Changing tides of maritime arbitration as Asian sea traffic grows
Updated: 2013-12-03 07:21
By Andrew Mak(HK Edition)
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On Nov 29, the international media reported that at about 1:15 am, some 15 minutes after a high speed ferry (or more precisely a hydrofoil passenger vessel) departed Hong Kong for Macao, it collided with an unidentified object. The ferry carried just over 100 passengers and 10 crew members. The ferry company had a lot of experience. It was said to have been carrying over 10 million passengers a year, between Hong Kong, Macao and other southern Chinese cities - including Zhuhai.
It offered a 24-hour service. It is important to note that in this case some 85 people were hurt - although their injuries were not serious.
These days, the Hong Kong marine safety had come under heavy scrutiny, after a collision between two ferries in July last year killed 39 people off Lamma Island. The coroner's inquiry was sensational and generated a lot of media attention, as it was apparently the most serious incident since 1971.
The issue was perhaps a bit strange for people who do not travel much by ferry. But sea traffic today is very different from 10 years ago. This is because of increased shipping trade between Hong Kong and other places in China, and the growing number of container ports in the Pearl River Delta.
Hong Kong prides itself on safety and efficiency and has one of Asia's most advanced infrastructures and economies, with first-rate public services. We have the region's most advanced facilities: the Hong Kong-Macau Ferry Terminal with helicopter services, a private terminal and a government-built terminal for cruise ships. We are still one of the world's safest maritime hubs, due to tough regulations on ship maintenance and port management.
However, in regard to maritime arbitration services, we face tough competition. London seems to be the predominant choice for arbitration. However, while London experience is valuable, it should not be the norm for arbitration involving disputes within the region because of time and cost considerations.
A search on the internet shows that the key areas of arbitration in the shipping industry in China often involve disputes over ship building. However, an important point should be noted. Chinese parties in the shipping industry have been constantly asked to participate in international markets. The reality is that this has meant charter parties and ship-building contracts are likely to specify English law and arbitration in London. The London arbitration clause is generally standard practice in the industry. It is not uncommon that even in disputes where both parties are Chinese they have chosen the contract forms and dispute resolution terms. To make Hong Kong arbitration a standard in the industry is a more sensible choice. Hong Kong practices common law and this has the same degree of certainty and predictability of London arbitration.
Perhaps with economic growth in Asia and even faster trade growth between China and other places in the region, demand for maritime arbitration services will not be so great in future. But ship collisions will be more common as sea traffic grows. Arbitration services for dry as well as wet shipping are just as important. The government has been promoting education in maritime law at university level. This is useful, but it will take many years to develop experience.
A more comprehensive strategy will be required. First, cooperation and agreement from shipping lawyers, banks, ship owners, ship operators, marine insurers, international commerce organizations on standards of shipping documents and documentary credits, and other stakeholders are required. In this sense the role of government will be important. Second, law firms in Hong Kong will need to be encouraged to promote Hong Kong as the maritime arbitration center. Cooperation and communication with other places in China, such as Shanghai, will be necessary. Third, maritime legal services should be encouraged and supported. Chinese parties will also need to be told how Western-based systems of litigation work. If Hong Kong adopts such a system, it will remain the best shipping center in the region. All this will require political will and resources. We already have an admiralty court. More resources for establishing a maritime arbitration tribunal should also be studied to help foster maritime arbitration services for lawyers in Hong Kong.
The author is a HK barrister and chairman of the Hong Kong Bar's Special Committee on Planning and Policy.
(HK Edition 12/03/2013 page9)