Bills of Lading – Arbitration Clause

1. We have been advocating arbitrationⁱ as the preferred dispute resolution process for Liner/NVO Bills of Lading (“Bs/L”) for the past few years as we remain convinced that this form of dispute resolution is both cost effective and efficient to deal with these disputes which are mostly low value in nature. We are delighted to note that Pacific International Lines recently amended its Bs/L wordings to provide for arbitrationⁱⁱ in their dispute resolution clause. We are hopeful that other Containers Carriers/NVO’s similarly consider arbitration as the default dispute resolution procedure instead of the prevailing process which is litigation.  
2. With respect to Bs/L issued by Multimodal Transport Operators, the prevailing legislation in India and the ASEAN Countries permit for the incorporation of an arbitration clause. In this regard, we had earlier suggested the following clauses to our clients for their consideration.
   1. Singapore
      This contract evidenced by the Multimodal Transport Document or Port to Port Bill of Lading shall exclusively be governed by Singapore/English Lawⁱⁱⁱ. Any and all disputes arising out or in connection with this contract, including any questions 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) current at the commencement of the arbitration, which rules are deemed to be incorporated by reference to this clause. However, if the claim or counter claim does not exceed USD 100,000 (United States Dollar One Hundred Thousand), the arbitration shall be conducted in accordance with the SCMA Small Claims Procedure as provided in the SCMA Rules 3^rdedition (October 2015^iv.
   2. India
      1. This MTD/Contract of Carriage shall be governed and construed exclusively in accordance with Indian Law.
      2. Any and all disputes arising out of or in connection with this contract, including any question regarding its interpretation, existence, validity or termination, shall be referred to and finally resolved by arbitration seated in India with the proceedings being conducted in English. This arbitration clause shall be governed by the laws of India. Jurisdiction for any matters related to the arbitration shall lie exclusively with the High court of _____ (depending on where the MTD is located).
      3. Unless the parties agree otherwise, the arbitration shall be conducted by a Sole Arbitrator appointed by the Gujarat Maritime Cluster (GMC)^v. The costs of arbitration, including the arbitrators and administrative fees shall be determined and allocated by the appointed arbitrator/s. Each party shall bear their own legal fees and other related expenses.
      4. Notwithstanding the above, nothing in this clause limits the right of the MTO/Carrier to bring proceedings, including third party proceedings, against the Consignor/Consignee/Merchant in any other court of competent jurisdiction or arbitral tribunal, and the bringing or continuing of proceedings in any one or more jurisdictions shall not preclude the bringing of proceedings in any other jurisdiction, whether concurrently or not, if and to the extent permitted by applicable law.

3. While we are circulating the arbitration clauses suggested earlier for consideration, we would strongly recommend that prior to incorporating them in contracts, parties should take independent advice from their lawyers to ensure that the wordings are fit for use both in the jurisdiction they are based and in the jurisdictions they operate in. Parties may also consider using the model clauses of various associations/institutions^vi and if necessary modify to allow different provisions for the law of the contract and seat of the arbitration.
4. We believe that the advantages of arbitration far outweigh the disadvantages^vii and are hopeful that Carriers/NVO’s/MTO’s amend their Bs/L wordings. This will allow parties to
   1. resolve their disputes choosing the appropriate procedure keeping in mind the amounts involved.
   2. avoid delays which may be prevailing in the other dispute resolutions processes.
   3. engage professionals well versed in the trade/subject matter to hear the disputes and provide a binding award.
   4. couple with other alternative dispute resolution processes such as mediation^viii/ expert determination.
   5. deal with the disputes by themselves^ix.
   6. easily enforce international arbitration awards due to the near universal application of the New York Convention^x.

ⁱ. See our earlier articles, Arbitration Clause for Liner Bills of Lading, Arbitration Clause – Liner Bills of Lading, Arbitration Clause in Liner Bills of Lading – is it workable?.
ⁱⁱ. See Clause 30 of the latest edition of PIL Bill of Lading Clauses which states as below:
30.1 Except as specifically provided elsewhere herein, Singapore law shall apply to the terms and conditions of this Bill of Lading.
30.2 The Merchant irrevocably agrees that any and all disputes arising out of or in connection with the contract of carriage evidenced by this Bill of Lading, 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 current at the commencement of the arbitration, which rules are deemed to be incorporated by reference in this clause.
30.3 Notwithstanding the above, nothing in this clause limits the right of the Carrier to bring proceedings, including third party proceedings, against the Merchant in any other court of competent jurisdiction or arbitral tribunal, and the bringing or continuing of proceedings in any one or more jurisdictions shall not preclude the bringing of proceedings in any other jurisdiction, whether concurrently or not, if and to the extent permitted by applicable law.
ⁱⁱⁱ. Parties to choose either Singapore or English Law by striking the other.
^iv. The latest edition of the SCMA Rules (IVth edition) does not have a Small Claims Procedure. Instead, they have an Expedited Procedure for aggregate claims and counter claims not exceeding USD 300,000.00. Parties may therefore consider either including the Small Claims Procedure provided in the SCMA Rules (IIIrd edition) or striking it out.  The clause provided for is actually the SCMA Model Clause with amends to provide for the Small Claims Procedure as provided in the earlier edition of the Rules.
^v. While we have provided GMC as the appointing authority, MTD’s can also consider other arbitral institutions to be the appointment authority.
^vi. Parties can consider model clauses of various associations/institutions such as LMAA, SCMA, SMA, HKMAG.
^vii. As indicated in our earlier post, Logistics Contract – Arbitration.
^viii. See for instance SCMA’s ARB-MED-ARB Protocol as provided in their IVth edition of their Rules.
^ix. in practice, parties generally take assistance from their lawyers but it is always possible for a party to self-represent themselves in an arbitration.
^x. In our view, this is the most important advantage of arbitration as it is easier to enforce vis-a-vis a court’s judgement given by a national court.