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Maritime arbitrations: drama and all...

Maritime arbitrations: drama and all...
The New York Maritime Consortium’s “Seven Days in May” was a dramatic event held in conjunction with the Maritime Law Association (MLA)’s annual meetings.

The programme was patterned on a day-long event, “Double Jeopardy”, which ran at the recent BIMCO meetings. New York’s Consortium is comprised of the MLA, along with the Association of Ship Brokers and Agents (ASBA), the Society of Maritime Arbitrators (SMA) and New York Maritime (NYMAR), each of whom provided actors for three hours of live theatre. Superb narration was provided by Keith Heard, an attorney at local firm Burke & Parsons.

The central legal issue concerns arbitrator’s ability to order the posting of security. According to a brief from MLA member Peter Skoufalos, of the law firm Brown, Gavalas and Fromm, “orders requiring a party to post security for an arbitrated claim are part of a general trend favoring interim measures in commercial arbitrations.”

Though punctuated with humorous touches, the hypothetical but highly realistic plot follows the lives of owners, charterers, their legal counsel and their arbitrators, in the days leading up to and following a serious occurrence- a deadly explosion aboard a year-old parcel chemical tanker at the anchorage in New York harbour.

The reality of the presentation was highlighted by real-life challenges that emerged – the loaded cargo a harmless wax, and warranted to be harmless - was mis-described because it was likely contaminated, prior to loading, with volatile low flash-point components. However, the owning side is not blameless, with a ship’s officer - mindful of the company’s tight schedule - ignored concerns during the loading phase, of a “funny odor” emanating from a cargo tank that subsequently exploded.

Subsequently, the officer, ably played by long-time SMA member Tom Fox, lied to a US Coast Guard investigator, about having been informed a crew member that something was not right. Fox’s character gained further opprobrium by coercing the junior crew-member, played by Holland & Knight lawyer Blythe Daly, to also lie when queried.

The Consortium’s event had been billed as a “mock arbitration”; using real lawyers and real arbitrators- New York’s capabilities to expeditiously resolve disputes are showcased. Importantly, the panel, led by Robert Shaw, convened quickly and under the SMA arbitration clause, was able to require a party to post a bond for security of a claim. In this case, the owner had great concerns about the financial stability of the charterer, a privately held trading company, controlled by non-US investors, moving large tonnage in highly volatile commodity markets, but without much in the way of physical assets.

As in the 2014 Bimco events (held in Dubai and then in London), the audience was able to vote at certain “decision points” along the way. The voting paralleled the decision ultimately made by the arbitrators, who made an interim award requiring charterers to post substantial financial security in the event of a later decision reached in favor of the owners, even though investigations were ongoing and fact-finding was only at early stages. Veteran arbitrator David Martowski explained in a paper he wrote, “Nothing is more frustrating than for a prevailing party to discover after lengthy and costly arbitration

proceedings that there are no funds to satisfy an award in its favour.”