International shipping contracts often include arbitration clauses, particularly in cases involving vessel charters, cargo delivery, and freight payment. These clauses are added to streamline dispute resolution between parties who may be based in different countries. For companies involved in maritime trade, arbitration is often preferred over court litigation because it allows disputes to be resolved privately and more efficiently. Still, when a dispute reaches the point of legal intervention, arbitration clauses can become a source of disagreement themselves. A commercial litigation lawyer may be called in to interpret whether the arbitration clause is enforceable, where arbitration should take place, and which law applies. These issues can grow more complicated when the clause is written vaguely or involves jurisdictions that take different positions on enforcement.
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Key Legal Issues With Enforcement
Disputes over arbitration clauses typically come down to a few main questions: Is the clause valid? Does it cover the current dispute? Is it enforceable under the laws of the court where enforcement is being sought?
In maritime agreements, it’s not uncommon for parties to reference arbitration in cities like London, New York, or Singapore without identifying the rules or scope. If the underlying contract involves multiple related agreements — for example, one for cargo and another for vessel charter — it may be unclear which disputes are covered by arbitration and which must be litigated in court. This creates an opportunity for one side to argue that arbitration should not apply at all. This is why it is so important to work with a lawyer from the start.
Courts often need to determine whether the arbitration agreement was clearly accepted by both parties and whether its language is broad enough to apply to the dispute. If a party files a lawsuit in court despite the arbitration clause, the other party may move to stay the court case or compel arbitration, triggering a legal battle before the main dispute is even addressed.
International Enforcement Adds More Layers
When arbitration does proceed and results in a decision (called an “award”), enforcing that award in another country can require additional steps. If one party refuses to comply with the decision, the other may have to bring the award to a court in a different jurisdiction for enforcement. That court will consider whether the arbitration process followed appropriate standards and whether the award violates public policy.
Under international conventions like the New York Convention, most developed nations recognize foreign arbitration awards. However, enforcement can still be contested based on arguments that the original process lacked fairness or that one party never properly agreed to arbitrate. The maritime industry often involves cross-border players, and disputes can quickly spread across multiple legal systems as a maritime lawyer can explain. No matter which side of the aisle you fall on within a contract, it is important to work with legal professionals.
Practical Advice For Shipping Agreements
Businesses that rely on maritime contracts should take care when drafting arbitration clauses. The language should be specific about location, rules, and scope. Working with legal counsel who understands both commercial litigation and maritime frameworks is key to writing agreements that hold up under dispute. It is best to work with a lawyer from the start, but you can bring in an attorney at any point to review your documents.
If your business works across borders and deals with maritime contracts, having the right dispute resolution clauses in place can save significant time and cost. Contact Volpe Law LLC for legal support with contract review, arbitration clause enforcement, or related commercial disputes.