Charterparty Dispute

Charterparty Dispute

If a dispute arises under a charterparty and the parties are unable to sort it out amicably, then they have to consider formal dispute resolution procedures.

There are three (3) different types of dispute resolution:

1- Court proceedings in England
2- London Arbitration
3- Mediation in London


A well-drafted charterparty should include a dispute resolution: Law and Jurisdiction Clause. This should indicate which dispute resolution methods have been chosen. Shipbrokers should check the details of the Dispute Resolution Clauses in various Charterparties.

The charterparty dispute resolution clause will sometimes give the parties a choice between court and arbitration. Sometimes it may require mediation before legal proceedings can start Arbitration or High Court proceedings.

The English style of dispute resolution is adversarial proceedings. This means both sides make opposing arguments and one argument wins. In legal proceedings (Arbitration and High Court) most cases settle amicably. If they do not, they are resolved in a final hearing before the adjudicator (Judge or Arbitrator), with formal presentation of the case and evidence from experts and witnesses. This means that the hearing or trial of a case can last several days. Larger cases may last weeks or even months.

The introduction of the Civil Procedure Rules (CPR) in 1999 has greatly changed the approach of the English courts. Procedures are now faster and the courts have an overriding objective to deal with cases fairly but also quickly. The courts will actively manage cases, encouraging the parties to identify exactly what is in dispute and how best to resolve the dispute. They will impose tight timetables for the court process.

In England there are specialist courts. Most shipping cases will be heard by the Commercial Court in London. The judges are former commercial barristers with many years of experience. Smaller cases are heard in the Mercantile Courts, which are specialist Commercial Courts. Most litigation is centralised in London. Proceedings are commenced by a claimant issuing a Claim Form (formally a Writ). Claimant can sue as many parties as he wants. These parties are defendants and are named in the Claim Form.

A Claim Form must be served within four months of issue or it will expire. If service is required outside of the jurisdiction, then formal application must be made to the court for permission. Service of English court proceedings outside England can take a long time which can delay the progress of the claim.

Arbitration Proceedings

Arbitration Proceedings are quick to start. Once proceedings are served, a defendant must advise whether he intends to defend the claim. If he does then the claimant will serve Particulars of Claim. This is a document detailing the charterparty terms, the obligations that those give rise to, the relevant facts, how the claimant says that the defendant has breached his charterparty obligations, what losses the claimant has suffered as a result and what relief the Claimant Claims. The defendant will then respond formally in his defence. This is a document setting out what points are admitted, not admitted or denied. He may have a different version of events. He might say that although the facts are true, he is not legally liable. He will set out the details there. The claimant then has an opportunity to serve a reply, responding to the defendant’s defence. That will usually be the close of ‘pleadings’. At this point the parties will have a clear idea of what the issues in dispute are and what facts need to be proved by evidence.


Case Management Conference (CMC)

After the close of pleadings the parties will be called to a short hearing before a judge to fix the procedure for the case going forward to trial. The parties must provide details on how many witnesses they intend to call, on what subject, what outstanding points they have for the other side and how long they expect the trial will last. The parties try to agree on these points in advance. A Court Order will be made, which the parties are expected to adhere to. It is very likely at the Case Management Conference (CMC) that the parties will be ordered to mediate. The court case will then stop and it will only start again if the mediation fails.



Disclosure  a key principle in English court proceedings is disclosure. This is the obligation on the parties to the proceedings to produce documents to the other party. Documents include non-paper records, for example, computer records or telephone recordings. Not only must they produce documentation that they rely upon to prove their own case, but they must also produce documents which can damage their own case or support the other party’s case. This is often a key stage in court proceedings, as documents may be disclosed which undermine one party’s case. It is possible to request an Order from the Court for special disclosure, which is even wider. This will require a party to search for specific documents, including documents which will lead to a train of enquiry relevant to the case. This can make disclosure very time-consuming and expensive. Some parties to the litigation will be reluctant to give proper disclosure and may try to hide documents. However, it is difficult to do this. This is particularly the case now, as more documentation is sent electronically. It is far easier to notice a missing document when a schedule of e-mails is obtained, than a copy fax which is removed from a file.

Witness Evidence: Facts relied on by the parties must be proved. Witness evidence is important in this. In English proceedings, it is usual for witnesses of fact to be interviewed and lengthy statements prepared and signed shortly after the incidents giving rise to the dispute. Those witness statements will be exchanged between the parties as part of the court process. The witnesses will attend at the trial to be cross-examined about their statements. In some cases expert evidence is required.

Experts’ Reports will be exchanged and the experts will appear at the trial as well.

Interlocutory Applications: It is very common during the progress of the case that various points arise, which the parties cannot agree on. They ask the court to decide them.


Trial  if the case is not settled by the parties there will be a trial. This is how the case is decided. The judge will hear formal arguments presented by barristers for the parties. Witnesses of fact and expert witnesses will appear in court to be cross-examined by the opposite party’s barrister. After the evidence is heard, the barristers will summarize the case for the judge and the judge will give his judgment. Judgment is often reserved, meaning that judgment is not given immediately. It will be given in a few days, or perhaps in complicated cases, some weeks or months later. The trial takes place in an open court, meaning the public can attend. The proceedings are not private, though they are very difficult to follow without the documents. The trial takes place in a formal court room and the judges wear wigs and gowns.