessel.

On appeal by the two aggrieved parties, the Supreme Court bench consisting of Justice J. Chelameswar and Justice Sanjay Kishan Kaul, considered three important principles while adjudicating the matter. One being the precedent set by the SC itself in the landmark decision of MV Elisabeth &Ors. v. Harwan Investment & Trading Pvt. Ltd. “The foundation of an action in rem against a ship arises from a maritime lien or claim imposing a personal liability upon the owner of the vessel.” Here the claim was only against the charterer of the vessel and not against the de jure owner of the vessel. Thus the chartered ship cannot be arrested for a claim against its charterer. The court observed that “the crucial test would be of ownership, which in the present case clearly does not vest with Reflect Geophysical and the de facto ownership under their bareboat charter cannot be equated to a de jure owner, which is necessary for an action in personam”.

The second point that crossed the Hon’ble Court was Article 3(3) of the International Convention on Arrest of Ships, 1999, which forbids the arrest of ships not owned by the person liable for the claim, except under a judgment based on a contrary law of the respective state. The Indian Admiralty law is silent on that matter, hence no judgment for arrest of such a ship could not take place. The SC itself has stated in the Elizabeth case (supra) that in the absence of any specific statutory provisions, maritime laws of the world can be adopted and adapted by Indian courts. Therefore, though India is not a signatory to the above convention the principles of the same can be utilized appropriately.

Finally, despite the fact that the court considered the plea of “beneficial ownership”, it didn’t really agree to it while adjudication. In Medway Drydock & Engineering Co. Ltd. v. M.V. Andrea Ursula, it was observed that “a ship would be beneficially owned by the person who, whether or not he was the legal or equitable owner or not, lawfully had full possession and control of her, and, by virtue of such possession and control, had all the benefit and use of her which a legal or equitable owner would ordinarily have”. But the fact that the above judgment was dissented by the Queen’s Bench itself in l Congreso Del Partido was duly noticed by the court. From the latter case, the court concluded that “mere possession of the ship, however, complete and whatever be the extent of the control was not found good enough to confer the status of ownership. The “beneficial use” of a chartered ship would not ipso facto convert the status of a charterer into a “beneficial owner.”

Hence, the Apex Court of India laid down a strong precedent that there cannot be an arrest or detention of a vessel in possession of a non-owner, but owned by a complete third party, as a security for a maritime claim against the former. The fact that the most significant admiralty case of Elisabeth v. Harwan Investment & Trading was cited and International Convention on Arrest of Ships was referred, where India not being a signatory, are all fascinating points to be noted. It is also interesting to look into, how the plea of “beneficial ownership” wasn’t really given importance for adjudication.

September, 2018


(continued from July edition)
Challenges and Opportunities – Singapore’s journey towards digitalization in 2018

Innovative players are bypassing the traditional shippers with new and cost-efficient digital business platforms that deliver more benefits to customers. In 2018 the Maritime Industry is reinventing itself, ushering in containerization, larger vessels, and electronic data exchange. The industry is also poised to make a drastic progress and growth in maritime financial recovery overcoming some of the constraints like fuel costs, entry of larger vessels in the market and also the new environmental regulations and standards.

Progressive ports are also embracing the digital breakthrough. Digitalization has helped the transformation of ports and terminals. Smart technologies have replaced the old systems that support the basic infrastructure and tools that handle cargo, manage traffic, customs dealings, safety assurance, and monitoring energy use, thus reducing wastage. Some ports worldwide have tied multiple individual systems into a single interconnected port-wide platform.

On 16th April 2018 the United Nations Maritime Organization has approved a strategy to eliminate carbon dioxide emissions altogether by 2020. The Maritime Singapore Green Initiative  also have made efforts to reduce the environmental impact of shipping and shipping related activities to promote clean and green Shipping in Singapore. In 2011 the Maritime and Port Authority of Singapore had decided to invest up to S$100 million over 5 years in Maritime Singapore Green Initiative, followed by the support from the maritime industry this was enhanced and extended till 31st Dec 2019. This initiative also makes Singapore’s efforts to a responsible flag and port state to clean and green shipping thus making it the most preferred Shipping hub globally.

The Singapore Budget announced on March 2018 that it will top up its Maritime Cluster Fund by S $100 million to help more transition to Digital and Automated maritime future. Senior Minister of Transport, Dr Lam Pin Min said that the latest amendments will lift the total investments in the MCF to $285 million. He also added that the introduction of the Maritime Transformation Map (MTP) will be rolled out over a period of few months and will co-fund the same with matching investments from industry partners, for the development of technology with high potential for industry applications. The Maritime and Port Authority of Singapore also have signed five Memorandums of Understandings (MOU) and two Agreements with local and international partners at the recently held Singapore Maritime Technology Conference (SMTC). These MOU’s are also aligned with the Sea Transport and Transformation Map that are designed to strengthen Singapore’s connectivity and help Singapore to take its Maritime Industry to be at par with the latest developments and adaptations of areas such as automation, data analytics, intelligent systems and cyber security. Thus Singapore has emphasized the importance of digital technology and innovations and is getting ready for a journey towards a better future for its Maritime Industry.

July, 2018


The rapidly developing digital technologies are embarking on a significant transformation of the Shipping Industry across the globe. The implementation of Digitalization, the innovative cyber security systems and technological solutions, autonomous mobility and artificial intelligence has helped in transforming the developments in the shipping industry. With the inputs of accurate, updated and secure data insights, delivered on time, the achievement of a more strategic and cost effective productivity along with maximum performance is possible. The ability to centralize the decentralized digital transformation on a digital platform creates a great potential for organizing markets efficiently. The exchange data and digital platforms enables the companies to have a control of and also organize the logistic chains delivered on time, by reducing the waiting period and predicting the arriving time of the vessels accurately, thus opening up the possibility of unmanned ships in future.

The world’s first crewless cargo ship will be delivered in 2018 under the name and fame of Yara Birkeland and the operations is assumed to commence in 2020. These Unmanned Ships are also referred to as “Unmanned Sea Surface Crafts” and these vessels are either remote controlled by shore- based controllers/officers, or controlled completely by complex algorithms with no human existence or a combination of the above mentioned two. The challenges that will be faced by these are guidelines and legal regulations to be followed in case of any violations, or maritime incidents involving any damage to the vessel, the cargo, human life, environment and property. The existing legal framework is that of the UNCLOS82 regulations by the International Maritime Organization. The present legal system and maritime regulations are designed for manned vessels so this will make it a difficult task for the legislators and jurists to decide upon the best and effective legal resolution in case of a violation or dispute. Therefore many countries are already considering amendments or integrations in the existing regulations and also drafting of fresh shipping guidelines and laws.
Digitalization has brought in many challenges as well as opportunities. According to the IMO over 90% of the world’s trade is carried out by sea as this is the most cost-effective way to move goods and raw materials across the world. One of the important factors is that it reduces cost and increases efficiency. The data inputs and interconnected technologies are emerging to create a revolution in the maritime industry. Systems like Radio Frequency Identification System (RFID) are used to track the movement of the vehicles cargo and people, and ensure timely delivery of cargo. GPS navigation system, automated electronic data exchange from ship to ship and ship to shore increases the efficiency, safety and accuracy in navigation and communications.
There are many challenges to overcome, and one of them is that of marine liability. The Question of liability is considered to be more complex as the vessel travel through different national waters and of different jurisdictions. The insurance industry will also face similar challenges in resolving disputes and also the difficulty to analyze the resources to risk management as well as to understand loss occurred. Thus, it becomes a necessity to ensure maximum data security for preventing a risk or loss. Cyber attacks on unmanned ships also can be problematic as container vessels reliant on digital navigation systems could be potentially manipulated and a small failure in a system can result in dangerous consequences in an interconnected digital environment. The networking of vessels and ports is an enormous opportunity for shipping. This also helps in reducing the ongoing over capacity paired with a relatively soft global demand, and the existing pressure on the rates and profit margins of the industry.

May, 2018

Understanding an Arbitration process, and its Scope in Singapore

Singapore is today one of the most illustrious and renowned seats of Arbitration because of the well-developed infrastructure, modern national legislation, and a strong position as a financial and commercial centre in Asia. Singapore has a wide spectrum of efficient arbitrators from across the globe ranging from seasonal dispute resolution generalists to highly specialized practitioners and expertise covering the entire legal and technical area of intellectual property. The Courts of Singapore is famous for its integrity, cost-efficiency, neutrality, competency and impartiality and also offer a high level of support for arbitration with minimum intervention. Moreover Singapore has many renowned local and overseas law firms and professionals who expertise in arbitration.

The obsequious nature of the people of Singapore towards the legal system is a notable factor. Singapore also welcomes foreign arbitrators and allows them to arbitrate in Singapore without a work permit and without withholding tax. According to the Singapore laws only a Singapore qualified lawyer from Singapore law practice can appear before the High Court for International arbitration related matters even though the original contract which was the subject matter of the arbitration may have been governed by a foreign law. Singapore also ensures that the arbitration legislation is kept responsive to the global legal and commercial developments. A recent study shows that Singapore is challenging the established centres of arbitration like London, Paris and Stockholm. Another factor that favours Singapore is its geographically convenient location and this makes it a neutral venue for parties from different parts of the globe.

The United Nations Commission on International Trade Law (UNCITRAL) the Model Law recognizes the incorporation and the enforcement of the arbitral award provisions by giving effect to the New York Convention of 1958 within its ambit. As Singapore is a signatory to the 1958 New York Convention, the Arbitral awards issued in Singapore are enforceable in over 150 UN Member states, and also in certain Commonwealth jurisdictions under the Reciprocal Enforcement of Commonwealth Judgement Act. The Awards are final and binding in nature and have no right of an appeal. In fact if parties to an arbitration can appeal it defeats the sole purpose or “raison d’etre” of arbitration.

March, 2018


Arbitration is an alternative dispute resolution process, in which the parties to a contract, present the arguments and evidence to an independent and neutral third party known as the “arbitrator” who is appointed by mutual consent or a statutory provision. This arbitrator who acts as a judge makes a determination named as an “award” which is legally enforceable and binding on both the parties.
The arbitration process is similar to going to courts, but is distinct in various forms of other non-binding dispute resolutions like mediation and conciliation. Arbitration is the best alternative to court-based litigation and it is more expedient, neutral, efficient, enforceable and confidential. The next question that arises in one’s mind is, “Which laws will be applicable here?” Well, usually the arbitration agreements seldom make any provisions for the governing law of the arbitration agreements. In International arbitration what needs to be perused are a number of factors like, the laws that govern the contract, the arbitration agreement, the arbitration procedure or the legal seat of arbitration and the law of the States where the award will stand enforceable.
The arbitration agreement is a contract in its own right, and is separable from the substantive contract entered into by the parties .This depicts the doctrine of separability which means that the arbitration agreement can be governed by a different law than that of the governing law of the substantive contract. It is always advisable to incorporate a governing law clause in the arbitration agreement to obviate in future, and in case if it’s not specified in the agreement, then the guidelines laid down by the Court of Appeal in the English courts are referred to. Arbitration is preferred to litigation because the parties can select neutrals of appropriate nationality and choose the applicable law, language, venue and the Seat of arbitration.

Seat of Arbitration:

The seat of arbitration is also known as “the place” of arbitration or “the locale” and plays a significant role in arbitration as it determines the governing procedural law of the arbitration and the enforceability of the award. It is the legal jurisdiction to which the arbitration is tied and will determine the procedure or rules which govern the arbitration and also makes the mandatory national laws of that country applicable. The canonical model for arbitration is based on “lex arbitri” which means ‘the law of arbitration’ and this varies from country to country. It also contains provisions that regulate the internal and external elements like the composition and appointment of the tribunal, requirements for the arbitral procedure and due process, the enforceability of award, the neutral nature, and many more.
The Geneva Protocol on Arbitration Clauses 1923 exemplifies an early perception that the law applicable to the arbitration should be that of the arbitral seat, and the arbitral procedure including the constitution of the arbitral tribunal shall be governed by the will of the parties and the law of the country in whose territory the arbitration takes place. The basic approach of the Model law is that the law applicable to each arbitration (the lex arbitri) will be the law of the place where the arbitration takes place (the lex loci arbitri) and the selection of the “Seat” of arbitration ordinarily results in the arbitration being conducted in accordance with the jurisdictions legal framework, with such derogations or variation as may be permitted. So if Singapore is selected as the “seat” of arbitration, it mandatorily and automatically adopts the Singapore Arbitration Act or the International Arbitration Act. The place of arbitration is different from the physical venue of arbitration which is the place where the arbitral tribunal carries on the hearing witnesses, experts or the parties. Traditionally the most popular seats of arbitration were London, Paris, New York and Geneva, where the oldest arbitral institutions are based, but the latest surveys shows Singapore growing to be one of the most popular preferences.
The International Arbitration Survey, conducted yearly by the School of International Arbitration since 2006 has depicted improvements and innovations in International Arbitration practices and trends worldwide. It has Ranked Singapore as the fourth most preferred and widely used seat in the 2015 International Arbitration survey, making Singapore a leading venue for international Arbitration. Asia has seen a significant growth in Arbitration due to the global economic evolvements making the two financial centres of Asia, Singapore and Hong Kong major seats in that region.

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