The Revolving Seat

We are grateful for opportunity to present this paper at the recently concluded ICMA XXIII wonderfully hosted by SCMA at Singapore. 

1. In international commercial contracts, parties may sometimes look at derailing the dispute resolution clause(“DRC”), such as the exclusive jurisdiction of a court, given that parties may have advantages in litigating in their preferred jurisdiction. In our last paper, “Arbitration for Liner Bills of Lading”, presented at ICMA XXII, we argued that Arbitration was the best fit for dealing with Liner Disputes. This paper is a continuation of our earlier paper with its stated aim of ensuring that the arbitration clause provided in DRC’s in Liner Bills of Lading (“B/L”) are not derailed as may be generally seen in the case of litigationⁱⁱ.
2. Our intention in this paper is to consider whether:
   1. The various Arbitration Clauses presently being used in the Shipping Industry are fit for purpose for Liner B/L’s.
   2. The use of an arbitration clause providing for the seat of the cargo interest would satisfy the domestic legislation to avoid any potential challenges to the arbitration.
3. Based on available statistics, it does appear that the shipping industry prefers ad-hoc/unadministered arbitration instead of the institutional modelⁱⁱⁱ. LMAA continues to be the forerunner followed by SCMA, SMA and The model arbitration clauses are broadly similar in that they provide the application of their Rules with some differences as stated below:
   1. LMAA: The model arbitration clause^iv provides for the application of English Law as the law of the contract and seated in London.
   2. SCMA: The model arbitration clause^v allows parties to choose the law of the contract (although it is mentioned as Singapore Law, it can be amended to another law such as English Law) and seated in Singapore.
   3. SMA: The model arbitration^vi clause does not provide for any specific law of the contract. It however provides for the arbitration to be governed by the United States of America Federal Arbitration Act.
   4. HKMAG: The model arbitration clause^vii is like the LMAA clause and provides for either the application of English or Hong Kong Law seated in Hong Kong.
4. Arbitration does not exist in a legal vacuum but is regulated by
   1. the procedure that has been expressly agreed or adopted by the parties (say the LMAA, SCMA, SMA or HKMAG Rules), and,
   2. the law of the place of the arbitration, called the Seat. This is well established both in theory and practice of international arbitration. The New York convention^viii maintains reference to the law of the country where the arbitration takes place^ix and to the law of the country where the award is made^x.
5. For the award to be enforceable, it is crucial that the arbitration should not be invalid in the place where it is seated and/or it should not be contrary to the public policy where the award is being enforced^xi. A party therefore has 2 choices, which are commonly called as Active^xii and Passive^xiii defenses to derail the arbitration by
   1. Actively contending that
      1. arbitration^xiv is the incorrect mode of dispute resolution both in the arbitration and in the courts where the arbitration is seated
      2. the Arbitrators were not appointed based on their qualifications^xv or based on the agreed appointment procedure^xvi.
      3. the appointed arbitrators are not impartial^xvii.
      4. the arbitration tribunal lacks jurisdiction^xviii.
      5. …
   2. Passively awaiting the award and denying the enforcement based on the defenses available in the enforcement jurisdiction^xix.
6. If the arbitration is seated in the jurisdiction where it is to be enforced, the opportunity for the passive defense is lost given that it is inconceivable that the arbitration proceedings would proceed if it was contrary to the laws of the Seat. This being the case, respondents would be compelled to either deny the jurisdiction of the arbitral tribunal^xx or initiate action in the courts^xxi where the arbitration is seated to deny that there was any agreement to arbitrate, or valid consent to arbitrate or that the matters raised in the arbitration were not what was agreed. Accordingly, if the “Seat” chosen is the place where the award is meant to be enforced, then the initiating party would need only to focus on the Active defenses and not on the Passive defenses.
7. S 11(3) Australian Carriage of Goods by Sea Act 1991 (“Australian COGSA”) provides for foreign seated arbitration clauses incorporated in B/L^xxii to be invalid i.e. for the arbitration to be valid, the arbitration should be seated in Australia. Accordingly, if Liner B/L’s are issued to Australian counterparties (either Shipper or Consignee) and with an arbitration clause, the arbitration must be seated in Australia to be valid under Australian COGSA.
8. Most of the countries have either incorporated the Hague or Hague Visby (“H/HV”) Rules (either as a signatory or without being a signatory to the convention) and legislated the same^xxiii. While the H/HV Rules do not expressly provide for any specific jurisdiction, Art III Clause 8^xxiv of H/HV Rules provides that any clause which lessens the liability as provided in the H/HV Rules would be null and void. This being the case, an argument can be made, at least, in certain jurisdictions that the provision of either litigation or arbitration in another jurisdiction against the cargo interests may result in a reduction of the liability such that it runs contrary to Art III R 8 of the H/HV Rules and therefore should be null and void.
9. The later cargo conventions, the Hamburg^xxv and the Rotterdam Rules^xxvi (which are not widely used such as theH/HV Rules), provide for the plaintiff with a choice of various jurisdictions in which to initiate action. The Rotterdam Rules go further by expressly providing for the plaintiff to pursue the Carrier i.e. the option is available to the Plaintiff (presumably, the Carrier will pursue the cargo interests in a jurisdiction where they have best chances of success in enforcing the judgement i.e. where the cargo interests are based^xxvii).
10. Some jurisdictions require that the counterparty expressly consent to foreign jurisdiction and/or arbitration for it to be valid. This is understandable given that the intention is to ensure that the weaker party is expressly aware of the contractual provisions and has expressly agreed to the same. In the case of a Liner B/L, the contractual terms and conditions are rarely if ever agreed^xxviii between the Carrier (who is in a dominant position) and the Shipper (the initial cargo contracting party). Subsequently, the B/L is generally transferred to another party who may only become aware of the terms of carriage once the B/L is transferred (by endorsement of the B/L).
11. Specifically with respect to Spain^xxix, Art 251 of Act 14/2014 of the Spanish Shipping Law on Maritime Navigation states that the BL holder acquires all rights and obligations as provided in the B/L except for the jurisdiction and arbitration and which require the express consent of the holder^xxx. Further Art 468 of the same act states that jurisdiction and arbitration clauses abroad^xxxi in a BL are considered null and void unless the jurisdiction or arbitration clause is expressly agreed upon by the consignee (third party)^xxxii.
    1. In the Joined Cases C-345/22 to C-347/22 Maersk A/S v Allianz Seguros y Reaseguros SA and Mapfre España Compañía de Seguros y Reaseguros SA v MACS Maritime Carrier Shipping GmbH & Co ECLI:EU:C: 2024:349. (Maersk Case), the European Court of Justice established that the rights and obligations of the B/L are acquired by the consignee, subject to the consignee’s national law (which in this case was Spanish).
    2. In cases where the consignee is Spanish, Spanish Law will apply such that foreign jurisdiction and arbitration clause would be null and void given that the consignee would not have expressly consented to them.
    3. Art 9(6) of the Act 60/2003 of the Spanish Arbitration Law states that the International Arbitration is considered valid when: “the legal rules chosen by the parties to govern the agreement; the rules applicable to the substance of the dispute^xxxiii; or the rules laid^xxxiv down in Spanish law”^xxxv.
    4. Arguably, if the arbitration is seated in Spain, the arbitration clause in a Liner B/L would be held valid even if there was no express consent by the Spanish cargo interests (including consignee). This would then force the cargo interests to either initiate or participate in any arbitration to deal with any disputes which may arise under the Liner BL.
12. Some jurisdictions such as Australia^xxxvi, India^xxxvii, Singapore^xxxviii, UAE^xxxix, USA^xxxx and UK^xxxxi, actively promote Alternative Dispute Resolution (“ADR”) to try to make the dispute resolution process more efficient. Arbitration is a part of ADR. This being the case, if parties do approach their courts to try and deny the application of the arbitration clause, we submit, that given that it is the overriding objective of the court to ensure efficient allocation of resources by considering ADR, the courts would be sympathetic to the use of the arbitration to deal with the dispute and may cure any defects to allow for the dispute to be arbitrated.
13. Liner B/L contracts are adhesion contracts with the cargo interests having no bargaining power to negotiate the terms. The issue of consent may well be a defense against the imposition of arbitration being the default dispute resolution process. However, given that the courts of the defendants (cargo interests) would have the supervisory power to deal with the arbitration (being the Seat), the sting would be removed.
14. Unfortunately, there is very little case law^xxxxii on the validity of arbitration clauses with respect to Liner shipping given that there are only few carriers^xxxxiii who have incorporated an arbitration clause in their B/L.
15. Accordingly, to ensure that arbitration clauses in Liner B/L’s are not derailed, it should be ideally seated in the jurisdiction where the cargo interests are based^xxxxiv. The B/L is a negotiable document of Title which is transferred from the Shipper generally in one jurisdiction, to the Consignee in another jurisdiction. Accordingly, to ensure validity of the arbitration clause, it should allow for the Seat to be the same as the cargo interest (shipper or consignee) pursuing or pursued and which means that the arbitration clause should allow for a “revolving” Seat.This will force the cargo interests^xxxxiv to take positive steps either at the arbitration or the courts in their jurisdiction to deal with the ongoing arbitration given that the option of passive defense (as detailed in Para 6) is unavailable. In addition, to ensure the arbitration clauses incorporated in the Liner B/L are binding, they must fulfill the provisions as provided in the Seat and which means that the cargo interests^xxxxvi should have been made aware of the Dispute Resolution clause by adequate notice, proper service of the proceedings, etc.
16. The other issue^xxxxvii which may crop up is the law governing the arbitration agreement given that parties may deny the use of arbitration as the dispute resolution process due to say capacity^xxxxviii. This may be expressly provided for in the arbitration clause (to avoid any ambiguity), and in its absence could either be the Law of the Seat^xxxxix or the Law governing the Contract^xxxxx. The Law governing the arbitration agreement has implications on the validity including whether parties had capacity and consented to the use of arbitration as the dispute resolution process.
17. Accordingly, the “ideal” liner arbitration clause should stipulate that for both the seat of arbitration and the law governing the arbitration agreement to be of the jurisdiction of the cargo interests^xxxxxi who may either pursue or be pursued. The prevailing common arbitration clauses used in the shipping industry do not provide for this flexibility.
18. Correspondingly, we would suggest that the relevant wordings of the model arbitration clauses (LMAA, SCMA, SMA & HKMAG) be amended to provide as below:
    “The seat and the law of the arbitration agreement shall be the country of the Shipper or Consignee (as the case may be), even if the hearing of the arbitration takes place at another location”.
19. Arbitration clauses are rarely found in Liner B/L’s. However, there is no reason why they cannot be incorporated in Liner B/L’s to deal with disputes. Hopefully, this paper will result in reconsideration of the Arbitration Associations/Institutions to tweak their model clauses allowing for the easy use in the Liner Industry.

^i.See our earlier articles,Arbitration for Liner Contracts & Arbitration Clause – Liner Bills of Lading. Also our presentation slides for our paper at ICMA XII.
^ii. See 2.2 to 2.5 of the Dissertation of Kaushik Agnihotri submitted to the University of Southampton  in  2025  which discusses  on  these  aspects  and  which  can  be  viewed  at https://nau.com.sg/wp-content/uploads/2025/12/Analysing-the-Legal-Viability-of-Arbitration-in-Liner-Bills-of-Lading-34353224.pdf
^iii. See HFW’s Shipping Insight: Who rules the waves?
^iv. This Contract shall be governed by and construed in accordance with English law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause. The seat of the arbitration shall be England, even where the hearing takes place outside England.
The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) Terms current at the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators, one to be appointed by each party and the third, subject to the provisions of the LMAA Terms, by the two so appointed. A party wishing to refer a dispute to arbitration shall appoint its arbitrator andsend notice of such appointment in writing to the other party requiring the other party to appoint its own arbitrator within14 calendar days of that notice and stating that it will appoint its arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within the 14 days specified. If the other party does notappoint its own arbitrator and give notice that it has done so within the 14 days specified in the notice, the party referring a dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its arbitrator as sole arbitrator and shall advise the other party accordingly. The award of a sole arbitrator shall be binding on both parties as if the arbitrator had been appointed by agreement.
Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of asole arbitrator.
In cases where neither the claim nor any counterclaim exceeds the sum of US$100,000 (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current atthe time when the arbitration proceedings are commenced.
In cases where the claim or any counterclaim exceeds the sum agreed for the LMAA Small Claims Procedure and neither the claim nor the counterclaim exceeds the sum of US$400,000 (or such other sum as the parties may agree) the parties may further agree that the arbitration shall be conducted in accordance with the LMAA Intermediate Claims Procedure current at the time when the arbitration proceedings and commenced. Where the reference is to three arbitrators the procedure for making appointments shall be in accordance with the procedure for full arbitration stated above.
^v. Any and all disputes arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be referred to and finally resolved by arbitration seated in Singapore in accordance with the Arbitration Rules of the Singapore Chamber of Maritime Arbitration (“SCMA Rules”) current at the commencement of the arbitration, which rules are deemed to be incorporated by reference in this clause. This arbitration clause shall be governed by the laws of [Singapore]*
^vi.  Should any dispute arise out of this Charter, the Matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final, and for the purpose of enforcing any award, this agreement may be made a rule of the Court. This Chartershall be governed by the Federal Maritime Law of the United States. The proceedings shall be conducted in accordancewith the Rules of the Society of Maritime Arbitrators, Inc. The arbitrators shall be members of the Society of Maritime Arbitrators, Inc.
^vii. This Contract shall be governed by and construed in accordance with Hong Kong* /English* law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in Hong Kong in accordance with the Arbitration Ordinance Cap.609 or any statutory re-enactment or modification thereof save to the extent necessary to give effect to the provisions of this clause.(*) Delete as appropriate. If no deletion is made, Hong Kong law shall apply.
The arbitration shall be conducted in accordance with the HKMAG Terms current at the time when the arbitration proceedings are commenced.
The reference shall be to three arbitrators. Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a sole arbitrator and, if necessary, for the President of the HKMAG to appoint the sole arbitrator if the parties cannot agree on the appointment.
In cases where neither the claim nor any counterclaim exceeds the sum of USD 100,000 (or such sum as the parties may agree) the arbitration shall be conducted in accordance with the HKMAG Small Claims Procedure current at the time when the arbitration proceedings are commenced.
^viii. The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) is one of the key instruments in international arbitration. The New York Convention applies to the recognition and enforcement of foreign arbitral awards and the referral by a court to arbitration.
^ix. Art. VII (2) of the New York Convention replaces the Geneva Protocol to the extent that contracting states become bound by the New York Convention.
^x. New York Convention, Art. V(1)(d).
^xi. See Art 5(2)(b) of the New York Convention which states “Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that the recognition or enforcement of the award would be contrary to the public policy of that country”.
^xii. See Fiona Trust & Holding Corp v. Privalov, [2007] UKHL 40
^xiii. See Dallah Real Estate v Government of Pakistan [2010] UKSC 46
^xiv. See S 6 of the English Arbitration Act 1996 / S 2A of the Singapore International Arbitration Act 1994 which defines what is arbitration agreement.
^xv. See S 24(1)(b) of the English Arbitration Act 1996/Art 12 of the Model Law which forms a part of the SingaporeInternational Arbitration Act 1994.
^xvi. See S 18(2) of the English Arbitration Act 1996/Art 13(3) of the Model Law which forms a part of the Singapore International Arbitration Act 1994.
^xvii. See S 24(1)(a) of the English Arbitration Act 1996/Art 11(5) of the Model Law which forms a part of the SingaporeInternational Arbitration Act 1994.
^xviii. See S 31 of the English Arbitration Act 1996 / Art 16 of the Model Law which forms a part of the Singapore International Arbitration Act 1994.
^xix. See Article V of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (NewYork, 10 June 1958).
^xx. See S 30, 31 of the English Arbitration Act 1996, Art 16 of the Model Law which forms a part of the Singapore International Arbitration Act 1994.
^xxi. See S 32 of the English Arbitration Act 1996 and Art 34 of the Model Law which forms part of the Singapore International Arbitration Act 1994.
^xxii. They    are    however     valid    if    incorporated      into     Voyage    Charterparties      –    see Dampskibsselskabet Nordon A/S v Gladstone Civil Pty Ltd [2013] FCAFC 107
^xxiii. See a list of countries which have legislated either the Hague or Hague Visby Rules in their jurisdiction.
^xxiv. Any clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss ordamage to or in connection with goods arising from negligence, fault or failure in the duties and obligations provided inthis Article or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect. A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability.
^xxv. Art 21: In judicial proceedings relating to carriage of goods under this Convention the plaintiff, at his option, may institute an action in a court which according to the law of the State where the court is situated, is competent and within the jurisdiction of which is situated one of the following places:
– the principal place of business or, in the absence thereof, the habitual residence of the defendant; or
– the place where the contract was made, provided that the defendant has there a place of business, branch or agency through which the contract was made; or
– the port of loading or the port of discharge; or
– any additional place designated for that purpose in the contract of carriage by sea
^xxvi. Art 66: Unless the contract of carriage contains an exclusive choice of court agreement that complies with article 67 or 72, the plaintiff has the right to institute judicial proceedings under this Convention against the carrier:
(a) of the following places:
(i) The domicile of the carrier;
(ii) The place       of       receipt        agreed       in       the       contract        of       carriage;
(iii) The place of delivery agreed in the contract of carriage; or
(iv) The port where the goods are initially loaded on a ship or the port where the goods are finally discharged from a ship; or
…
^xxvii. In theory, Carriers can also deal with arbitrations if initiated where they are based. However, as this is related to Carriers involved in Liner Carriage, they would be trading regularly in the jurisdiction where the cargo interests are based and would prefer to deal with their disputes in these jurisdictions to avoid any potential sanctions or enforcement against their assets in these jurisdictions.
^xxviii.  Liner B/L’s are adhesion contracts, and which are standardized, non-negotiable agreements drafted by the party with superior bargaining power and presented to the weaker party on a “take it or leave it” basis.
^xxix. We thank Kaushik Agnihotri for the research on Spanish Law and which was helpful in assessing the impact of a foreign arbitration clause incorporated in a Liner BL in Spain. We have deliberately considered Spain given that it is aCivil Law Country and where cargo interests have successfully challenged the jurisdiction of another country on the basis of national (Spanish) law even though the jurisdiction may be of another European Country.
^xxx. https://www.mjusticia.gob.es/es/AreaTematica/DocumentacionPublicaciones/Documents/Act_on_arbitration_(Ley_60_2003__de_arbitraje).PDF
^xxxi. The act provides for the clause to be void if it provides for another jurisdiction. Hence, if the arbitration clause provides for Spanish Jurisdiction or Spanish seated arbitration, it would be valid.
^xxxii. Article 468 of Act 14/2014 on Maritime Navigation.
^xxxiii. Law governing the contract.
^xxxiv. Law of the seat.
^{xxxv.https://www.mjusticia.gob.es/es/AreaTematica/DocumentacionPublicaciones/Documents/Act_on_arbitration_%28Ley_60_2003__de_arbitraje%29.PDF
 xxxvi.} Under the Civil Dispute Resolution Act 2011 (Cth), ADR must be considered prior to litigation. Parties are required to file a “genuine steps statement” which must show the steps that parties took to resolve the dispute and why ADR was or wasn’t attempted.
^xxxvii. In India, pre-litigation mediation (which is again a part of ADR) is mandatory for commercial disputes. S 89 of the Code of Civil Procedure (CPC) requires the Courts to consider referring parties to ADR after the suit is filed.
^xxxviii. The Singapore Courts strongly encourage ADR through the State Court, Supreme Court Practice Directions, the ADR offer regime in the State Courts and the presumption of ADR framework. Unreasonable refusal may result in cost penalties even to the successful party.
^xxxix. While ADR is not mandatory for all civil/commercial cases, courts encourage mediation and often refer cases to the amicable settlement centres after filing the action.
^xxxx. ADR is not required prior to initiating a civil action in the USA but many courts encourage and with some courts requiring ADR after a case is initiated.
^xxxxi. ADR is not legally mandatory in the UK but parties are expected to consider it and can be penalized if unreasonably refused.
^xxxxii. See Caravel Shipping Services Private Ltd v Premier Sea Foods Exim Private Ltd, an Indian Supreme Court judgement.
^xxxxiii. Pacific International Lines is one of the few major Liner shipping companies which has incorporated an asymmetric arbitration clause to deal with disputes.
^xxxxiv. The provisions of the various acts are to ensure that the rights of the cargo interests are balance given that they would be invariably having a weaker bargaining position.
^xxxxv. By definition, a Liner contract requires the carrier to run a Liner service which means that they should have a regular service. Given that they would be operating in the same jurisdiction where the cargo interests are based even after a dispute has arisen (unless they have ceased their service), it is inconceivable that they will not participate in any court or arbitration in the location where the cargo interests are based as this may result in the imposition of court sanctions or a default award.
^xxxxvi. Shipper, Consignee or any other party generally defined as Merchant.
^xxxxvii. This issue cropped up after our paper proposal was submitted. While this was not in our initial paper proposal, for completeness, this should also be considered to avoid any challenges to the application of arbitration as being the dispute resolution process.
^xxxxviii. In common law countries, the capacity to sign an arbitration agreement follows general contract law principles: parties must be of sound mind, not minors, and have authority to bind themselves or their principals. Lack of capacity of a party may render the arbitration agreement as invalid.
^xxxxix. See S6A of the English Arbitration Act 2025.
^xxxxx. See Anupam Mittal v Westbridge Ventures II Investment Holdings, [2023] SGCA 1, the Singapore Court of Appeal (“SGCA”) held that held that the law governing the arbitration agreement governs arbitrability at the pre-award stage, and provided some guidance regarding the application of the three-stage test (Courts will first look whether parties have expressly chosen a law to govern their arbitration agreement. Should there be no express choice, Courts will determinewhether there is an implied choice of law. Should there neither be an express nor an implied choice, courts will determine the system of law with the closest and most real connection to the arbitration agreement) laid down in BCY v BCZ [2017] 3 SLR 357 for determining the law of the arbitration agreement where the parties have not made an express choice of law.
^xxxxxi. To avoid passive defense as stated in Para 6 above.