Part II To Arbitrate or Not to Arbitrate? The Grey Area of Contracts of Carriage, 7 Incorporation of a Charterparty Arbitration Clause into a Bill of Lading and its Effect on Third Parties

Abstract

This chapter discusses the practice of incorporating charterparty arbitration clauses into bills of lading and examines recent decisions of the English courts which have tended to take a flexible and liberal approach in determining the effectiveness of such incorporation. It notes that a restrictive approach to the recognition of the validity of such arbitration clauses results in a highly uncertain position for a carrier who may find itself having to arbitrate in different locations to respond to different claims arising out of the same incident. It also criticizes the European Court of Justice’s decision in Allianz SpA (formerly RiunioneAdriatica di SicurtaSpA) v West Tankers Inc (The Front Comor). The case has created the potential of much confusion on the enforceability of a charterparty arbitration clause incorporated into a bill of lading, and creates unnecessary unpredictability and the heightened potential of litigation costs to determine preliminary issues.