Back to overview

Commercial Question

London calling

updated on 04 December 2012


Why is the prominence of London maritime lawyers likely to continue?


Shipping is perhaps the most international of the world's industries, serving more than 90% of global trade by carrying huge quantities of cargo round the world. The United Kingdom used to be a major player in this industry not only because of its prominent position in shipbuilding, but also due to it being the base for traders shipping goods all over the world, and being home to Lloyd's - the leading specialist insurance market. Lloyd's may still occupy that position, but the majority of UK shipyards have closed, with most major shipbuilding work now being done in China, South Korea and Japan. Ship owners, ship operators, charterers, shippers and ship management companies are now also predominantly based outside of the United Kingdom. Nonetheless, there remain many specialised shipping law firms in the United Kingdom, both large and small, together with numerous barristers' chambers that specialise in maritime disputes. It is also the case that a vast number of shipping disputes are litigated, arbitrated or mediated in London every year.

Practically speaking, these disputes end up in London because the parties involved want them to. All contracts should, and normally do, have a law and jurisdiction clause by which the parties decide in advance where a dispute will be settled and according to which country's laws. By selecting English law and jurisdiction, the parties agree that any dispute will be heard in the English courts and that the laws applied to the dispute shall be the laws of England and Wales.

While the vast majority of parties to shipping contracts will not be based in England, a disproportionate number will select English law and jurisdiction in their contracts. For example, any of the following could contain an English law and jurisdiction clause; a charterparty between a Chinese charterer and a Marshall Islands registered ship owner operating from Greece; a shipbuilding contract between an Indian shipyard and a German buyer; or a bill of lading with a German carrier and a Thai shipper, which is then transferred to a Lebanese consignee in West Africa. Providing the clause is properly incorporated into the relevant contract, a dispute arising out of or in connection with that contract will be decided according to that clause and will usually be handled by English law qualified lawyers.

English law and jurisdiction are chosen for a number of reasons. Traditionally, the English courts are a trusted forum: they uphold the rule of law, and the judges are independent from the executive and considered to be incorruptible. The applicable court procedure is highly prescribed (in civil cases, the relevant procedure is to be found in the English Civil Procedure Rules and relevant court guides) and largely transparent. Furthermore, English lawyers have a reputation for professionalism and lack of bias, giving their clients legally sound but nonetheless commercially practical advice. Practitioners in some other jurisdictions do not necessarily have the same golden reputation. English is widely spoken and is the primary working language for most international contracts that involve a range of parties from different jurisdictions speaking different languages. In addition, London is deemed to be a particularly appropriate forum for resolving shipping disputes because of English legal precedent, meaning that there is a lot of shipping case law that can be consulted and relied on to help determine any type of maritime dispute arising. Much of English contract and tort law has been built around shipping cases, due to the numerous issues that arise when shipping goods around the world. In fact, a number of civil jurisdictions consult English shipping case law when they need to fill in the gaps which their own civil codes do not cover.

A large number of maritime disputes now go to London arbitration rather than through the English courts. Indeed, more maritime disputes are presently heard in English arbitration proceedings than in any other international arbitration centre. The parties will normally provide for their disputes to be settled in arbitration by incorporating an arbitration agreement into their contract. Alternatively, they might agree arbitration on an ad hoc basis once a dispute arises. Ideally, an arbitration agreement will specify: the particular arbitral body the parties choose to deal with their disputes (most often the London Maritime Arbitration Association, in the case of shipping disputes to be arbitrated in London); the number of arbitrators; and the method of appointment. Usually, the arbitral body selected by the parties will have its own rules of procedure which the parties must comply with.

Additionally, the provisions of the English Arbitration Act 1996 apply to English arbitration proceedings and must be read in conjunction with the arbitral body's rules and/or the arbitration agreement in the contract. In addition to the general advantages of arbitration (eg, confidential, more flexible and can be cheaper), in shipping matters it is particularly useful as it allows a tribunal of arbitrators with expertise in maritime matters to be appointed. Arbitrators with a background in the shipping industry are arguably better placed in some cases to grasp the concepts and technicalities of a shipping dispute than some judges, although that of course depends on the extent of expertise the judge in question has built up in shipping disputes during his or her career.

London arbitration is beginning to face some healthy competition from other international arbitration centres, such as Singapore, which are gaining prominence as alternative arbitration forums. Due to the increasing dominance of the Far East in shipping and shipbuilding local arbitration centres might appear more practical logistically and financially in some cases. Nonetheless, given the vast number of commercial disputes arising globally within the shipping industry and London's leading reputation as the home of experienced shipping litigators and arbitrators, as well as for its neutral and highly regarded judiciary, it is understandable why London remains the seat of arbitration of choice for the vast majority of international contracts relating to shipping.

Polly Davies is a newly qualified solicitor at Ince & Co LLP.