Historically dominated by London and New York, maritime arbitration is an area of dispute resolution spreading its wings and exploring new corners of the globe.
Blooming out of Asia’s emerging economies are new maritime arbitration hubs in Hong Kong and Singapore. Even further afield in the Middle East, maritime arbitration in Dubai is on the rise. Cases, which in previous years would have travelled to London or New York, are now being heard within the region.
In 2016, according to leading law firm Holman Fenwick Willan, approximately 1,700 individual maritime arbitrations were handled by the London Maritime Arbitrators Association (LMAA) alone. However, Brexit has rattled London’s assumed dominance as the industry’s hub, with some questioning the city’s future as a centre of global maritime dispute resolution.
These fears have abated, with reassurance post-Brexit London arbitration awards will still be internationally enforceable in the same way they are now, under the New York Convention 1958.
While London and New York will likely continue to dominate volume in the short-term, interesting recent political developments in the East may see a significant shift in volume in the longer-term. Dubai has also been in view with news of its first cases in action at the Emirates Maritime Arbitration Centre.
In the East, Hong Kong and Singapore continue their rivalry, jostling to be recognised as Asia’s leading international city. As maritime and shipping hubs, the city states are fierce competitors.
In October 2018, new political developments came to light for Hong Kong that will most likely see Hong Kong edge out Singapore for dispute and arbitration volume in the coming years.
Hong Kong has a long and established history as a maritime hub. Unlike London, Hong Kong was and remains an active port, which means the maritime industry and disputes are much closer than other countries.
Bill Amos, a Fellow and Council Member of the HKIArb, HKIAC Panel arbitrator, and LMAA Supporting Member, from Mayer Brown, shares his experience, “In the past 25 years, Hong Kong has expanded its pool of maritime services talent to the point where we now have the perfect ecosystem for maritime arbitration.” This ecosystem consists of Common Law; courts that are supportive of enforcement of arbitration awards; and a large pool of maritime lawyers, maritime arbitrators and maritime experts.
“In terms of advantages over other maritime arbitration hubs, we Hong Kongers have an understanding of China that you will not find in London or in Singapore,” he states.
Hong Kong has enjoyed a robust maritime industry, but has lacked in active support from previous governments, “That has now been replaced by an active government promotion in the area of maritime arbitration dispute resolution services and active government support of the maritime industry generally,” shares Amos.
“The Chief Executive’s 2018 Policy Address, delivered on the 10th October 2018 had several measures to develop the maritime industry and maritime arbitration is complementary to that,” explained Amos.
This local government support is bolstered by the Central Government in Beijing, both are actively working to strengthen Hong Kong as an international dispute resolution centre. The maritime industry and professional services surrounding it are a clear policy focus, with the latest address stating the government will, “Facilitate and support dispute resolution services for the global maritime industry.”
Amos clarifies, “It’s really evident from the Chief Executive’s Policy Address that this is being done in Hong Kong.” He continues, “That really is a new development.”
How is such support implemented? Amos cites that the Hong Kong Maritime Arbitrators Group (HKMAG) is taking an active role in promoting the city’s maritime arbitration. This group is currently developing the Hong Kong maritime arbitration terms, a written set of procedures that will be very similar to the LMAA terms.
There’s also government support for institutions such as the Hong Kong Institute of Arbitrators who will be given office space in the legal hub at the West Wing of the government buildings. “In terms of government support, there’s a changed landscape,” reflects Amos.
In recent months, the maritime industry has been visible on the government’s agenda. The Chief Executive’s Council of Advisers on Innovation and Strategic Development discussed aviation and maritime innovation in Q3 2018.
Chief Executive Carrie Lam recently said at the Global Maritime Forum Annual Summit, “We do hope to be breaking some new ground in our maritime industry, in order to remain a global force through this 21st century.”
At the same conference, Lam cited the importance of maritime dispute resolution, especially in the current political climate, she said “Of particular concern for many, including Hong Kong, is the sudden spate of trade disputes, most notably between the world’s two largest economies, the United States and China. A protracted trade logjam between them would undoubtedly squeeze cargo flow across seas.”
The Belt & Road initiative will be central to the bolstering of dispute volumes for Hong Kong. A significant increase in case volume is most likely a few years away, but for now, all the legal and support services infrastructure is being built up with the Central and Hong Kong government’s support.
“A lot of organisations involved in the maritime industry are from China, and many of them are state-owned or have significant state backing. So, the advantage of the command economy in China is that those arbitration clauses, if sanctioned and supported by the government, will be appearing in contracts. There will be an increase in the use of Hong Kong arbitration,” shares Amos.
Hong Kong is well prepared to take on the Maritime Arbitration role, as all the required expertise and knowledge has been long established in the city. The project also has the backing of the Hong Kong government and Chinese authorities as part of a broader strategic goal of supporting the maritime cluster in the city.