This article has been authored by Vedansh Raj is an student at Rajiv Gandhi National University of Law, Punjab (RGNUL).
The maritime legal system in India recognises admiralty law as an important arm in the proper management of claims that may be rolled out of navigation and shipping. Of all the most complicated matters that fall under admiralty jurisdiction, salvage services, or those in an attempt to save a ship, cargo, or people’s lives, are quite the most complicated ones. This paper finds itself within the interplay of India’s Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 (“The Admiralty Act”) and the Arbitration and Conciliation Act, 1996 (“The Arbitration Act”) to question the arbitrability of claims for maritime salvage. This article seeks to evaluate to what extent some of such claims can be effectively dealt with through arbitration taking into consideration legal provisions, judicial decisions and public policy considerations.
Admiralty Jurisdiction and Maritime Salvage
The Admiralty Act consolidates India’s maritime claim laws. It gives High Courts in coastal states the power to consider and decide cases under Section 3 and has in rem jurisdiction for maritime claims including salvage. Section 4(1)(i) of the Admiralty Act provides for salvage claims where the matter is considered urgent while allowing vessel arrest to secure claims strengthen the concept of salvor’s lien thus establishing the uniqueness of salvage issues.
In contrast to typical private business disputes of a commercial nature, salvage claims under maritime law always implicitly involve public policy. They accompany environmental protection, navigation safety, and third-party rights, so they differ from strictly contractual ones. The permissibility of arbitration is well known for its effectiveness and freedom of the parties, but when it comes to salvage issues, there are still contentions on its applicability.
Arbitration and Salvage: Legal Context in India
Section 6 of the Arbitration Act is a complete legal framework for passing on disputes through commercial and speedy arbitration. Section 7 of the Arbitration Act establishes and protects arbitration agreements under which it becomes possible for parties to refer disputes for arbitration, including maritime disputes. However, the Act bars or limits arbitrability in cases based upon public policy or statutory jurisdiction such as criminal matters or matrimonial lawsuits as propounded in Booz Allen & Hamilton Private Ltd v. SBI Home Finance Ltd.
The nature of salvage claims poses the question of whether such an issue should be of exclusive statutory jurisdiction or matters capable of being referred to private arbitration. The Admiralty Act does not exclude contracts of arbitration in salvage claims. However, the strong undertone of judicial intervention points to legislative intent to keep such matters under the court’s jurisdiction.
Judicial Perspectives on Arbitrability of Maritime Claims
The Indian courts have emphasised the doctrine of judicial oversight regarding maritime claims balancing the same with the public interest, in the case of Liverpool & London S.P. & I Asson. Ltd vs M.V. Sea Success I & Anr the apex court recognised the international character of the maritime concerns that emerged in this case and the judiciary’s role in mediating controversies concerning public policy in maritime disputes.
In 2003, the Indian court held in the case of Oil & Natural Gas Corporation Ltd v. Saw Pipes Ltd that the arbitral awards may be set aside by the court if there has been a clash with the principles of public policy, sovereignty, natural justice and the principles of equity and fairness because this case establishes a broad interpretation of the term ‘public policy’. The Supreme Court once again reminded, in the case of Swiss Timing Ltd vs Organizing Committee Commonwealth Games, 2010 that matters touching vital public policy or statutory interpretation cannot be referred for arbitration, apply this to the maritime disputes related to salvage claims the issue related to environmental protection and third parties’ interest, raises significant legal and policy concerns on arbitrability.
International Frameworks on Salvage Arbitration
Salvage arbitration has been recognized globally but the same has been restricted due to various factors and thus to be carefully applied. The Salvage Convention of 1989 (“Convention”) which 69 states have ratified, replaced the earlier ‘no cure, no pay’ principle. This Convention encourages arbitration under standard form/such as Lloyds Open Form (“LOF”). However, India has not yet adopted this Convention.
In the case of public authorities, Article 5 of this Convention explicitly states that “the Convention shall not affect any provisions of national law or any international convention relating to salvage operations by or under the control of public authorities.” However, in the case of private parties, these frameworks contain judicial checks to protect public policy concerns such as environmental liability. In 2011, the English High Court approved the arbitration concerning salvage under the LOF agreement in the case of Samce Europe and MSC Prestige but later the court intervention prevailed due to the issue of the environment related to the arrest of the vessel.
Furthermore, The Arrest Convention of 1999, provides rules for the arrest of the vessel and equilibrates arbitral procedural freedom to the arrest of the ship, under Article 2 of this convention. This convention also mentions the public policy (‘ordre public’) under Article 7(5) which discusses the jurisdiction on the case merits, with judicial oversight in enforcement. India’s failure to ratify these conventions underscores the legislative void related to salvage arbitration and leads to unparalleled counterparts related to admirals and arbitration legal systems.
Challenges and Proposed Reforms in Arbitrating Salvage Claims
The arbitration in the process of salvaging poses various challenges these include, firstly, the salvage operations entail the preservation of the environment or human lives, which ultimately become the concerns of public interest and require social control in the form of judicial interference. Secondly, the most contentious aspect of salvage claims is that they are often commonly associated with numerous participants ranging from insurers, shipowners and environmental organisations, the diversity of parties renders arbitration cumbersome. Thirdly, the issue of salvage requires urgent relief by the courts because they are associated with the arrest of vessels and injunctions which admiralty courts can timely do under Section 5 of the Admiralty Act. Furthermore, Section 36 of the Arbitration Act allows for enforcing foreign awards in Indian courts. Still, it resolves longer and poses enforcement issues contrary to the nature of arbitration in urgent salvage concerns.
To address these challenges India should amend the Admiralty Act which explicitly approved autonomy-based frameworks for salvage arbitration and bridge the gap between autonomy and oversight. India’s complex admiralty structure could be made far more efficient by specific centres, equipped with specialised courts that deal with admiralty and environmental law to handle disputes arising from salvage issues.
India could adopt a Hybrid Dispute Resolution mechanism where the complex salvage issues could be referred to arbitration and admiral courts simultaneously. The problems regarding contractual parties could be redressed to arbitration. In contrast, the court could modify and address the General Terms and Conditions regulating consumer’s rights if the latter discovers that these Terms and Conditions infringe on public interest. Lastly, India should rectify the Salvage Convention and the Arrest Convention to align with international norms, reducing ambiguity associated with the arbitration of salvage claims.
Practices in other Jurisdictions
India could emulate the approaches adopted by various countries to reconcile the admiralty law and arbitration law without compromising the public interest. United Kingdom, has accepted arbitration for maritime claims such as salvage under legislations like the LOF under their Arbitration Act of 1996. Section 68 of the UK, Arbitration Act empowers the court to continue to possess the ability to interfere and rule on matters related to public policy. Hence, they also have the right to arrest ships.
The Singapore Chamber of Maritime Arbitration (“SCMA”) specialises in arbitration by providing the advantages of an institutional approach in maritime disputes. The High Court (Admiralty Jurisdiction) Act, of 1961 allow courts to exercise jurisdiction over maritime claims while recognising arbitration agreements under Section 5 of this act.
The Australian courts have reinforced the party’s autonomy in naval disputes, provided they do not contradict public policy. This was observed in the case of Bunga Melati 5 v. Murray Clayton. Sections 12 & 13 of Australia’s Admiralty Act of 1988, allow arbitration to resolve contractual aspects of salvage disputes, while courts address non-contractual elements like environmental liability. Furthermore, Australia also incorporated the international framework in resolving maritime disputes through arbitration by adopting the International Arbitration Act of 1974.
Conclusion
Maritime salvage claims present a complex interplay between admiralty jurisdiction and arbitration settlement in India. Though the arbitration offers autonomy to the parties in dispute, the same cannot be compromised because salvage claims incorporate public policy dimensions which necessitate judicial oversight. Solving this paradox calls for legislation change, global inclement, and the introduction of unique approaches such as Hybrid Dispute Resolution to resolve the conflict.
To strike a balance between the efficiency of arbitration and judicial oversight, India requires modernisation of the existing legal frameworks which align with the present times and thus position itself as a global maritime hub. The integration of arbitration into salvage disputes along with adequate protection to enforce awards by the admiral courts will strengthen India’s maritime law and ultimately promote economic and environmental interests.