A Few Good Lawyers

It’s never fun to disagree. When everything’s going well and business is booming and customers are happily paying their bills, disagreement isn’t likely. But when something goes wrong and two sides with differing interests and opinions quickly form, then it’s welcome to Fight Night.

Such conflict is part of our human condition. Rabbi Nachman of Breslov noted centuries ago that “even one who has no desire to quarrel, but prefers to dwell in peace, is drawn into controversies and battles.”

Talking it over, compromising, stepping into the other person’s shoes are all great ways to resolve a disagreement. But sometimes there’s no resolution. Whether through mediation, arbitration, litigation or some other modern-day “ation,” if we can’t solve our problems by mutual agreement then we have no choice but to give up a share of our independence, self-determination and freedom and grant a higher body – a “third party” – the authority to make a legally binding, enforceable decision for us.

The quality of such a decision can vary. While we’ve come a long way from consulting chicken entrails, seeking a legal solution will often still be an ambiguous, frustrating experience. The process is dependent on subjective, human factors from start to finish. “Soft skills” like being articulate or dressing well can matter as much as or more than knowing the law and the facts of a case.

A Peculiar Set of Laws

In shipping, these vagaries can be magnified by the fact that the industry is a niche. It’s governed by its own peculiar set of laws – not merely general commercial law but rather maritime law, overlayered with uniqueness and countless international treaties like the 1921 Hague Rules or the 1978 International Convention on Standards of Training, Certification and Watchkeeping for Seafarers.

All these take time to master. Further, the conventions and customs of shipping are out of the ordinary. Certain behavior can be expected from men and women of the sea, but not from others.

Disagreements are toughest to resolve when the interested parties aren’t even familiar with the way business is done in shipping. Sometimes they may not even be familiar with the most basic industry jargon, meaning there’s no shared language to express grievances or propose solutions. Each hour spent educating the experts on the other side means less time for diving into the laws and facts directly applicable to the case. That means slower proceedings and a much higher risk – due to ignorance – of a surprising or oversimplified result.

Call in the Arbitrators!

Arbitration is exceptionally popular in shipping because it holds out the prospect that the individuals responsible for resolving a dispute are – ideally, at least – knowledgeable industry businesspeople. But this isn’t necessarily true anymore. Arbitration has become increasingly legalized.

Reporting on the International Congress of Maritime Arbitrators in 2017, Karen Maxwell wrote that arbitration is no longer as pragmatic and efficient as it once was “largely because of the involvement of lawyers in representing the parties to maritime arbitration, and the corresponding growth of procedures that mimic court proceedings, vituperative correspondence and the ‘tyranny of time sheets.’ More recently, there has been a growing trend for QCs [Queen’s Councils, a type of English lawyer] and ex-judges to seek appointment as arbitrators, meaning that the tribunals, as well as the parties, are well and truly ‘lawyered-up.’” 

So if both court and arbitration are “lawyered-up,” what’s the difference?

Judges can’t be appointed, but arbitrators can. Most arbitration rules allow each party to appoint one arbitrator of their own choice. Rules also normally dictate that if those two arbitrators, one from each party, can’t get it done, they’ll jointly appoint a third, tie-breaking arbitrator. By contrast, in court you get the judge or, alternatively, a panel of several judges, who’ve been assigned to your case under the prevailing allocation of duties. The personnel selection can be fateful.

Further, to even get to arbitration, an agreement with the other party is required. That isn’t always possible. If it isn’t, then court is the only option – and sometimes in a totally foreign jurisdiction.

Your Place or Mine?

A case can land in all manner of surprising forums depending on its circumstances. A few forums have a long history of being engaged in commerce by sea. They have experts who are knowledgeable about maritime matters and, best of all, they can fall back on a developed infrastructure of legal, insurance, engineering and nautical service providers as well as classification societies and financial institutions.

In these forums – Rotterdam, London, New York, Singapore, Athens or Hamburg – the odds are better than even that the case will be decided by people who have good insight into shipping.

But cases can also end up elsewhere, in the bleak no man’s land of generalist judges who have never before heard of a bill of lading, have difficulty telling a bareboat charter from a time charter, and may try to analogize local traffic law principles to a ship collision because reading the International Regulations for Preventing Collisions at Sea 1972 (COLREGs) is too tricky compared to road signs.

Explaining a complex maritime case where hundreds of thousands or even millions of dollars are at stake is complicated enough. Imagine if, in addition to the facts, you must now explain the fundamentals too. This is not just time-consuming. It’s also risky, and judges notoriously dislike being in the same room with anyone who knows more than they do.

The risk of being poorly, incompletely or wrongly understood by a non-expert is enormous. Educating the court on industry-specific rules and their application when it’s essential to the outcome of a case requires a velvet touch – and a steady hand on the tiller.

Maritime Brain Drain

At the same time, shipping is in retreat in terms of its mindshare. “Brain drain” is a problem as the past lean decade has pushed many promising legal candidates into other careers.

In 2018, Karen Waltham of Spinnaker Global, a maritime human resources firm, remarked: “Our guess is that the industry has a public relations problem. Maritime is just not viewed as an attractive career option for millennials.”

As I’ve written in these pages before, shipping is being subordinated to the demands of construction, energy, aerospace and infrastructure cargo interests. This loss of negotiating power bleeds over into contracts that are unsuited and unfavorable to seagoing commerce. Fewer maritime contracts means less relevance for maritime law. These anti-synergistic effects are making it riskier over time to assume a basic level of industry knowledge and a shared understanding of maritime customs and rules.

A judge, like a lawyer, is comfortable with what he or she knows. But unlike lawyers, judges don’t have the benefit of specialization. They’re assigned to a certain duty roster and have an obligation as public servants to take all comers – even when those cases fall outside their areas of expertise. The likelihood that lawyers will know more about the law governing a particular case than the judge is already high.

But few courts have sufficient maritime case volume to have a dedicated judge or even chamber for such cases. When the applicable law is maritime, it’s almost always a given that the lawyer will also need to step into the role of teacher, assuming the aim is to obtain a decision guided by the proper laws.

Whose Rules?

In this context, the non-maritime parties that are frequently on the opposing side of a dispute will have every incentive to try to bend the case to a different area of law entirely – or, as it may be, to a different jurisdiction. If they succeed, the case can be decided without the treaties and exceptions that exist to benefit shipowners and carriers, or it will end up in a hostile venue.

For the carriage of goods by sea, for example, the limitations of liability available per package or per kilogram are much more favorable than for the carriage of goods by land. In an intermodal shipment, a court may be inclined to ignore the sea leg and apply the more familiar and common land-based cargo damage rules. An aggrieved party, viz., the cargo interest, will undoubtedly be in favor of such an approach and will argue accordingly. And jurisdictions without significant shipowning interests tend to be more cargo-friendly.

Prevention and preparation are key. In negotiating contracts, anticipating the smartest choice of law and the safest venue for dispute resolution are essential. Making the other side sensitive to the peculiarities of carriage of goods by sea and to the unique concerns of shipowners is also vital to a fair contract.

Fighting the Good Fight

If it still comes to mediation, arbitration, litigation or any other “ation,” at least you can be sure that the ground is as fertile as it can be for applying the proper rules. And that effort is hard but vital – hearing the arguments and terminology spoken aloud, the statutes and treaties quoted in pleadings and then set down in a verdict or settlement shows that maritime law is still alive and well.

Cicero wrote that “justice is indispensable to the conduct of business.” Shipping has to fight for its own rules in the same way it has to fight for everything else these days. We can take nothing for granted.