International Maritime Arbitration – Right to Appeal – 2

1. We attended SCMA’s seminar conducted on 31^st Aug 2023 on “Unfolding Conversations : To Arbitrate or to Mediate?” in which some participants suggested for the inclusion of the right to appeal on a point of law for Singapore arbitrationsⁱ and/or an appeal process in the arbitration rules. We also had the opportunity to view a panel discussion conducted by Quadrant Chambers and the LMAA on the occasion of the London International Shipping Week 2023 on The Future of Maritime Arbitration. We had the opportunity to hear Mr Paul Tanⁱⁱ, a well-known arbitration lawyer, speaking at the Singapore Institute of Arbitrators on “Is there any law in International Commercial Arbitration?” where he argued for an opt in mechanism to the Singapore International Arbitration Act (“IAA”) allowing parties to appeal on a point of law. Finally, we had the opportunity to discuss with Jeffrey Blumⁱⁱⁱ, a well-known arbitrator / Baltic expert witness on this topic during one of his visits to Singapore. Given that we had earlier published our views on the Right to Appeal on a point of law^iv, we have reconsidered this matter afresh.
2. The main difference between the adherents of the Model Law and the English Arbitration Act is that the English Arbitration Act, section 69 allows a party to appeal on a point of law subject to either the agreement of the parties^v or with leave^vi (permission) of the court.
3. The proponents of the English system believe that parties should have a right to appeal, in limited circumstances, given that arbitrators may get a point of law wrong. In such a case, a party should have the right to appeal to ensure that the point is reconsidered by the courts and any wrong remedied.
   1. While we do admit that arbitrators, being human beings, may be wrong sometimes, this would also be in the case of judgements provided by judges (who are also human beings and therefore are fallible in nature^vii) and who would hear the matter if the right to appeal on a point of law exists. In the circumstances, if a losing party were to appeal, this would result in delays and increased costs, which we submit may not have been envisaged, at least by the non-English parties at the time they agreed to arbitrate their disputes.
   2. The fact is that pursuit of any claim either by arbitration or by the court process would require incurring substantial expenditure. This being the case, only some parties would have the necessary appetite to appeal. Accordingly, the right to appeal does not, arguably, arrive at a balance given that much would also depend on the financial resources available to the party wishing to appeal and which may in some instances derail the very reason why arbitration, as a quick and effective process, was considered.
4. Confidentiality: One of the unique features of arbitration is said to be its confidential nature. In this regard,
   1. Both the English Arbitration Act and the Singapore IAA (“IAA”) do not expressly provide for any duty of confidentiality. Parties may expressly provide for it in their agreement (which may be done by agreeing to adopt an Arbitral Rules most of which provide for confidentiality). Even in the absence of such express agreement, common law^viii, would impose such confidentiality in the absence of a contrary agreement.
   2. The recent amendments to the IAA go a step further in that section 12(1)(j) of the IAA provides the arbitral tribunal with the power to enforce the duty of confidentiality by making orders or directions as they may deem necessary.
   3. Additionally, Singapore amended the IAA in 2022 to make all arbitration related court proceedings private by default and gave the court powers to keep the information relating to the proceedings confidential. However, the fact is that even with the judgements redacted, interested parties would be able to glean on the parties involved and which would result in the loss of confidentiality.
   4. If a matter is appealed, say in an English court, then there are two possibilities.
      1. All the parties agree to the appeal, in which case the parties arguably have varied the requirement of confidentiality.
      2. If the appeal is with the leave of the court, then one of the parties may have not agreed for the duty of confidentiality to be varied. When the English Court provides its judgement^ix, it is not a given that the details of the arbitration^x would be kept confidential. Accordingly, if confidentiality is considered as one of the tenets of arbitration, then this may be breached whenever a matter is appealed on a point of law.
   5. It is our personal view that there would be immense benefit to remove the duty of confidentiality, which can be accomplished if it is expressly agreed by the parties, say by providing it in the arbitral rules. This will then result in the availability of published awards leading to parties being aware of the expertise of the arbitrators and development of the soft law for arbitration. If an arbitrator’s decision proves to be unpopular to the market, theory dictates that the market would avoid engaging that arbitrator and which will go to restore the balance.
5. The parties involved in International Maritime Arbitration come from various jurisdictions and which may not have the same philosophy as the English common law. The fact is that most nations, including other common law jurisdictions^xi, have agreed to the provisions of the model law.
   1. The LMAA sees the maximum number of maritime arbitrations. From the statistics available at the LMAA’s website, in 2022 the LMAA had a total of 3193 appointments with 149 being of the Small Claims Procedure (“SCP”). We also note that a total number of 420 awards were issued with 88 being under the SCP. While the awards issued may also be of appointments in earlier years, for the purpose of this article, we will consider this as the running number and ascribe this to the year 2022. Accordingly, the percentage of SCP awards to the total awards is approximately 21%. When we consider number of references and the awards published, we note that approx. 13% of the references in 2022 (on the running number basis) go on to reach a full award (the earlier years show a higher figure and therefore the adjusted figure should be around 20%). One of the comments we came across on the SCP is that SCP led to a higher percentage of Awards^xii. This is also evident from the statistics that in the year 2022, 149 appointments led to 88 awards i.e., about 59%.
   2. If we consider all the other arbitral institutions, they are mainly institutional in nature and therefore parties would only initiate arbitration when negotiations have failed (as they would have to make payment of at least the first tranche of fees). This being the case, we submit that this barrier of payment of advances will result only in lesser references, and which would then proceed to the award – say 80%. Our rough estimate from statistics readily available on the internet^xiii suggests that there are about 357 references made to the other institutions for Shipping and related matters, which would result in say approx. 286 awards or so (basis 80% proceeding to award) in comparison say with 420 awards of LMAA in 2022. We believe that there would be other maritime arbitrations below the radar such that the actual market may be evenly divided say between English^xiv and non-English arbitrations. The point we are trying to make is that the world of maritime arbitration appears to be evenly divided between the two camps i.e., with and without the right to appeal.
6. With respect to LMAA arbitrations, we understand that they mainly consist of Charterparty disputes^xv and are generally funded by FD&D clubs, who as a matter of history are based in London, and who may be certainly happy with the status quo. It would be incorrect to consider the same provisions for say disputes which are not funded or are not C/P disputes. Maritime Arbitrations^xvi not only include C/P disputes but also any dispute connected with shipping. This being the case, while we are certainly happy for LMAA and London seated arbitration to continue with the prevailing process, we believe that it would be best for other seats to deal with shipping related disputes in their own fashion instead of mirroring the English pattern.
7. Final thoughts:
   1. While there may be clamor from English lawyers and the FD&D clubs comfortable with the English system, this does not mean that the other processes are unfair. Instead, parties have a right to choose what process best suits their needs. Parties rarely consider the issue of appeal on a point of law at the time of negotiating their contracts, particularly if there is a fair system for dispute resolution process to deal with their disputes.
   2. If the aim of arbitration is to ensure affordable and quick justice, having a right to appeal may go against this and instead unnecessarily delay and escalate costs. Hence, we argue against any imposition of this right, at least into any of the other maritime arbitration rules and/or legislation.
   3. If the parties so desire that they should have a right to appeal on a point of law, then this should be expressly provided in the arbitration clause so that it reflects the parties express choice instead of being fait accomplii.

We thank Dr Arun Kasi of 4-5 Gray’s Inn Square /  Arun Kasi & Co for reviewing this article. The views expressed in this article together with all errors are entirely ours.

^i. Arbitrations seated at Singapore and which would apply the curial law of Singapore. The Singapore International Act 1994 incorporates the Model Law. Art 34 of the Model Law  only permits a party to make an application to the courts, in this case the Singapore Courts,  to set aside the arbitral award . The English Arbitration Act 1996 while allowing for right to set aside as provided in S 67 & S 68, has an additional right in S 69 to appeal on a point of law.
^ii. Partner at Gibson Dunn, Singapore.
^iii. https://www.linkedin.com/in/jeffreydblum/?originalSubdomain=uk
^iv. See our earlier article, International Maritime Arbitration – Right to Appeal
^v. S69(2)(a) of the English Arbitration Act
^vi. S68(2)(b) of the English Arbitration Act
^vii. See an article on Human, all too Human: Human Fallibility and the Separation of Powers and which touches on the fallibility of humans.
^viii. Both English and Singapore Common Law.
^ix. We understand that under CPR 62.10, the default position is that an application under s 45 for determination of a point of law during the arbitral proceedings or an appeal under s 69 are heard in public, and all other “arbitration claims” are heard in private. However, the court may make an order that modifies the default position. The general tendency of the court might be to prefer “private” rather than “public” hearings, although this cannot be taken for granted.
^x. See “Privacy and confidentiality of arbitration – related court proceedings : a culture clash” . Also Herbert Smith Freehills article on the English Law Commission Report on the amendments to the English Arbitration Act.
^xi. For instance – Australia, Brunei, Canada, India, Malaysia, Singapore, Sri Lanka are all signatories of the Model Law. In fact, 88 of the 121 jurisdictions have been influenced by Model Law.
^xii. See article by BDM, The pros and cons of arbitrating under the LMAA Small Claims Procedure
^xiii. See HFW – The Maritime Arbitration Universe in Numbers
^xiv. By English, we mean Arbitrations seated in England and Wales and which provides for the right to appeal in S69 of the English Arbitration Act 1996.
^xv. We do not have any statistics to back this assertion. However, anecdotal evidence does suggest that 80% of LMAA arbitrations are with respect to C/P disputes.
^xvi. We recently heard a pod cast on “a spotlight on maritime arbitration” by ReedSmith and who have defined Maritime Arbitration to include any matters connected with any ship related disputes, Charterparties, carriage of goods by sea including  bills of lading including and contracts of affreightment, pooling agreements, carriage of passengers, specialized cargoes, ships fuel, shipbuilding and repairs, ships sale and purchase, brokerage, management of ships, casualties, marine insurance….