Executive summary
- Parties should be able to clearly identify governing law (e.g. English, Swiss, New York etc), jurisdiction (England & Wales, Geneva, New York etc) and forum (ad-hoc arbitration, institutional arbitration, state courts etc) applicable to their potential shipping disputes.
- English law generally gives strong effect to party choice. If the contract clearly chooses English law, London arbitration or the English courts, that choice will usually be respected.
- In shipping, the answer to which law applies and where disputes are resolved is often spread across more than one document. A charterparty, bill of lading, insurance policy and sale contract may not all point to the same law or forum.
- London arbitration is popular because it combines party autonomy, specialist decision-makers, confidentiality and strong award-enforcement machinery. London courts are popular because they have very deep expertise in shipping disputes.
- Where it is not clear which law applies or where the dispute should be resolved, the fight can become expensive very quickly. This may be the case where law and forum clauses are badly drafted, where different documents contain different resolution clauses or where there are inconsistencies between standard form documents and riders. All these issues may delay resolution of disputes, and may even result in a party losing on an otherwise wining argument (e.g. where the case is commenced in the wrong forum and the limitation period then expires).
- The first practical question is therefore not who is right on the merits, but where, under what law, and before which tribunal that merits fight will be decided.
Introduction: three separate questions
5-001 These are usually the first questions to ask because they shape everything that follows. A trader may have an excellent substantive claim and still lose time, money or leverage if proceedings are started in the wrong forum, against the wrong party, or under the wrong legal assumptions.
5-002 Governing law, jurisdiction and arbitration must be kept separate. Governing law answers which legal system decides the parties’ rights and obligations. Jurisdiction answers which court may hear the dispute. Arbitration answers whether the parties have chosen a private tribunal instead of a court. Those questions often point in the same direction, but they do not have to.
Reading the contractual stack
5-003 The safest starting point is always the express wording of the contract. Many charterparties, sale contracts, bills of lading, insurance policies and guarantees state the governing law and dispute forum in clear terms. Where they do, English law generally takes that bargain seriously. In commercial shipping, that respect for party choice is one of the main attractions of the system.
5-004 The difficulty is that a shipment rarely sits on one contract only. The sale contract may choose one law, the charterparty another, and the bill of lading may incorporate terms from the charterparty without repeating them in full. Traders therefore need to read across the whole contractual stack instead of assuming that one clause governs every related dispute.
5-005 Bills of lading deserve particular care. A bill may incorporate a law and arbitration clause from the charterparty under which it was issued. If that happens, a cargo claim may be pulled into London arbitration even though the bill itself looks simpler on its face. Much of the early argument in shipping disputes is therefore about incorporation, identification of the relevant charterparty, and whether the clause is wide enough to catch the dispute that has arisen.
The English approach to dispute clauses
5-006 English law is commercially robust on dispute clauses. It usually approaches them on the basis that rational businesspeople intend one-stop resolution of their disputes, not fragmented litigation in several countries. That does not eliminate construction fights, but it does mean that English courts and tribunals are generally reluctant to read arbitration and jurisdiction clauses narrowly without good reason.
London arbitration and the seat
5-007 London arbitration remains popular for practical reasons. Parties can choose specialist arbitrators, tailor procedure, preserve confidentiality and obtain an award that is generally easier to enforce internationally than a court judgment. In maritime contracts that combination is often more important than any abstract preference for arbitration over litigation.
5-008 Arbitration also has its own legal structure. The tribunal may rule on its own substantive jurisdiction, and the English court can support the process in suitable cases by measures such as evidence orders or other interim relief. That combination of arbitral autonomy and court support is one reason why London remains deeply embedded in standard shipping contracts.
5-009 The seat of arbitration must not be confused with the governing law of the main contract. A contract may, for example, choose English law but provide for arbitration in Paris or Singapore. Equally, parties may choose London as the seat while leaving the substantive contract to another law. Those combinations are legally possible, and when they exist they must be analysed carefully rather than treated as drafting noise.
When there is no effective choice
5-010 If there is no effective express choice of governing law, the answer does not disappear; it has to be worked out through conflict-of-laws rules. In English law, contractual choice still comes first. In the absence of choice, connecting factors such as the characteristic performance of the contract and its closest connection may become important. But by the time parties are arguing about those matters, cost and uncertainty are already rising.
5-011 If there is no effective forum clause, jurisdiction becomes tactical very quickly. The claimant may look for the court with the best procedural tools, fastest route to judgment, or best access to security. The defendant may argue that another forum is more appropriate. In shipping, those arguments are rarely academic. The location of the ship, cargo, documents, witnesses and assets can all matter at once.
Remedies, assets and time bars
5-012 Forum fights also interact with remedies. A claimant may need urgent relief before the merits are decided, whether by arrest, security, freezing relief, document preservation or anti-suit relief. That is why experienced shipping lawyers often examine assets and procedural position at the same time as they examine the merits. A strong claim without a realistic enforcement path may have limited commercial value.
5-013 Time bars make these issues even sharper. Some maritime claims are subject to short contractual or statutory limits, and some forum clauses require the claimant to start in a particular place before time expires. A cargo claimant who sues in the wrong court and only later discovers that the bill required London arbitration may find that the real battleground has become limitation rather than liability.
Holding parties to their agreed forum
5-014 English courts will often act to hold parties to their agreed forum, whether that means staying English proceedings, enforcing an arbitration agreement, or restraining foreign proceedings brought in breach of contract. That approach is commercially important. It tells traders that dispute clauses are part of the bargain, not decorative boilerplate to be revisited after the dispute starts.
The trader’s checklist
5-015 The practical trader’s checklist is therefore short. First, identify every potentially relevant contract. Secondly, separate governing law, court jurisdiction and arbitration instead of collapsing them into one question. Thirdly, check incorporation wording carefully, especially in bills of lading. Fourthly, ask where the assets and enforcement opportunities are. Fifthly, check time bars immediately. In shipping disputes, those steps often matter before the merits do.
Publicly available case links
Fiona Trust & Holding Corp v Privalov [2007] UKHL 40 – Used in paragraph 5-006 for the strong English presumption that commercial parties intend dispute clauses to cover their disputes broadly and commercially. Public link
Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb [2020] UKSC 38 – Used in paragraphs 5-009 and 5-014 for the distinction between the governing law of the contract and the law governing the arbitration agreement, and for English support of arbitration bargains. Public link
Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria [1970] P 94 – Used in paragraph 5-011 for the classic English approach to foreign jurisdiction clauses and forum disputes. Public link
Donohue v Armco Inc [2001] UKHL 64 – Used in paragraph 5-014 for the principle that English courts will ordinarily seek to uphold an agreed exclusive court clause unless strong reasons are shown. Public link
UniCredit Bank GmbH v RusChemAlliance LLC [2024] UKSC 30 – Used in paragraphs 5-007 and 5-014 for the modern Supreme Court restatement that parties should generally be held to their contractual forum bargain, especially where arbitration is chosen. Public link
Toyota Tsusho Sugar Trading Ltd v Prolat SRL [2008] EWHC 925 (Comm) – Used in paragraph 5-008 for the point that English courts may in an appropriate case determine jurisdiction issues connected with an arbitration agreement. Public link
