London has 80% share of global maritime arbitration market

Research by international law firm HFW has found that London continues to dominate the market for maritime arbitration. This was despite suggestions that Brexit would see activity shift to emerging disputes hubs around the world.

London accounted for more than 80% of global maritime activity, according to HFW’s analysis of data from 13 major maritime institutions around the world. The capital handled approximately 1,500 maritime arbitrations in 2017, compared to around 140 in Singapore and just over 100 in Hong Kong.

HFW’s research also found that, after local law, English law was the most commonly chosen law in arbitrations globally across all sectors, including maritime arbitrations. English law was the applicable law in 85% of all LCIA arbitrations in 2017.

Craig Neame, Partner, HFW, said that “there has been a lot of debate about whether London will lose business as a result of Brexit. Our research clearly shows that, when it comes to shipping disputes, London is still the clear market leader, and we see nothing to suggest that will change in the foreseeable future.”

He noted that Singapore and Hong Kong would continue to be attractive to companies operating in Asia, while Dubai and the Nordic countries would develop a larger arbitration caseload once EMAC and NOMA became more established. “But English law will remain a popular choice among those in the shipping industry and we expect London to continue to attract the majority of maritime arbitrations.”

The maritime arbitration universe in numbers: one year on

HFW’s analysis last year showed that London remained at the forefront of global maritime dispute resolution. More than 1,750 maritime arbitrations were held in London in 2016, compared to just over 120 cases in Singapore, approximately 46 maritime arbitrations in Hong Kong, and fewer than 20 maritime arbitrations in Dubai and Paris.

HFW said that these figures, together with anecdotal evidence within the shipping industry, led to the conclusion that, although there is increased global competition between international maritime arbitration institutions, London was maintaining its position as the dominant maritime centre for dispute resolution globally, both in the short and medium term after Brexit.

HFW’s latest analysis showed that London continued to maintain the largest share of maritime arbitrations globally. In 2017, 1,496 individual maritime arbitrations were handled by the LMAA, of which 480 culminated in an award. When combined with the figures for LCIA and ICC, London handled approximately 1,500 maritime arbitrations. Although there was a slight reduction in London arbitration in 2017, HFW said that this was “still a healthy figure which indicates that London continues to maintain the confidence of parties to shipping disputes”.

It said that any reduction in the number of arbitrations was very likely the result of a global drop in the total number of arbitrations.

Last year HFW’s research indicated that Singapore and Hong Kong were London’s strongest competitors. The latest figures continued to support this.

There were approximately 140 maritime cases in Singapore in 2017, across the SIAC, SCMA, LMAA and ICC arbitral institutions. This represented a small increase on the amount of cases in Singapore in 2016.

In Hong Kong, HKIAC dealt with approximately 23 maritime arbitrations in 2017. This represents a reduction of cases of approximately 36% when compared to 2016.

HFW said that it understood that approximately 10 LMAA arbitrations were seated in Hong Kong in 2017 and that there were around 80 maritime appointments recorded by HKMAG in the same year.

That would mean there were just over 100 maritime arbitrations in Hong Kong in 2017.

The 2017 statistics for Dubai were similar to those obtained in 2016, indicating that it has not avoided the recent global arbitration downturn. We previously predicted that the Emirates Maritime Arbitration Centre (EMAC) which launched in September 2016 would take on a larger caseload once it was more established. EMAC did not provide maritime arbitration statistics to HFW, but HFW said that it was likely that its 2017 figures for Dubai would be greater if this data was included.

In mainland Europe the number of arbitrations conducted in Paris appeared to have remained the same in 2017 as in 2016, and arbitration statistics for Denmark and Sweden remained modest, Rotterdam administered up to 30 new maritime arbitrations in 2017 under UNUM Rules.

HFW advised in 2016 that the Scandinavian maritime clusters were seeking to promote a new Nordic shipping arbitration centre. The Nordic Offshore and Maritime Arbitration Association was established on November 28th 2017. Although no statistics were currently available, HFW anticipated that the creation of this centre would increase significantly the arbitration caseload of the Nordic countries in the very near future. “It is likely that Scandinavia, when taken as a whole, will emerge as a global competitor to rival London, Singapore and Hong Kong”, said HFW.

In its 2016 publication HFW acknowledged the strength of American maritime arbitration institutions, and this did not diminish in 2017.

The legal firm expanded its analysis for 2017 to include not only the Society of Maritime Arbitrations (SMA) but also the Maritime Arbitration Association (MAA) and Houston Maritime Arbitrators Association (HMAA). There were 38 SMA awards published in 2017, which was nine more than in 2016. The MAA and HMAA did not provide arbitration statistics to HFW but it was thought likely that a significant amount of maritime arbitrations took place there.

English law was the most commonly chosen law in arbitrations globally across all sectors (including maritime arbitrations). English law appeared to have been the applicable law in 85% of arbitrations at the LCIA in 2017.

In Hong Kong, 14 different governing laws were chosen to govern the disputes submitted to HKIAC in 2017, with Hong Kong law being the most common, followed by English law and Chinese law. The position was similar at SIAC where 61% of the arbitrations were governed by Singapore law in 2017, and 21% governed by English law (across all sectors). In Sweden, HFW understood that 72% of SCC cases were governed by Swedish law in 2017, with about 6% of cases governed by English law. “These figures add weight to the argument that English law will remain a popular choice within the global shipping industry in the short to medium term”, HFW said.

HFW said that Brexit could always have been something of a red herring, given the fact that this has no impact on the UK’s position as a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.

http://www.hfw.com/downloads/001161-HFW-The-maritime-arbitration-universe-in-numbers-More-on-the-statistics-May-19.pdf

Notes and some tentative 2018 numbers:

Only 15-20 of those LMAA cases were seated outside of London (in Singapore or Hong Kong). HFW understands that in 2018 the number of maritime references handled by the LMAA rose to 1,561 whilst the number of awards increased to 508.

SIAC handled 91 maritime cases in 2017. In total it issued 139 awards, of which approximately 28 (20%) were maritime related. SCMA confirmed that it oversaw 38 maritime references in 2017. HFW understands that the number of maritime references handled by the SCMA increased to 56 in 2018. SCMA did not provide statistics on the number of awards. ICC handled 38 cases across all sectors in Singapore in 2017 and approximately three of their cases (6.8%) related to the transportation sector.

HFW understands that SIAC handled 72 maritime cases in 2018, less than the 91 cases they handled in 2017. 2018 figures for ICC were not available at the time of this publication going to print.

23 maritime arbitrations were registered with HKIAC in 2017, with one case culminating in a final award. HKMAG received around 80 maritime appointments in 2017. HKMAG does not collect statistics on maritime awards so it is not possible to quote a more precise figure for Hong Kong.

DIFC-LCIA administered one maritime arbitration in 2017 and three in 2018. A maximum of three arbitrations were seated in Dubai under London LCIA rules in 2017, but as only 8.58% of all LCIA references in 2017 were maritime-related. These arbitrations have not been in the statistics.

12 ICC arbitrations were seated in the UAE in 2017, but only 6.8% of cases at the ICC in 2017 related to the transportation sector, so HFW has not included ICC statistics in its figures for Dubai.

Europe excludes Germany and Greece (GMAA in Germany do not keep records of the arbitrations administered by its members whilst PAMA in Piraeus did not provide figures to HFW on request).

The ICC said that Paris was selected as the place of arbitration in 121 cases across all sectors and that 6.8% of their cases related to the transportation sector.

HFW understood that CAMP issued approximately 10 arbitration awards per year “so the number of references is likely to be higher”. It should be noted that Paris has a significant ad hoc maritime arbitration caseload which cannot be easily tracked, and for which statistics have not been included in the numbers above.

The Danish Institute of Arbitration (DIA) said that six of their international arbitration cases had maritime references. The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) report on their website that 52% of the SCC’s caseload in 2017 related to Swedish parties alone.

NOMA did not provide HFW with arbitration statistics and did not provide projected figures for 2018 or beyond.

Cases administered by AAA are not published ( https://www.standard-club. com/media/1557733/maritime-arbitration-in-the-united-states.pdf )

The SMA does not publish all of its arbitration awards so the figure for SMA will be an underestimate of their caseload. The number of SMA awards published in 2018 was 24.

In 2018 there was a shift in the number of LCIA arbitrations with disputes governed by English law (76%), down by 9pp on 2017.

HFW also noted that it was not possible to provide comprehensive statistics for every jurisdiction as some arbitration institutions had not released their detailed figures for maritime arbitration in 2017 (including for example the SMA in New York). HFW also approached several arbitration institutions in the US and China which would not provide figures. HFW noted that London’s share of global maritime arbitrations would be less, were these figures included.

The statistics do not include specialist maritime commodities arbitration such as GAFTA or FOSFA. If HFW had added these into the statistics the number of London maritime sector arbitrations would be higher.

Certain institutions have combined maritime sector disputes into a broader category. The ICC, for example, include arbitrations for non-maritime arbitrations as the figure given is for ‘transportation’ generally. HFW said that if it had more granular data, with the non-maritime arbitrations stripped out, it was likely that the London case totals would be higher.

The data for each jurisdiction is a combination of data from different organisations (e.g. the number for maritime arbitrations in London is formed from statistics obtained from the LCIA, LMAA and ICC). As different organisations may have defined ‘maritime’ differently, HFW advised that the combined statistics could “only provide a broad brush picture”.

HFW said that it had not been able to capture all ad hoc arbitrations. “As such, the figures for marine arbitration in most jurisdictions will be underestimates.”

The LMAA do not publish a breakdown of LMAA cases seated outside London. They told HFW that in any given year around 15 to 20 cases are seated in other jurisdictions (in Singapore or Hong Kong). “To reflect this we have added 10 cases to the totals for 2017 for both Singapore and Hong Kong.”

HFW also emphasized that some cases categorized as ‘maritime’ would represent broader commercial disputes involving companies within the shipping sector, rather than representing shipping law disputes.

The geographical venue of arbitration (location for hearings etc) and the legal seat will not always be the same.

HFW requested from each arbitration institution the figures for the number of maritime references and awards in each jurisdiction. Where this information was not publicly available HFW used the figures for number of appointments or “cases handled”, depending on how the figures were presented. “As such, some of the figures may overstate the number of arbitrations in some jurisdictions”.

http://www.hfw.com/downloads/001161-HFW-The-maritime-arbitration-universe-in-numbers-One-Year-On-May-19.pdf