Navigating Disputes with Maritime Arbitration
By Adam Shoneck, Vice President, AAA-ICDR® Consumer Division, and Jo Colbert Stanley, Principal, Stanley Legal Services and Expert in Maritime Law
With summer in full swing, many people will take to the water for vacations, getaways and daytime escapades. Some of the recreational activities likely will involve a contract containing an alternative dispute resolution (ADR) clause.
What should consumers know when engaging in maritime recreation? The American Arbitration Association-International Centre for Dispute Resolution’s® (AAA-ICDR) Adam Shoneck posed these questions to Jo Colbert Stanley, an expert in maritime law (see below for bio).
Q: Let’s start with cruises; most consumers probably don’t know that they can be bound to arbitration by purchasing a ticket for a cruise. What do they need to know about disputes with cruise lines?
A: When purchasing a cruise ticket, consumers often agree to the cruise line's terms and conditions, which typically include an arbitration clause. This means that, in the event of a dispute, such as personal injury, lost baggage or service issues, the matter must be resolved through binding arbitration rather than through traditional litigation. It's important for consumers to read these terms carefully to understand their rights and obligations.
Here is a sample arbitration clause that could apply when purchasing a cruise line ticket:
Dispute Resolution and Binding Arbitration.
OTHER THAN CLAIMS FOR PERSONAL INJURY, ILLNESS OR DEATH, PURSUANT TO THIS AGREEMENT, THE PARTIES ARE AGREEING TO GIVE UP ANY RIGHTS TO LITIGATE CLAIMS IN A COURT OR BEFORE A JURY, OR TO PARTICIPATE IN A CLASS ACTION OR REPRESENTATIVE ACTION WITH RESPECT TO A CLAIM. OTHER RIGHTS THAT YOU WOULD HAVE IF YOU WENT TO COURT MAY ALSO BE UNAVAILABLE OR MAY BE LIMITED IN ARBITRATION.
ANY CLAIM, DISPUTE OR CONTROVERSY (WHETHER IN CONTRACT, TORT OR OTHERWISE, WHETHER PRE-EXISTING, PRESENT OR FUTURE AND INCLUDING STATUTORY, CONSUMER PROTECTION, COMMON LAW, INTENTIONAL TORT, INJUNCTIVE AND EQUITABLE CLAIMS) BETWEEN YOU AND US ARISING FROM OR RELATING IN ANY WAY TO YOUR PURCHASE OF PRODUCTS OR SERVICES, WILL BE RESOLVED EXCLUSIVELY AND FINALLY BY BINDING ARBITRATION.
The arbitration will be held according to the jurisdiction, venue, dispute resolution, time limit and choice of law provisions contained in the applicable Cruise Terms.
Q: Consumers also can be bound to arbitration when purchasing or renting a boat. What types of disputes arise out of those relationships?
A: In the context of purchasing, renting or chartering a boat, common disputes include issues related to the condition and seaworthiness of the vessel, breaches of contract (including purchase sales agreements), disputes over payment and insurance claims.
For charters, disputes may arise over damage to the boat, safety compliance and the terms of use. Arbitration clauses in these contracts ensure that such disputes are resolved efficiently and privately, often involving experts in maritime law and industry practices.
Q: Do boat owners need to purchase insurance as automobile owners do? What should consumers know about disputes involving a marine policy?
A: Yes, boat owners should purchase marine insurance, which is akin to automobile insurance but tailored to the unique risks of maritime activities. Marine policies typically cover physical damage to the boat, liability for injuries to passengers and third parties, and environmental liabilities such as oil spills. Disputes can arise over the scope of coverage, claim denials and the valuation of damages.
It's crucial for consumers to thoroughly review their policies and understand the arbitration clauses mandating that disputes be resolved through arbitration, which often provides a more specialized and expedited resolution process, rather than litigation.
Q: What else should consumers know about arbitrating maritime issues?
A: Consumers should be aware that maritime arbitration often involves specialized knowledge of admiralty or maritime law and industry standards. This is a principal reason why using arbitration is advantageous to settle or otherwise resolve these disputes, as arbitrators typically are experts in their fields.
Additionally, the arbitration process generally is more flexible and can be tailored to the specific needs of the parties involved. It's important for consumers to keep detailed records of any contracts, communications and incidents to support their case in arbitration. Understanding the arbitration process and preparing accordingly can significantly impact the outcome of a dispute.
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Jo Colbert Stanley founded Stanley Legal Services in Florida. She is a certified arbitrator with the International Yacht Arbitration Council and serves on the consumer panel of the American Arbitration Association® (AAA®). Jo holds a diploma in International Maritime Arbitration from the Chartered Institute of Arbitrators, along with a Master of Laws in ADR and serves as the director of maritime affairs at Colodny Fass in Florida.