‘Shaky’ times for arbitration clauses: rethinking business common sense

Abstract

English courts have held that clear words of incorporation of the arbitration clause (contained in the charterparty) are indispensable in the bill of lading, to bind consignees who had never witnessed the charterparty. This approach is for the protection of consignees as third parties. In this article, attention will be paid to the identification of problems relating to the form that a charterparty should have to be appropriate for incorporation. Whether charterparties can be superseded by other types of documents will also be examined. Last but not least, the author will critically assess the rules of construction followed in recent cases where ambiguous language has been used in incorporation clauses in bills of lading. In the last few months, three judgments have been issued which have produced highly controversial outcomes. The author asserts that the method of construction should not be considered as a distinct method from that of incorporation of clauses. Times have changed and, apparently, so has business common sense. However, ‘uncertain certainty’ has been caused because business common sense has been applied differently to judgments that have been issued with a couple of months difference.