International Maritime Arbitration and the Rotterdam Rules: A New Perspective on Party Autonomy

• Author: Joshua Taylor
• Position: I am grateful to Associate Professor Paul Myburgh of the University of Auckland Law Faculty for his helpful contributions and comments in writing this paper
• Pages: 25-43

(2014) 28 ANZ Mar LJ

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INTERNATIONAL MARITIME ARBITRATION AND THE ROTTERDAM RULES:

A NEW PERSPECTIVE ON PARTY AUTONOMY

Joshua Taylor*

Rotterdam Rules - A set of rules dreamed up by the United Nations to govern the international carriage of

goods, with a special focus on the rights of landlocked countries. Thirteen years in the making, the Convention

on Contracts for the International Carriage of Goods Wholly or Partly by Sea (to give it its full, grey name)

takes us back to pre-Hague Rules days and carries on the tradition of producing something for everybody which

meets the needs of nobody. – Chris Hewer, December 2012, The Arbitrator

1 Introduction

In 2009 the United Nations presented a document, developed by its Working Grou p III under the United

Nations Commission on Trade Law (UNCITRAL), for signatures by member states as the new regime for

shipping liability. The document is called the United Nations Convention on the Carriage of Goods Wholly or

Partly by Sea, to be known commonly as the Rotterdam Rules. Containing a chapter on arbitration, the

Rotterdam Rules followed the precedent set by the Hamburg Rules in regulating forum selection clauses in

contracts for the carriage of goods by sea. The chapter was hotly debated so that, along with the chapter on

jurisdiction, provisions had to be made that contracting states to the Rotterdam Rules will only be bound by this

chapter if the states take a further step by opting in.

The effect of this chapter is, for specific maritime contracts, to limit party autonomy to choose an exclusive

arbitral forum in arbitration clauses and enforce a choice of places connected to the dispute. So a clause in a

maritime contract affected by Chapter 15 requiring arbitration to take place in location A would not be binding

on the claimant. Instead the claimant could bring arbitral proceedings in any of the places listed in Chapter 15.

While in an ideal world the place would have no substantive effect on the fairness of any arbitral tribunal, in

reality the choice of place is a significant factor as parties seek a convenient and economical forum that is

sympathetic to their interests.229 This drives the controversy as taking away the contractual stipulation of place

is considered by some to be a revolutionary break from party autonomy.

When the UNCITRAL Working Group III decided to include a chapter on arbitration, the debate and

submissions by interested parties were substantial and opinions were diverse. Some are strongly on the side of

party autonomy and abhor this intrusion onto freedom of contract. Others take a permissive approach

considering that a chapter on arbitration is necessary for the coherence of the Rotterdam Rules as a whole,

especially in relation to the chapter on jurisdiction. The end result is that Chapter 15 on arbitration is a unique

and complex compromise between party autonomy and mandatory rules. In the author’s humble opinion, this

chapter now reasonably accurately, in theory, represents the current reality of party autonomy of maritime

arbitration. However, the provisions are also plagued with major problems making them practically unworkable.

The aim of this paper will be to discuss how party autonomy in maritime arbitration clauses can be interpreted

with a new perspective through the lens of the Rotterdam Rules and also to offer a starting point for the

discussion on how more pragmatic rules on maritime arbitration could be considered for adoption by New

Zealand.

1.1 A New Perspective on Party Autonomy in Maritime Arbitration through

the Rotterdam Rules

The author contends that when approaching maritime arbitration, there are different perceptions of how party

autonomy is understood. A compromise between party autonomy and mandatory rules must be seen to be the

sensible way to advance congruent worldwide legal regimes. The limited encroachment by the Rotterdam Rules

upon party autonomy and freedom of contract in arbitration clauses, in bills of lading and other contracts of

carriage of goods by sea, is in many ways appropriate when considering the unique nature of maritime

arbitration and the current legal impositions on maritime arbitration agreements. The prevalence of ‘copy and

* I am grateful to Associate Professor Paul Myburgh of the University of Auckland Law Faculty for his helpful contributions and comments

in writing this paper.

229 Sabena Hashimi, ‘The Rotterdam Rules: A Blessing?’ (2012) 10 Loyola Maritime Law Journal 227, 256.

International Maritime Arbitration and the Rotterdam Rules

(2014) 28 ANZ Mar LJ

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paste’ arbitration clauses,230 fitted into the transport document by the carrier, which designate unsuitable and

distant locations for arbitral proceedings necessitate that it must be possible, in some cases, for arbitration to be

held at a place connected with the dispute.

In this paper, the author will use the mechanics and effects of Chapter 15 of the Rotterdam Rules on arbitration

as the context by which party autonom y in maritime arbitration can be seen in a new perspective. Through

examining the development of the rules and by comparing the relationship between party autonomy and the

Rotterdam Rules in maritime arbitration and other regimes affecting arbitration such as the Hamburg Rules,

Canadian law, United States law, Australian law, and the international air carriage liability regimes, the author

will show that ultimately the Rotterdam Rules represent no major break from global legal trends. Criticisms of

the arbitration chapter will be given du e attention and potential directions for expanding on this fresh outlook on

maritime arbitration will be postulated.

1.2 The Development of Maritime Arbitration

Maritime arbitration is the result of a marriage between two different fields of law – maritime law and

arbitration law. The rise of modern international commercial arbitration is a relatively recent triumph of party

autonomy in the last century. Arbitration agreements are contractual arrangements to have disputes solved by an

independent arbitrator instead of the courts. Prior to 1958, arb itration clauses were generally frowned on by

courts in many jurisdictions as ousting the jurisdiction of the court. However, signed in 1958 and entering into

force in 1959, the New York Convention on the Enforcement of Arbitration Agreements (New York

Convention)231 unified the law internationally on arbitration agreements by confirming and upholding their

enforceability and the freedom of parties to contract into them. The New York Convention was such a success

that now in many states the only practical answer to an in ternational commercial dispute is arbitration.232

In contrast to arbitration, maritime law is an aged branch of law , developing mainly as a civil law concept.233

Developed to accommodate taxes, international customs and statecraft, maritime law is most recognisable for its

mandatory rules and international legislative cooperation or at least uneasy compromise to encourage uniform

practice. While this may be an overly romantic assessment, none can deny that maritime legal instruments and

practices diverge from traditional common law rules, such as the way in which the bill of lading bends the rule

of privity of contract.234 A prominent Australian judge, Justice James Allsop in talking about maritime law

stated that due to shipping’s ancient nature and its status as a universal and necessary activity to commerce, the

field ‘has always revealed a striking degree of uniformity’ through compulsory rules.235 Thus, the value placed

on party autonomy in arbitration is different to party autonomy in maritime law. The former was a recent

worldwide legislative movement to protect and uphold parties’ freedom of contract and values party autonomy

highly. The latter is a legal tradition where the imposition of mandatory rules has been seen as necessary to

balance competing interests and enhance uniformity and sees party autonomy as one of many competing

principles.

Maritime arbitration has developed rapidly in spite of its mixed parentage. Now is the ‘golden age’ of maritime

arbitration due to worldwide respect for the arbitration process, judicial cooperation with the arbitration industry

and near universal enforcement of arbitral awards.236 While vulnerable to substandard legislation, in current

practice all forms of commercial arbitration remain a legal success.237 Notable maritime arbitration centres,

such as those in London, New York, Singapore and Tokyo, have established reputations in dealing with

maritime disputes and most arbitration clauses in maritime contracts are based on one of their model clauses,

230 It is well known that a great number of shipping cases arise due to contracts which are constituted of terms and clauses copied from

standard form bills of lading. These contracts are usually unworkable in the circumstances and lead to needless litigation beneficial only for

use as case studies in contract law textbooks.

231Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10 June 1958, 330 UNTS 3 (entered

into force 7 June 1959).

232James Allsop, ‘International Maritime Arbitration: Legal and Policy Issues’ (Paper presented to the Australian Maritime and Transport

Arbitration Commission, Sydney, December 4 2007) 1.

233Gordon W Paulsen, ‘Historical Overview of the Development of Uniformity in International Maritime Law’ (1983) 57 Tulane Law

Review 1065, 1078.

234Bradley Giles, ‘Caution sounded on ‘passion for maritime arbitration’ (1999) Northern Law News 9, 9.

235 Allsop, above n 4, 5.

236 Russell J Cortazzo Jr, ‘Development and Trends of the Lex Maritime from International Arbitration Jurisprudence’ (2012) 43 Journal of

Maritime Law & Commerce 255, 256.

237 Ibid.