NY ARBITRATION GROUP MAKES AMENDMENTS TO CLARIFY RULES

Maritime arbitration is a contractual proceeding whereby the parties to a maritime dispute, in order to obtain an inexpensive and speedy final disposition of a matter, select arbitrator of their choice and by consent submit the controversy to the arbitrators, rather than to a court for determination. Most of these arbitrators are commercial shipping people and members of well-establish arbitration associations.

The Society of Maritime Arbitrators of New York is considered by many in shipping to be one of the leading maritime arbitration associations in the world. This professional, non-profit organization is dedicated to promoting sound arbitration practices in maritime disputes. The 130-member Society recently promulgated far-reaching amendments to its arbitration rules that may provide the global shipping community with swift and cost-efficient methods for the fair disposition of maritime controversies.

The amended rules, which come into effect on May 10, consist of a preamble and 37 sections. The rules are clearly written and free from legal jargon. The sections give practical guidance on subjects such as how to initiate an arbitration, the appointment of arbitrators, procedures and oral hearings and guidelines for arbitrating on documents alone.

The amended rules make three major changes to the societies’ former rules. These changes deal with the awarding of attorneys’ fees, the consolidation of disputes and a procedure for avoiding court proceedings to compel a recalcitrant party to arbitrate.
With regard to attorneys’ fees, the arbitration panel must address the issue of attorneys’ fees and costs incurred by the parties. The panel also is empowered to award reasonable attorneys’ fees and expenses or costs incurred by a party in the prosecution or defense of the case.

Consolidation of Proceedings
Under the amended rules, the parties may agree to consolidated proceedings involving related contract disputes with other parties arising from common questions of fact or law. Consolidation should make arbitration more cost-effective, quicker and help eliminate inconsistent results.

Under the U.S. Arbitration Act, when a party to an arbitration clause refuses to appoint an arbitrator, the claimant must petition the U.S. District Court to compel arbitration and to appoint an arbitrator on behalf of the recalcitrant party. Under the new rules the claimant can demand that the other party appoint its arbitrator within 20 days, failing which the claimant (not the court) will appoint an arbitrator on the recalcitrant party’s behalf.

The new rules also mandate that the arbitrators have a duty to issue a reasoned written award no later than 120 days after the final evidence or briefs have been submitted and the parties have been notified that the proceedings have been closed.

The rules also permit parties to utilize the S.M.A. shortened arbitration procedure, which offers an economically sound and sensible solution for small and simple claims. Here the parties are encouraged to agree upon a sole arbitrator. If unable to do so, a panel of three arbitrators will be formed. If the defending party fails to appoint its arbitrator within 15 days, the arbitrator appointed by the claimant becomes the sole arbitrator. The shortened procedure normally proceeds by mail on documents alone.

The amended rules, which come into effect on May 10, consist of a preamble and 37 sections. The rules are clearly written and free from legal jargon. The sections give practical guidance on subjects such as how to initiate an arbitration, the appointment of arbitrators, procedures and oral hearings and guidelines for arbitrating on documents alone.

Those interested in obtaining a complimentary copy of the new rules or learning how to incorporate them into maritime contracts should telephone the S.M.A. at (212)483-0616.


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