MARITIME ARBITRATION AND CASE LAWS DEVELOPMENTS IN INDIA BY - DR. SHAJI. M
MARITIME
ARBITRATION AND CASE LAWS DEVELOPMENTS IN INDIA[1]
AUTHORED BY - DR. SHAJI.
M
Abstract
Nautical
arbitration in India is rapidly becoming an efficient and specialized method of
resolving nautical disputes arising from contracts, marine insurance, and international
trade. The Arbitration and Conciliation Act of 1996 forms the base of India's
structure of arbitration, embracing standards of UNCITRAL, and has established
an arbitration-friendly atmosphere. Major cases have been decided by the
judiciary to determine the process of maritime arbitration, like M.V. Elizabeth
v. Harwan Investment and Enrica Lexie. The legislative efforts recently
include, inter alia, the Merchant Shipping Bill, 2024 and the Coastal Shipping
Bill, 2024 that aims at reforming the country's marine legislation to develop
India's blue economy. The Gujarat International Maritime Arbitration Centre
clearly represents a watershed moment in India's progress toward becoming a
global maritime arbitration power. Improved infrastructure, good arbitrators,
and convergence with international rules are the foundations upon which India's
maritime arbitration sector has significant potential to enhance trade growth,
cut litigation costs, and strengthen the country's maritime economy.
Keywords: Maritime Arbitration, Legislative Reforms, Dispute Resolution, case
laws
Abbreviations and Acronyms
·
UNCLOS
- United Nations Convention on the Law of the Sea
·
UNCITRAL
- United Nations Commission on International Trade Law
·
ICA
- Indian Council of Arbitration
·
MoU
- Memorandum of Understanding
·
PCA
- Permanent Court of Arbitration
·
SBT
- Southern Bluefin Tuna
·
EEZ
- Exclusive Economic Zone
·
GMU
- Gujarat Maritime University
·
GISMARC
- Gujarat International Maritime Arbitration Centre
Introduction
According to Halsbury,
Arbitration means:
"Arbitration
is the reference of dispute between not less than two parties, for
determination, after hearing both sides in a judicial manner, by a person or
persons other than a court of competent jurisdiction.”
Maritime
arbitration is the most commonly adopted method of dispute resolution in
international trade and business resulting from diverse operations including
ship financing, building, sale, purchase, employment, transporting commodities
along sea, insurance, and other cargo transports. Indian Council of Arbitration
came up with Maritime Arbitration Rule which is governing local and
international marine arbitration in India.
On
June 21, the Gujarat Maritime University signed a Memorandum of Understanding
(MoU) with International Financial Services Centers Authority to set up the
first arbitration and mediation center in India, known as the Gujarat
International Maritime Arbitration Centre, which is for the marine industry.
There are already 35 arbitration centers in India, however none of them
specifically service the marine industry. The Singapore Dispute Centre is
currently considering arbitration cases involving Indian parties with the
objective of establishing a world-class arbitration center specialized in marine
and shipping issues to resolve commercial and financial disputes between
regional businesses.
In
short, maritime arbitration is a unique and cost-effective method for settling
business disputes in a world that is characterized by rapid economic growth and
complete logistical services.
The proposed maritime center in India will facilitate regional arbitration and
dispute settlement and thereby make it easier for parties to navigate.
History of
Indian Maritime Arbitration
Arbitration, indeed, predates
human memory. The Arbitration (Protocol and Convention) Act 1937, Arbitration
Act 1940, and Foreign Awards (Recognition and Enforcement) Act 1961 were the
ones that existed before the Arbitration and Conciliation Act.
The Arbitration and Conciliation Act abolished these provisions. In 1985, the
United Nations Commission on International Trade Law (UNCITRAL) created the
UNCITRAL Model Law on International Commercial Arbitration.
The Arbitration and Conciliation Act of 1996 (hereinafter referred to as
"the Act") was the result of the Indian Parliament's effort to build
an arbitration-friendly framework using the Model Law.
The Arbitration Act of 1940 was outdated, according to its Statement of Objects
and Reasons. India's economic reforms will be futile without a favorable
climate for arbitration, according to the report.
In Konkan Railway Corpn. Ltd. v. Mehul Construction Co., the Supreme Court
remarked that the new law was a move to attract international focus.
The judiciary generally favored the efforts of Parliament to uphold mercantile
community, "and its interpretation has to consider all the.
Identify
Indian Maritime Economy in Modern Time
The central government
of India has proposed two steps to make the marine scene more modernized and boost
domestic waterway trade. The Merchant Shipping Bill, 2024, and the Coastal
Shipping Bill, 2024, are two such measures.
The Coastal Shipping Bill of 2024 is one of a cluster of steps aimed at
encouraging domestic shipping operators through reduction of regulatory hurdles
and increased involvement in coastal and international trades. It would
eliminate the need for Indian-flagged vessels to obtain trading permissions for
coastal activities while simplifying regulatory procedures and encouraging
local enterprises to expand their services.
It also attempts to
align Indian trade vessel regulations with global norms, allowing Indian ships
to compete in global maritime markets. The bill suggests the creation of a
National Database of Coastal Shipping to increase transparency and ensure
effective information exchange across the sector.
The Coastal Shipping
Bill of 2024 is going to utilize India's 7,500-kilometer coastline and 14,500
kilometers of navigable waterways to boost domestic trade and connectivity.
It would replace the ancient Coasting Vessels Act of 1838 by providing
financial and operational incentives to vessel operators, hence increasing
private sector participation and trade volumes. It also promotes indigenous
shipbuilding by encouraging the use of Indian-built vessels and assisting
domestic shipbuilding and repair firms, hence enhancing self-reliance in marine
infrastructure.
The Merchant Shipping
Bill 2024 aims to replace the Merchant Shipping Act of 1958 and better India's
maritime legislation.
It simplifies and harmonizes the form by combining provisions from the previous
act, eliminating unnecessary procedures, and reducing bureaucratic obstacles.
It pays particular attention to accelerating ship registration procedures,
enhancing the welfare of seafarers, strengthening marine safety and accident
management, and environmental sustainability through strict emission and
pollution restrictions and promotion of green technologies.
The reforms in these
aspects always have all the potential to properly increase maritime logistics
efficiency, lower shipping costs, strengthen supply chain reliability, for
further create investment opportunities in India. It will benefit the
environment structures of the country, make it more sustainable, and assist
this nation in meeting its climate goals by moving freight away from congested
road and rail networks toward coastal shipping. Regionally, marine reforms
would spur the development of India's "blue economy" by catalyzing
economic activity across coastal districts.
The last two are the
Merchant Shipping Bill, 2024, and the Coastal Shipping Bill, 2024. These are
major reforms in India's maritime scene looking forward to making a
sustainable, efficient, and competitive maritime sector.
Arbitration for Maritime
Disputes (Globally and Domestically)
Economic maritime
conflicts are a very complex and specialized area of law that emanates from
commercial activities involving ships and the sea. Examples of maritime law
concerns that may be involved in such disputes include carriage contracts,
charter parties, marine insurance, salvage, and collisions. Such challenges
would require a good understanding of both maritime law and shipping industry
commercial operations to be solved.
Arbitration has become
the popular way of resolving commercial marine disputes because of its
efficiency, flexibility, and experience in handling complex maritime issues. It
offers flexibility, efficiency, competence, and anonymity. The parties are able
to choose the arbitrators, the arbitration rules, and procedural parts of the
procedure. This allows parties to adapt the arbitration to their needs and
circumstances, which is particularly useful in maritime disputes that sometimes
involve technical specialist issues.
Arbitration proceedings
generally take less time and are smoother than regular litigation, which
shortens the time to resolution. This is very important in the marine business,
where timing is crucial and wrong decisions lead to huge financial losses. Arbitrators
who have hands-on knowledge and experience in maritime law and industry
procedures are likely to produce informed and sophisticated decisions than
judges who do not have the necessary skills.
Commercial marine
arbitration has confidentiality as another major advantage. Arbitration
processes are private and secret, unlike the court proceedings, which usually
attract public occurrence. This ensures parties guard sensitive information
from certain instances of delays, damaged cargo, and freight rate disputes.
Maritime arbitration has
been in the spotlight because of a defective process called forum law, where
the considerations are purely based on the domestic law itself, and which
sometimes conflicts with international customs and traditions. However, arbitration
comes with several benefits in terms of flexibility, efficiency, expertise, and
confidentiality.
The South China Sea
dispute is a territorial and maritime conflict between China and Southeast
Asian countries like the Philippines, Vietnam, and Malaysia.
In 2013, the Philippines filed arbitration proceedings against China in order
to obtain legal clarification on several important grounds of contention. The
United Nations Convention on the Law of the Sea is the essential document in
the understanding of legal aspects of the conflict as it lays down the
obligation and rights of states toward territorial seas, exclusive economic
zones, and the right of innocent passage.
In July 2016, the
Permanent Court of Arbitration in The Hague made a landmark decision in favor
of the Philippines, declaring that there was no legal basis for its claims
under UNCLOS. Although China had declared its objections under Article 298, the
tribunal ruled that the Philippines' claims were valid and would go to
arbitration. China
was held to have interfered with fishing and petroleum exploration in the EEZ
of the Philippines, violating its sovereign rights.
The South China Sea
Arbitration has significant implications, one of which is the legal
clarifications on key issues relating to the legal status of features and the
validity of the "Nine-Dash Line." However, with China dismissing the
ruling, enforcement was made cumbersome because UNCLOS relies on state
cooperation through voluntary adherence to implementation procedures in
conformance with the convention instead of a direct mechanism for its
enforcement.
The Southern Bluefin
Tuna (SBT) is the subject of the SBT Arbitration Case, which has made it a
primary focus of commercial fishing operations.
Unsustainable fishing practices have prompted worries regarding the maintenance
of SBT supplies, as well as potential long-term damage to the marine ecology.
Many other UNCLOS
clauses of high importance apply to this arbitration, including Article 61,
which outlines basic principles on how states should cooperate with one
another, and Article 64, which encourages states to cooperate with regional or
international organizations while being guided by the best available scientific
information.
UNCLOS Article 287 outlines the arbitration procedure available to states if
concerns exist regarding the interpretation and application of the convention.
This final case is that of Southern Bluefin Tuna Maritime Arbitration, which
falls within international law and maritime arbitration as the means in which
to resolve disputes upon sustainable use of marine resources.
Case Laws
Indian Arbitration Act
1899 and Arbitration Act 1940 achieved uniformity of law throughout India,
although the decisions made under this act were not final decisions, but were
sent for judicial scrutiny. The Arbitration and Conciliation Act, 1996 embraced
UNCITRAL Model Law on International Commercial Arbitration and recognised the
concept of international arbitration, arbitral award were made final and were
compared with judgments of civil courts.
The Indian Council of Arbitration came out with the rules of marine
Arbitration, which govern both local as well as international marine
arbitrations. These regulations deal with the formation and working of an arbitration
committee, the procedure for claim and counterclaim, and the qualifications and
empanelment of arbitrators.
The Indian judiciary has
played a vital role in developing the country's maritime arbitration scene, and
the Supreme Court of India has constantly highlighted the importance of
arbitration as a speedy and cost-effective way of dispute resolution. The
Indian Council of Arbitration's Maritime Arbitration Rules are the guidelines
for domestic and international maritime arbitrations, and the court has played
an important role in developing the country's marine arbitration scene.
Maritime arbitration will rise in importance as India grows as a key role in
international trade and business.
The Enrica Lexie
incident, also called "The Italian Republic v. The Republic of
India," is an extraordinarily intricate case of international legal
contention involving issues of the use of force in international waters,
immunity, and jurisdiction.
The case was that two Indian fishermen were shot murdered by Italian marines
onboard an Italian oil ship called MV Enrica Lexie.
The killings happened in February 2012 when Italian soldiers fired into the
Indian fishing boat called St. Antony. The Indians impounded the ship, and the
two Italian officers who were on board were arrested and charged with murder.
The legal foundation of the dispute was provided by the United Nations
Convention on the Law of the Sea (UNCLOS), which under Articles 17 and 287
provides for "innocent passage" into coastal states, and allows governments
to refer disputes to arbitration.
Italy argued that India did not have jurisdiction, and India responded that the
marines should be indicted for murder. The PCA found that India had no
jurisdiction to try the Italian marines and that India must devolve power over
the marines so that Italy can prosecute the suspects. However, the PCA found
that the acts of the Italian officers infringed India's freedom of navigation,
and India is entitled to compensation for a variety of losses.
This is a right that
dates back to the reign of Edward III, to use a ship as collateral for a
maritime claim. Courts have a role in improving and supporting the process of
international maritime arbitration, and they do this through orders made to
arrest the ship to ensure security. Arbitrations pertaining to ships must be
based on the Mareva injunction, which is usually granted whenever a judge is
reasonably satisfied that a debt is overdue and unpaid, and that the debtor may
liquidate his property to avoid paying the bill before the verdict. Interim
reliefs are viewed as procedural tools used to solve critical issues during a
trial case.
The Supreme Court's
ruling in the case of M.V. Elizabeth v. Harwan Investment & Trading Pvt.
Ltd case established India as a common law country.
Article 7 of the 1952 Convention allows the Admiralty Court to seize a vessel
for the purpose of obtaining an award which can be issued by way of an arbitral
proceeding. Section 9 of the Act of 1996 states that the Court may order
provisional measures, for instance secure the amount in dispute in arbitration.
This case is relevant to the present research concern in maritime arbitration
in that the Golden Progress case led to a landmark judgment that overruled the
judgment of the court in Blue Diamond Freight Pvt. Ltd. V. M.V. Indurva Vally.
The Supreme Court held
in M/S. Crescent Petroleum Ltd. V. M.V. "Monchegorsk" & Others
that the Court "may exercise jurisdiction 'in rem' independently of the
proceedings which may be taken out against the persons liable 'in
personam'" by referring to section 35 of the Admiralty Courts Act, 1891.
That implies that any party aggrieved against any ship can initiate action
against a High Court of Admiralty and recover as many remedies that he is or
may be legally entitled as possible, absent an outright prohibition on
jurisdiction.
The Arbitration
Amendment Act of 2015 strengthened procedures for interim relief and extended
them to arbitrations that took place abroad. If a jurisdiction or arbitration
clause exists, a ship may be detained as security for a maritime claim in the
courts of another state. The International Convention on the Arrest of Ships,
1999 permits a party to bring a suit "in rem" during the pendency of
foreign arbitration. Although not ratified by India, common law concepts place
them within Indian law and are applicable to the enforcement of maritime
claims. The Supreme Court ruled in M.V. Sea Success I v. Liverpool and London
Steamship Protection and Indemnity Association Ltd the Indian Admiralty Courts
would be bound by the Geneva Arrest of Ship Convention of 1999.
If an arbitration clause is part of the contract, the other party is provided
with reasonable notice, and the claimant is entitled to defend themselves under
the Arbitration Act. If the judgment of the tribunal is binding, the admiralty
court will bring an "in rem" case.
Results
Indian
marine arbitration has developed a lot on account of the Arbitration and
Conciliation Act of 1996, which is drafted based on UNCITRAL rules. This is
highly important for India because such an exercise will help fulfill the goals
of India pertaining to marine arbitration. Case laws like M.V. The Elizabeth v.
Harwan Investment and the present scenario of Enrica Lexie show that courts
support this kind of arbitration, which has earned India its reputation over
the years as a jurisdiction friendly to arbitration. There is scope for using
reforms like the Merchant Shipping Bill, 2024, and the Coastal Shipping Bill,
2024. The bills are mostly about amending maritime rules to enable the growth
of the country's business. Reform measures always demonstrate that India
supports a structure for effective settlement of disputes, something that could
boost world trade and make the country's maritime sector more competitive.
Future Prospects
The article goes into
deep coverage of the South China Sea issue, focusing on the UNCLOS, or United
Nations Convention on the Law of the Sea. There was an arbitration case between
the Philippines and China, the SBT arbitration case, and a decision made by the
UNCLOS in 1999. The article also explores maritime arbitration, underlining its
significance in providing a streamlined, specialized, and confidential
mechanism for dispute resolution. Despite its advantages, there has been an
upsurge in the difficulties of enforcing maritime arbitral awards, creating
anxiety within the maritime and legal communities. The article also shows how
the strategies adopted by entities to frustrate enforcement are complex, such
as resource depletion and the international nature of maritime activities.
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