Disputes

Maritime arbitration

Published 28 August 2026 · updated 17 October 2026

Shipping disputes do not usually go to court. They go to arbitration, where private judges called arbitrators decide the case. Most of these cases are decided on documents alone. There is no hearing and nobody gives evidence in person. One line in the recap (the written summary of the deal) decides where this happens, under which rules, and how you start it. That line is usually agreed last and read less carefully than anything else on the page.

Why arbitration and not a court

There are three reasons, although people usually mention only one of them.

Enforcement. Under the New York Convention of 1958, the courts of its many member countries must recognise and enforce arbitration awards made in other member countries. They can refuse only on narrow grounds. No similar worldwide agreement exists for court judgments. So it is easier to collect payment on an award in another country than on a court judgment. This matters because the other party is usually in another country.

Neither side will accept the other side's courts. A Greek owner and a Chinese charterer can agree on a neutral place. They will not agree to use each other's home courts.

The arbitrators know the trade. Maritime arbitrators come from broking, ship owning, average adjusting, the P&I clubs and the legal profession. They already know what a notice of readiness is, so nobody has to teach them. That saves real money on a dispute that depends on a statement of facts.

Privacy is another reason, and it is a real one. But because decisions are not published, the industry has no public collection of past decisions to learn from. That is the main drawback of arbitration for the industry.

The four seats

The seat is the place whose law governs the arbitration.

Ad hoc means that no institution runs the case. This confuses people new to the trade. Choosing LMAA arbitration does not appoint anyone. It does not open a file with an institution, and no office sends an invoice. The parties appoint the arbitrators themselves, and the arbitrators run the case. That is why it is cheap for small claims. It is also why nothing happens unless one party acts.

Scale, and what it tells you

The LMAA reported 3,469 new appointments under its Terms and Procedures in 2025. These covered an estimated 2,015 cases, and 563 awards were published. Eighty-three of those awards followed a hearing in person.

Read the last two figures together. Well over four fifths of awards were made on the documents, with no hearing. For anyone running a desk, this is the most useful fact here. It means the documents decide the case. Nobody will be cross-examined, so a convincing witness cannot save a weak statement of facts. The evidence is the statements of facts, the notices of readiness, the recap, the bills of lading and the emails. People who were not there read them later, with no other context.

The three procedure levels

If you run a small claim under the full procedure, you can spend more on the argument than the claim is worth. The LMAA publishes three levels. All are 2021 editions and apply to arbitrations started on or after 1 May 2021:

• The Small Claims Procedure, for claims of up to 100,000 US dollars. The limit applies to the claim and the counterclaim separately, not added together. It has one arbitrator, a capped fee, and an award made on the documents only.
• The Intermediate Claims Procedure, where claims are over 100,000 US dollars but neither the claim nor the counterclaim is over 400,000, or another figure the parties agree. It has a shorter timetable and limits on costs.
• The full Terms, for everything above that.

The level is chosen in the arbitration clause, or agreed once the dispute has started. The fair time to choose it is when the deal is made, before anyone knows who will be making a claim.

The clause, and what a short one leaves out

A recap that says only "arbitration in London" leaves several things out. It does not say the seat, and so which court supervises the case. It does not say which law governs the contract, how many arbitrators there are, or which procedure applies. These gaps are filled later, either by argument or by default rules. Both cost money.

There are two more traps specific to this trade. First, old editions of some standard contract forms had no law and arbitration clause at all. That is why adding one was one of the most common rider clauses (extra clauses added to a standard form) for decades. It is not safe to name a form without checking whether it has such a clause. Second, under English law, general words are not enough to bring a charterparty's arbitration clause into a bill of lading. The bill must refer to it directly. A bill that only says it includes all the terms of the charterparty will usually not include the arbitration agreement.

Starting a claim, and the deadlines that end them

Starting arbitration is a specific formal step. It is not an intention, and it is not a letter complaining about the other side. Under English rules you usually start it by serving a notice that asks the other party to appoint an arbitrator. Or you appoint your own arbitrator and ask them to do the same. A party that has been sending strong emails for months has not started anything.

Two different deadlines apply. The charterparty's own time bar comes first and is usually short. Many voyage charters say a demurrage claim fails unless it is sent, with its supporting documents, within a set period after discharge is finished. There is also the general limitation period (the legal time limit for bringing any claim) under the law that governs the contract. For cargo claims there is also the one year time bar under the Hague-Visby Rules. If you miss the contract deadline, a good claim fails before anyone looks at whether it was right. This is the most common way money is lost in shipping disputes.

The court in the background

An arbitration with its seat in England runs under the Arbitration Act 1996, as changed by the Arbitration Act 2025. The useful changes are practical. Arbitrators now have a clear duty to disclose conflicts. Arbitrators can make awards on a summary basis, which means by a shorter procedure. There are rules for emergency arbitrators. And there is a revised procedure for challenging whether the arbitrators have the power to hear the case. Otherwise the court's role is the same, and it is a supporting role. The court can grant temporary orders, order security, enforce awards, and hear a narrow appeal on a point of law. Parties can exclude that appeal, and they often do.

What this means before there is a dispute

All of this comes down to three habits. First, write a complete arbitration clause that names the law, the seat, the rules and the level. Second, keep a timestamped record, because most awards are made from the documents by people who were never at the berth. Third, put the contract time bar in your diary, counted from the date it really starts. Missing that deadline ends more claims than any other mistake described in this library.

References

• London Maritime Arbitrators Association, Statistics of appointments and awards. lmaa.london
• London Maritime Arbitrators Association, The LMAA Small Claims Procedure 2021, 2021. lmaa.london
• London Maritime Arbitrators Association, The LMAA Intermediate Claims Procedure 2021, 2021. lmaa.london
• UK Parliament, Arbitration Act 1996, 1996. legislation.gov.uk
• UK Parliament, Arbitration Act 2025, 2025. legislation.gov.uk
• UNCITRAL, Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), 1958. uncitral.un.org

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