Alternative Dispute Resolution [“ADR”] is utilized to achieve quick justice
without engaging in the Court’s procedures. Maritime professionals utilize
this method of resolving disputes due to its numerous benefits, including
maintaining the confidentiality of their operations, avoiding jurisdictional
disputes, and not requiring lengthy procedures.1 One more core aspect of
this note would be about inculcating blockchain technology in maritime
arbitration procedures. Individuals with adequate expertise in this area also
select arbitrators, considering various additional factors in their choice;
involvement of this new technology will add one more filter in such
selections. Numerous additional advantages and disadvantages of
employing this technique will be examined in the research.
ADR techniques were created to facilitate quick and straightforward
decision-making, considering the heavy workload faced by the judiciary.
One of them is arbitration. In arbitration, disputes are settled, with binding
consequences, by an individual or individuals functioning judicially in a
private setting, instead of a court of law (were it not for the parties’
agreement to exclude it) that would normally have jurisdiction.2 Arbitration
has successfully served as an alternative to litigation for the maritime sector
for centuries. For instance, entities such as the Society of Maritime
Arbitrators have flourished as resources for alternative dispute resolution,
implementing rules partly based on the Federal Arbitration Act [“FAA”] to
realize objectives of cost-effectiveness, speed, and fairness.3 The benefit of
utilizing this approach instead of litigation is that the involved parties can
select judges (arbitrators) and a procedure of their preference, leading to
quicker and less burdensome justice. Consistency in ancient international
maritime law emerged as a necessary response to the unavoidable conflicts
that occurred in trade, aiming to reduce unexpected challenges and
promote, rather than hinder, commerce. Maritime arbitration possesses
unique characteristics that set it apart from other types of arbitration. For
example, in regards to sources of law; typically, the arbitration agreement is
embedded within contracts that utilise standardised forms created and
regularly revised by maritime entities like the Baltic and International
Maritime Council [“BIMCO”],4
the Association of Ship Brokers & Agents
[“ASBA”], and the Japan Shipping Exchange [“JSE”]. These include,
among others, time and voyage charter-parties, various contracts for goods
transport (such as bareboat charter agreements and contracts of
affreightment), as well as shipbuilding, ship repair, ship scrapping contracts,
and salvage agreements. The arbitrators arrive at their decision through an
option apart from international and national legal sources, which is the “lex
maritima,” meaning rules developed through the practices of the maritime
community.
Further distinction between maritime arbitration and general arbitration lies in the nature of the issues at hand; in maritime arbitration, disputes typically pertain to unfulfilled goods transfers, damaged merchandise, insurance
claims, tort liabilities, and similar matters.6 These concerns typically do not
require arbitrators to delve into specific factual or legal disputes; instead,
they necessitate the arbitrator’s understanding of maritime trading history.
This is generally why maritime arbitration often necessitates the
engagement of ad hoc arbitrators with specialized knowledge and expertise
relevant to the maritime matters involved. The selection of arbitrators is
also influenced by a significant factor, namely, nationality. Typically, the
conflicts might include parties from different national backgrounds. Similar
to maritime collisions, arbitrators are expected to remain impartial and not
show preference for any specific nationality, instead basing their decisions
on legal principles.
A notable case concerning maritime arbitration is Republic of Mauritius v.
United Kingdom of Great Britain & Northern Ireland,
10 which dealt with the United Kingdom’s [“UK”] authority to establish a Marine Protected Area [“MPA”] in the British Indian Ocean Territory. A dispute resolution process took place regarding this issue between the two nations. The Mauritius government contested the UK government’s action by stating that Sir Christopher Greenwood’s involvement in the proceedings could lead to bias, given his role as the foreign and Commonwealth legal adviser for the UK.11 However, the arbitration tribunal did not accept this claim.
The issue was ultimately settled in 2015 with the declaration that the UK
Government could not establish the MPA, as it did not align with the
stipulations of Articles 2(3),12 56(2),13 and 194(4)14 of the United Nations
Convention on the Law of the Sea [“UNCLOS”]. This case showcases the
efficiency and value of the maritime arbitration.
Now moving our focus to India, which in recent years, has emerged as a
significant economic power, partially owing to its accessible coastlines. At
the onset of Fiscal Year 2024, the trade volume at the leading ports in the
country reached 1540.23 million tons, and this number is anticipated to rise
further. Global commerce has played a role in the growth of trade. The
deregulation of the shipping sector through several initiatives like the
National Maritime Development Program, which has a total investment of
$11.8 billion (initially), and the development of infrastructure has guaranteed
the seamless movement and transportation of traded commodities. Like in
most commercial relationships, the participation of various Multi-National
Corporations [“MNCs”] has introduced specific legal concerns. In order
to guarantee that these disagreements are settled in a way that is most
advantageous for all parties, and to prevent the individuals involved from
presenting a negative image to their investors and clients, Indian legislative
authorities have established an arbitration framework to resolve the
disputes.
India’s growth in the maritime and commercial areas lists an extensive
necessity for a strong domestic ADR mechanism, and it becomes crucial to
examine how other regions, especially the U.S., has been dealing with their
management of arbitration setup. As we strive to raise our arbitration
standard to international level, a comparative review of U.S. model can
provide useful perspectives on how judicial attitudes and statutory mandate
can bolster arbitration as the favoured approach for dispute resolution. The
American way lays down the significance of clear statutes and their
supportive stance towards arbitration in fostering global trust in the
arbitration systems.
The U.S. has historically viewed arbitration, as not just an alternative to the
litigation but as a fundamental aspect of its commercial law and dispute
resolution mechanism. It has treated it as the one that harmonizes efficiency with the autonomy of the parties involved. By going through the U.S. judiciary’s push to uphold arbitration agreements and preserving the
integrity of arbitral procedures, valuable insights can be gained as an
example for India’s arbitration framework.
“The U.S. Supreme Court has shown a strong interest in encouraging parties to utilize arbitration and in safeguarding the independence and function of the arbitration process.”
Consequently, the court’s rulings exhibit a “strong federal stance supporting
arbitral dispute resolution.” The arbitration rulings by the court typically deal
with the interpretation of the federal Arbitration Act (which grants courts
the power to enforce arbitration agreements via specific performance). The
court has indicated that “parties are typically at liberty to arrange their arbitration agreements according to their preferences.” The parties can determine the issues that will be arbitrated and the procedures that will govern the arbitration process.
In Gulf Oil Corp. v. Gilbert16 [“Gulf Oil”], several private and public interest
factors were established for courts to evaluate when deciding whether to dismiss a case based on “forum non conveniens”.17 According to federal
jurisprudence, a court should give “great deference” to a plaintiff from the
United States [“US”] regarding their chosen forum while weighing these
private interest factors. That respect, however, is unsuitable when a foreign
claimant is trying to bring claims in a US court. The Supreme Court, in Gulf
Oil, identified public interest factors that evaluated if the link between the
controversy and the domestic forum warrants the administrative challenges
arising from its trial. In Gulf Oil, the court outlined these “public interest”
elements for judges to assess:
the inequity of imposing jury duty on individuals in an unrelated
jurisdiction.
The overarching policy guiding these thoughts is to avoid overwhelming
courts with disputes that have minimal or no connection to the community
where the court operates.18 Ultimately, a court ought to adhere to the
principle that the trial is to be held in a venue that renders litigation “simple,
swift, and affordable.”
the administrative challenges arising from overcrowded courts;
the community’s stake in resolving regional disputes locally;
the benefit of conducting the trial in a venue familiar with the
governing law;
the prevention of unwarranted complications from applying foreign
law; and
A. Maritime Arbitration in India
The Indian Council of Arbitration, which was established in 1965 by the
Government of India, has established the fundamental guidelines for
participation and management concerning Maritime Arbitration. It includes
mandating Maritime Arbitration Committee to hand-pick its members by
the Ministry of Shipping and the Shipping Corporations of India and
Maritime Panel of Arbitrators. The International and Domestic Arbitration
Centre’s [“IDAC”] India’s Maritime Arbitration Rules, 2019 is an extensive
effort to match international standards, although its significance and impact
are acknowledged, the Committee functions without definitive rules
concerning the selection of its members or how it operates. Established
under the executive rules, it lacks any legislative basis, and therefore, its
decisions hold no binding legal power. The lack of legal support results in
the Committee lacking the enforceable authority that entities such as the
Shanghai International Shipping Arbitration Court possess by the law.
The Indian Parliament, aiming to align with international arbitration
standards set by entities like the Permanent Court of Arbitration in “The
Hague”, enacted specific laws in 2015 and 2019. These modifications to the
Arbitration Act have impacted sectoral arbitration systems.19 The key
provisions added through the amendment to the parent act in 2015
encompass a revised interpretation of Section 920 in the Arbitration and
Conciliation Act of 1996 [“1996 Act”], which addresses “Interim Relief.” This
stipulation mandates statutory protection and preservation or some type of
security to guarantee that the goods under dispute are not handled in any
rash manner. Prior to the amendments, enforcing such provisions was quite a challenging endeavour, particularly when dealt with by an arbitration
committee based in another country.21
However, because of the expanded interpretation of “Court” in Section
2(2)22 of the 1996 Act, all commercial goods engaged in any disputes located
at Indian ports can now be subjected to these measures within a specified
timeframe. The Major Port Authorities Act, 202123and the creation of the
Adjudicatory Board in August 2025 24 have transformed India’s port
governance structure. Substituting the centralized TAMP with
autonomous, board-led systems, the changes align Indian ports with global
landlord port frameworks and enhance efficiency in settling tariff and
concession disagreements. Along with the increased procedural clarity
brought about by the amendments to the Arbitration and Conciliation Act,
these changes together promote a more arbitration-friendly
maritime setting.25
Subsequent to this action, domestic arbitration bodies, like the “Mumbai
Centre for International Arbitration,” have incorporated this idea into their
regulations. Section 11(6A)26 of the Act was established to guarantee that
the Supreme Court of India [“SC”] and the High Courts [“HC”] do not
engage in any part of the Agreement except for the clauses regarding
arbitration. It was likewise determined in the matter of BGS SGS Soma JV
v. NHPC Ltd.
27 [“BGS SGS Soma”], concerning the revised Section 37,28
that parties may only seek court intervention on appeal if the earlier
application was rejected under Section 3429 of the same legislation. The
modification in 2015 occurred after the Bharat Aluminium Co. v. Kaiser
Aluminium Technical Service Inc. [“BALCO”], from which it was determined
that the judiciary system should strictly follow the policy of noninterference, especially in relation to matters of international arbitration.30
After this amendment, the Legislature’s series of additional enactments in
2019 further solidified the national Maritime Arbitration community. After
this amendment, in the case of Garware Wall Ropers Ltd. v. Coastal Marine
Constructions31 [“Garware Wall Ropers”], even with Section 11 in place, the
SC determined that owing to the lack of stamp duty, the contract
contravened the Maharashtra Stamp Act of 1958. Consequently, the court
was empowered to seize it until the associated fees and penalties were
paid.32 Moreover, the amendment altered other current provisions,
including the Appointment of Arbitrators as outlined in Section 11(3),33 to
be undertaken by Arbitral Institutions evaluated by the suggested
Arbitration Council of India, which will be established under the new
Section 43 D34 of the Act.”
The 2015 and 2019 amendments to the Arbitration and Conciliation Act
reflect India’s legislative aim to align with international norms, still their
effectiveness regarding maritime arbitration is questionable. In this context,
the Merchant Shipping Act, 202535 surfaces as a legislative advancement
that may, though indirectly, revitalize the discourse on maritime arbitration
in India. Through the modernization of the regulatory structure overseeing
ship ownership, vessel registration, and maritime employment, the Act
signifies a wider policy transition from strict regulation to facilitation, an
important condition for a flourishing arbitration environment. 36
This Act’s conformity with international treaties like MARPOL, the
Nairobi Wreck Removal Convention, and the Maritime Labour Convention
indicates India’s increasing dedication to global maritime governance
standards, which over time, may, foster the normative context needed for
specialized arbitral mechanisms.
Although it doesn’t sufficiently tackle the gaps that have traditionally
obstructed the maritime arbitration, it gives a ray of hope for further
advancement and increased focus of legislation in this sector.
B. Blockchain Technology in Arbitration
Blockchain is seen as a fundamental element and key component of the
Fourth Industrial Revolution. Various industries, such as healthcare, have
explored the application of blockchain technology. Intelligent electronic
arbitration [“IEA”] is a ground-breaking and novel method for resolving
disputes that incorporates artificial intelligence technologies into electronic
arbitration. The move to adopt the IEA mechanism for settling commercial
disputes is driven by the requirement to guarantee sustainability in
arbitration practices in India and the urgent need to promote access to
justice amid the COVID-19 pandemic or any unstable situations.37
Employing the IEA mechanism is not entirely free from criticisms. Initially,
if a losing party does not adhere to the IEA award, the winning party is
required to follow the conventional enforcement methods. This leads to
additional legal actions, unnecessary costs, and excessive time consumption.
Second, the parties involved in the IEA face the risk that their confidential
data and information exchanged during the IEA process may be
unprotected from cyber-attacks.
“It has been found that employing IEA in a blockchain-based model holds the potential to resolve the aforementioned issues. Specifically, blockchain would remove the necessity of undergoing a lengthy procedure to enforce the IEA award, as that award would be self-enforcing and not require the involvement of the courts.
Moreover, the secure characteristics of blockchain would significantly reduce the likelihood of cyber-attacks arising from carrying out the IEA procedures in cyberspace.”
II.Current scenario in India
India has always benefited from maritime routes in terms of trade and
commerce. To steer the winds positively for the Indian economy, the Union
Government has implemented a variety of measures, such as:
- Establishment of Joint Ventures [“JVs”] involving major Indian
ports and their international counterparts, alongside non-major
ports and private enterprises; and - A 100% Foreign Direct Investment [“FDI”] through the automatic
process;
“Establishment of a system in which crucial documents, such as Request for
Qualification [“RQF”] and Request for Proposal [“RFP”], adhere to a specific
standard. In India, the regulations regarding maritime arbitration are governed
by the Indian Council of Arbitration, which features a specific segment known as
‘The Maritime Arbitration Rule of the Indian Council of Arbitration.’ The
previously mentioned rules include elements such as; the maritime arbitration
panel, the roles of the mentioned panel, the area of application, awards, and so
forth.””
These regulations oversee the procedure of domestic and international
maritime arbitration in India. Also, the realm of maritime arbitration has
expanded, highlighted by the creation of the Gujarat International Maritime
Arbitration Centre [“GIMAC”], which serves as the country’s leading
arbitration and mediation centre for marine and shipping sectors. The
formation of GIMAC brings relief, since among the 35 arbitration centres39
in the country, none are exclusively dedicated to the marine sector.
The maritime law cases in the Admiralty Division stem from collisions in the
South Pacific or the Red Sea involving ships that are not registered in
Britain, and foreign litigants still tend to favour Indian jurisdiction to some
degree. This famously is due to the maritime lien, which, in this and
numerous other admiralty cases, allows the English court to detain, and, if
required, sell the vessel itself unless sufficient security is provided by the
owners. The “action in rem” provided the court of a nation that possessed a
significant share of the world’s shipping boats, and whose ports were likely
to be frequented by nearly all major vessels found on global trade routes, a
natural and important superiority in maritime authority. Admiralty
jurisdiction is implemented to a limited extent, in practice, across numerous
British and former British territories. Only jurisdictions with a significant
international port, like Bombay, Colombo, Singapore, or Hong Kong, could
establish a substantial admiralty industry.40 Provided that the legal principles
concerning collisions and salvage (setting aside, for now, the impact of
contracts preferred by insurance firms based in London) are consistent in
former British territories as in England, there is no justification for
competitors not to emerge,41 attracting business from our Admiralty
Division due to the same benefits that rendered it an appealing venue in its
initial period.
The possibilities of the Bombay High Court were examined in the following
two instances:
- In the case of Bombay C. & R. Steam Navigation Co. v. Heleux Master,
it was established that the Admiralty Side of the Bombay High
Court possessed the authority to resolve collision cases resulting
from incidents on the high seas. - In Muhammad Yusuf v. P. & O. Steam Navigation Co., a collision took
place in Bombay harbour, and it was determined that a lawsuit could
be filed in the Bombay High Court, but on the original (that is to
say, for the current purpose, merely the “common law”) side
Consequently, minimal to no business has occurred in Admiralty at
Bombay.””
Fast forward to the present, in accordance with Rule 3(1) of the Maritime
Arbitration Rules [“MAR”], a specialized body known as the “Maritime
Arbitration Committee” has been formed. Rule 4 implies that it is tasked with responsibilities such as selecting arbitrators, monitoring the advancement of a case related to the maritime industry, appointing arbitrators, and so forth. The Rule 5 of MAR stipulate qualification and necessary expertise as essential criteria for appointment to the Maritime Arbitration Committee.
Nevertheless, several challenges persist within the Indian Maritime
Arbitration framework.
These challenges underscore the adage that ‘all talk and no action’ perfectly
describes the Indian Maritime Arbitration system’s handling of
complex disputes. “The central concern revolves around the Maritime
Arbitration Committee. This Committee consists of ten members, featuring
appointments from the Ministry of Shipping and the Shipping Corporation
of India, alongside members from the Maritime Panel of Arbitrators. Rule
10 of MAR specifies that a Sole Arbitrator must be appointed if the claim
amount is one crore rupees or less. Alternatively, both parties are required
to select a member of the Panel of Arbitrators, and they will work together
to choose a third arbitrator, as demonstrated in the case of Southern
Petrochemical Industries Corporation v. The Great Eastern Shipping.
”
Should either party neglect to designate an individual, the Committee is
required to intervene and appoint the arbitrator, as specified by the Delhi
High Court in the Steel Authority of India Limited v. Indian Council of
Arbitration45. In the global context, a Bill of Lading might not confer an
arbitration clause; however, if a Charter-Party contains such a clause, it is
deemed valid. Although it has significant influence, the Committee has not
offered clear guidelines or criteria for selecting its members or for its
functioning, as it is governed by the executive rules.”
As discussed earlier, the SC had previously held the power to seize it until
the required fees and penalties were paid and the amendment so revised
other current clauses, as discussed in Coastal Marine Construction,
including the Appointment of Arbitrators in Section 11(3) by Arbitral
Institutions.
Though the procedure is legislatively reforming, yet India’s arbitration
framework lacks specialised institutions. The standard of International
Arbitration is determined by different organizations worldwide that
participate in this field. Every involved association creates a targeted
approach to rules, practices, and the issuance of arbitral awards that
combine to create the foundation for how practices operate, thus
supporting the provisions of the UNCITRAL Model Law. Therefore,
conducting a detailed analysis of the key Maritime Arbitration
Organizations is warranted when assessing the industry. Established in
1960, the “London Maritime Arbitration Association” [“LMAA”] has
continuously updated its Rules of Procedure. It has implemented various
regulations, including the LMAA Small Claims Procedure 2017 and a
formal procedure for Fast and Low-Cost Arbitration [“FALCA”], leading
to a notable increase in cases to 2500 and the “granting of almost 500 awards,”
even with the effects of Brexit. The Emirates Maritime Arbitration Centre
was founded through “Decree No.16,” released by Sheikh Rashid Al Maktoum,
the United Arab Emirates’ ruler in 2016.46 The Centre was established to
rival the arbitration institutions of other nations and to promote maritime
commerce in the country. Throughout the years, the Emirates Maritime
Arbitration Centre [“EMAC”] has established itself as the foremost arbitral
association in the “Middle East and North Africa” [“MENA”] region. Despite
being new in the arbitration sphere, the EMAC has established “arbitral
referral clauses” as a required practice.
Moreover, the “Singapore Chambers of Maritime Arbitration” [“SCMA”], still
favoured by Indians, is a specialized organization that offers a refuge to
nearly 3000 shipping firms for settling their conflicts. The SCMA’s
distinction from the “Singapore International Arbitration Centre” [“SIAC”] is
regarded as a significant change for the maritime industry, as it targets
disputes specifically related to that sector.
“This gap has been recognized and noted in the Maritime India Vision 2030.47
It has been explicitly stated that currently, India does not have adequate
infrastructure for dispute resolution when compared to LMAA, SCMA,
EMAC, and TOMAC. Moreover, it was recognized that by the year 2030,
India would establish a defined infrastructure for maritime arbitration,
particularly when the disputing parties are Indian citizens.”
The establishment of the “Indian Maritime Arbitration Association” [“IMAA”]
would enable this, serving as an “institutional arbitration system”
influenced by the Arbitration and Conciliation (Amendment) Act of 2015.
It would also validate the LMAA guidelines in a way that caters to the
Indian community while simultaneously making it practical for international
participants, primarily comprising foreign investors.
III.Forum selection in maritime arbitration
Typically, parties involved in a dispute under admiralty jurisdiction can
contractually determine in advance how that dispute will be addressed
before any litigation occurs. Initially, parties can specify the venue for
dispute resolution (forum selection clauses), the applicable law for settling those disputes, and mandate that disputes be referred to arbitration. The
parties can eliminate some of the ambiguity associated with the resolution
of future conflicts by specifying the location of the resolution, the
applicable law, and the method of resolution. Admiralty law gives
significant respect to these preliminary contractual choices. In order to
prevent the enforcement of a forum selection or choice of legal clauses, a
party must demonstrate that the clause is “unreasonable given the circumstances.”
The US SC has narrowly defined ‘unreasonableness’ and has explicitly stated
that forum selection clauses are presumed to be valid. The responsibility of
demonstrating unreasonableness is significant, resting solely on the
demonstration:
- that the clause stems from deceit or exploitation,
- that it contradicts a strong public policy, or
- that enforcing the clause denies the plaintiff their opportunity to
present their case in the court.
In its landmark ruling of The Bremen v. Zapata Off-Shore Co. [“Bremen”], 48
the US SC highlighted that by minimizing the unpredictability related to the settlement of future conflicts, these clauses promote international
commerce.
While Bremen dealt with forum selection clauses, the court suggested that
the same reasoning would be relevant for the choice-of-law clauses. Lower
courts tackling choice of law (and arbitration clauses) have employed the
Bremen analysis. Thus, similar to forum selection clauses, when examining a choice of law, Bremen’s “reasonable under the circumstances” test often
serves as a crucial preliminary issue.
IV.Inclusion of blockchain technology in maritime arbitration
A. Dispute Resolution and Role of Smart Contract
Smart Contract is a self-executing contract where the terms and conditions
are written in the form of codes directly. The two most important ones,
which are also time and money consuming, are charter party agreements
and freight contracts. They can get automated and quick in the operation
using this technology. Payments and billing, in these two aspects, can trigger automatically once goods are delivered and confirmed on the blockchain.
One of the successful and working examples in this area is of the CargoX
Platform. This platform leverages bills of lading using blockchain
technology and majorly smart contracts. They facilitate automation of the
payments in container shipping. The code is programmed in a way that once the GPS data of port arrival is confirmed, the payments get released.
Also, maritime arbitration requires a hefty amount of paperwork and
documentations. Documentations of charter agreements, cargo manifests,
vessel logs, etc., burden the arbitrators; this altogether defeats the purpose
of arbitration in the first place which is quick redressal. Blockchains can
immutably store these records, ensuring their authenticity and reducing the risk of tampering. Companies like Maersk and IBM have developed
TradeLens, a blockchain-based platform that securely stores shipping
documentation. Also, in arbitration, verified blockchain records can be
presented as evidence.
One of the major benefits of integrating the blockchains in maritime
arbitration is Real-Time Transparency in Cargo Tracking. Smart contracts
enhance transparency by enabling all shipowners, insurers, charters and,
most importantly, stakeholders, to access real-time cargo information. This reduces the disputes regarding delays and cargo handling. An example can
be drawn from the Everledger,
51 which uses blockchain to track high-value
goods and sort the disputes between them. This also helps arbitral tribunals
to quickly verify the facts.
B. Automated Enforcement of Maritime Arbitral Awards
Once arbitration awards get finalised, the blockchain-induced smart
contracts can enforce them automatically by either triggering compensatory
actions or by releasing escrowed funds. One of the known platforms like
Kelros52 usually experiments with blockchain-based dispute resolution. This
can be extended to maritime arbitration as well.
Jurisdictional dispute is persistent in maritime arbitration. The decentralised
nature of blockchain facilitates arbitration across borders without actually
relying on any specific country’s jurisdiction. A near-to-success example can
be of Lexchain.
53 It offers blockchain based tools for handling cross-border
legal disputes including maritime arbitration.
The incorporation of blockchain in maritime arbitration would commence
with incorporating a smart-contract provision in the charterparty or cargo
agreement, indicating that any arbitral award will be automatically enforced
upon issuance. After the arbitrator deliver its decision, the award is digitally
authenticated and logged on the blockchain ledger. The smart contract,
which is coded with the criteria for the award will eventually get activated
and disburse held funds, starting payment compensations, or enforcing
contractual duties; without the need for conventional court involvement. Although blockchain and smart contracts hold high prospect for maritime
arbitration, substantial procedural hurdles persist. The certainty of
enforcing blockchain-mediated awards could be vague under the 1996 Act,
especially in relation to Sections 2(2) and 34, which address court
involvement and the recognition of awards. Creating precise, machinereadable arbitration clauses is essential since vagueness can lead to conflicts.
Limits in stakeholder capacity, such as the technological knowledge of
shipowners, charterers, and regulators, present real challenges. The
implementation is further complicated by data integrity, cybersecurity, and
confidentiality. Cross-border acknowledgment generates disputes with
international regulations, and the lack of official standards for blockchain
arbitration results in legal ambiguity.
V. Recommendation
This part is divided into two sub-parts. One discusses general
recommendations about maritime arbitration and the other discusses
recommendations about inclusion of blockchain technology in such
arbitration matters.
A. General recommendation
India’s strategic position along key shipping lanes and its significant volume
of maritime trade offer natural benefits for establishing a maritime
arbitration centre. Ports such as Mumbai, Chennai, and Kochi function as
important trade hubs, providing considerable logistical ease for those
engaged in maritime disputes. The expansion of India’s economy and the
rise in maritime activities also highlight the need for a strong dispute
resolution system. Utilizing these geographic and economic advantages,
along with specific policy measures, can place India in a strong position
within the maritime arbitration arena.
India ought to set up a dedicated maritime arbitration centre, akin to the
Singapore Dispute Centre, which is presently handling an arbitration case with Indian participants. This centre would concentrate solely on maritime
and shipping matters, offering an economical and effective approach for
resolving commercial and financial conflicts among businesses active in the
area. This would not only bolster India’s standing as a significant participant
in the global shipping sector but also create a distinct chance for the nation
to establish its own arbitration procedures suited to the particular
requirements of the maritime industry. To enhance the efficacy of the
maritime arbitration system, it is crucial to boost awareness and training for
maritime arbitrators. This can be accomplished via workshops, seminars,
and conferences that address the unique needs and issues of maritime
arbitration. This method resembles that of the SIAC, which provides
training courses for arbitrators and other professionals engaged in the
arbitration process.
In contrary to other researches so conducted, including various LLM
thesis54 and blogs, this note will not suggest the reduction in the maritime
arbitration cost. The reason is that a general voyage of one ship (not even
an oil tanker) costs around one to three hundred million US Dollars
[“USD”]. Additionally, a single voyage generates an average revenue of
around 10-40% of the total cost, hence creating profit margin which range
up to 90 million USD. So generally, there is no deficit of money here, and
companies won’t shut down or opt out of arbitration, which is quicker than
court proceedings, just because of cost so incurred. Thus, making a hassle
of cost shouldn’t be a concern for researchers. Companies can fairly afford
this procedure and are not reluctant regarding this.
Now, how cost given under the MAR be justified becomes a deciding
question. The rules give an elaborated pricing model of the arbitration that
has to be undertaken. The cost depends upon the amount of the claim and
the counterclaims. It gives the charges for the claims ranging from five lakhs rupees to ten crore rupees and the charges, so given, range from two lakh
rupees to fifty lakh rupees, respectively. If we convert them into USD, it
will become two thousand USD to fifty thousand USD. This amount is just
half a percent of the average profit generated and nearly one percent of the
total amount so claimed by the parties.55
Another supporting argument is that the average arbitration cost in any
cross-border dispute or in any form of commercial arbitrations, including
the International Investment Arbitration, conducted by ICSID, costs
somewhere around the same amount. This shows that it is the standard cost
which is incurred in the process of arbitration as government is not funding
it and it is totally managed by private individuals. From the accommodation
to the fee of an arbitrator has to be covered by the fees submitted by the
parties. Hence, there is no way around the fee structure of the arbitration.
India, as always, is relatively cheaper in this area as well; but not as effective
as other arbitration seats are. Hence the recommendation from the author’s
side will be an increase of the arbitration fees in the rules.
B. Recommendation for inclusion of Blockchain Technology
Blockchain Technology has to be included in not only maritime arbitration
but also in any regular arbitration process, in order to keep an effective
dispute resolution framework. When particular blockchain systems or
platforms are recognized as advantageous and aligned with the objectives
of the stakeholders, making them worthy of support, the significant
stakeholders, including public sector participants, might contemplate
offering financial backing or technical help to overcome challenges such as
technological integration expenses, insufficient expertise, and the overall
reluctance of stakeholders in the maritime industry to invest in blockchain
systems. Based on the system and goals, stakeholders might also think about financing (or co-financing) the creation of a blockchain platform and
application for specific objectives.
A significant concern which can be raised in funding is that the
stakeholders’ knowledge about this new technology in the maritime field is
insufficient and the understanding of blockchain among participants in the
shipping industry, particularly with respect to the essential elements of
blockchain, such as; challenges and constraints, variations in characteristics
between public and private blockchain systems.56
The overall culture of the shipping sector, along with the reluctance to
abandon legacy systems, has also been recognized as a problem.
Consequently, stakeholders might want to start, participate in, or otherwise
back educational, training, or capacity-building initiatives to ensure that
essential participants (or prospective participants) in the maritime industry
comprehend the possible advantages, expenses, opportunities, and dangers
associated with different blockchain systems. This could motivate
stakeholders and partners to make educated choices regarding blockchain
implementation and might prevent initiatives from progressing too far
down a route that could be unhelpful to participants or might incur
prohibitively high costs to terminate or deconstruct. Likewise, it would be
recommended to provide training, education, and capacity development for
regulatory or other significant bodies engaged in administrative functions
or enforcement.
VI. Limitations
At this stage of blockchain technology development, it is not feasible to
provide clear recommendations on whether advocating for or engaging
with blockchain in a specific use case is advisable, due to uncertainties
surrounding costs, benefits, energy and resource consumption, security, and privacy, as well as other critical factors and possible outcomes. These
uncertainties become even more pronounced due to the differences in
essential characteristics of blockchain by platform type and setup (e.g.,
public, permissionless compared to private, permissioned; selection of
consensus mechanism; selection of administrators, validators, and thirdparty oversight, etc.), as well as the trade-offs linked to decisions between
platforms and systems. This implies that the choice to endorse or adopt
blockchain is very context-dependent as it hinges on the objectives of the
system, along with the costs, advantages, and compromises linked to that
particular system and setup.
For every use case and possible system, it is recommended that participants
and prospective supporters strive to comprehend the expenses associated
with the system (like energy consumption and technology deployment
costs), the possible outcomes of the system (including environmental and
health effects of energy consumption, privacy and security concerns, and
potential impacts of shared information for that specific-use case), as well
as the participants involved (comprising stakeholders, administrators, and
relevant authorities or enforcement). Choices will need to be determined
individually, after thoroughly analysing, evaluating, and contemplating these
characteristics and possible outcomes, taking into account the specific
platform type, the system setup, the expected usage scale, and the
transaction volume, among other factors.
VII. Conclusion
The ever-changing landscape of global trade and maritime activities requires that legal systems for resolving disputes adapt to contemporary challenges.
Maritime arbitration, despite the fact that it is effective in addressing
intricate disputes, encounters procedural inefficiencies and jurisdictional
uncertainties that limit its overall effectiveness. India has substantial
potential to emerge as an important centre for maritime arbitration because of its strategic location, expanding maritime trade, and robust legal framework. Creating a specialized maritime arbitration centre, along with improved training for arbitrators and a more attractive fee arrangement,
would strengthen India’s standing in the international maritime arbitration.
With some cutting-edge suggestions, this research highlights the
revolutionary impact of blockchain technology on maritime arbitration.
The transparency, immutability, and capacity of blockchain to automate
processes with smart contracts offer creative solutions to significant issues,
including evidence management, delays in enforcement, and the
complexities related to jurisdiction. Nonetheless, incorporating blockchain
into maritime arbitration necessitates addressing the technological,
financial, and knowledge challenges. Accelerating blockchain adoption can
lead to a more efficient and equitable maritime arbitration framework by
promoting stakeholder education, enhancing capacity building, and
developing supportive public-private partnerships. In the end, the merging
of legal innovation with technological progress ensures a future where
maritime conflicts are settled quickly, openly, and safely. Utilizing its
intrinsic strengths and embracing new technologies, India has the chance
to pave the path in maritime arbitration, aiding in a strong and resilient
global shipping industry.