Commodities Arbitration Under SMA Rules - Chapter 16 - Navigating Maritime Arbitration
Originally from Navigating Maritime Arbitration: The Experts Speak
Nearly all maritime arbitration in the United States occurs in New York under the rules of the Society of Maritime Arbitrators (“SMA”). Since its establishment in 1963, the SMA has offered an “efficient, practical system for fair disposition of maritime disputes.” It has been observed that, “the advantages of arbitration, in contrast to litigation in the courts, are that the parties may choose the arbitral forum and applicable procedure; the dispute is decided by experts in maritime law; and resolution of the dispute is generally faster . . . [and] less burdensome.” SMA panels are primarily comprised of “commercial maritime professionals” who “call upon their years of first hand practical experience, knowledge and specialized training to help parties resolve disputes.”
Commodity sale contracts typically require delivery of the goods to ocean going vessels and arrangement for their transportation to distant ports. In order to allocate between the buyer and the seller the obligations, costs and risks associated with contracts for carriage of the goods, commodity sale contracts frequently contain provisions relating to such maritime matters as laytime, demurrage, despatch and dead freight. It is therefore not surprising that many commodity sale contracts provide for SMA arbitration. In addition to being familiar with these maritime subjects, a number of SMA arbitrators have backgrounds in commodities trading companies or exposure to the commodities trade through their experience working in the shipping industry.
SMA arbitrators are also used to dealing with a wide range of commercial issues that arise under both maritime contracts and commodity sale contracts – including issues related to product quality, finality of inspection clauses, the measure of damages for non-delivery or delay, remoteness of damages, and excuses for non-performance. Using SMA arbitration for commodity sale contracts takes advantage of this expertise.