Party autonomy

Party autonomy regarding choice of court and arbitration agreements generates intense debate in the PIL discipline and emerges in the study of the shipping law sector. Party autonomy provides speed, predictability and legal security to the contracting parties in the event of a cargo claim and can be divided into procedural, material and ‘conflicmal’. The latter is also known as party autonomy in conflict of contract laws and allows parties to choose the law for the validity and effectiveness of the contract with no more limitation than the PIL of the forum. Procedural party autonomy provides for the recognition and enforcement of the choice of seat and dispute resolution mechanism. Substantive or material party autonomy sets the material content of the contract, contractual clauses normally incorporated by reference within a predetermined national system, subject to the mandatory rules of the forum.

It can be said that there is greater legal uncertainty regarding party autonomy from a procedural perspective (validity of choice of forum and applicable law), compared with conflicmal (choice of law for the validity and effectiveness of a contract) or material (choice of contract clauses normally incorporated by reference within a predetermined national system) perspectives. This work will focus on procedural party autonomy, which influences material and conflicmal party autonomies present in various instruments, to determine the most effective legal system for material and conflicmal autonomy.

How does party autonomy impact contracts for the carriage of goods by sea? Contracts for the carriage of goods by sea carry legal risks that have to be balanced with the legitimate commercial interests of contracting parties. Charterparties and B/Ls will not have contradictory terms when the shipowner also acts as the carrier of the goods since it is a party to both the charterparty and the B/L. What are the components of party autonomy and in what circumstances does it come into play?

Procedural party autonomy

Procedural party autonomy is related to the recognition and enforcement of the choice of forum agreements, the cargo claims or the arrest procedures. It does not only apply to litigation. The different procedural rules either apply to contractual cargo claims between the shipowner and the charterer under the charterparty or to cargo claims between the B/L holder and the shipowner that will usually be in contract on the terms of the B/L, although not where it is a charterer's B/L.

In order to stress the importance of procedural party autonomy, different scenarios first need to be analysed. A problem may occur when a shipowner does not act as the carrier and does not sign the B/L. The terms in the charterparty and the B/L may differ, and the transferor of the B/L may not be aware of the negotiated terms of the charterparty. It may be necessary to clarify whether the transferor B/L holder can act against the carrier who is bound by both contracts. If the parties cannot settle the case on their own, the analysis of this issue by the court where the lawsuit is filed leads to a determination of the competent forum where the B/L holder is entitled to sue the carrier. Domestic procedural laws may or may not recognise the validity of dispute resolution clauses inserted in contracts of affreightment. Non-recognition may then lead to a conflict between different customary rules and practices established between the parties.

The principle of procedural party autonomy makes arbitration a flexible dispute resolution mechanism, providing parties with the freedom to contractually determine the circle of persons entitled to participate in the arbitration proceedings according to their commercial needs. Parties may disagree on the designated dispute mechanism or the scope of its

¹

Stavros Brekoulakis, ‘The Relevance of the Interests of Third Parties in Arbitration: Taking a Closer Look at the Elephant in the Room’ (200S) 113 Penn State L Rev 1165, 1166.

powers. Thus, a respondent may attempt to evade arbitration, perhaps making an allegation of violation of some limits or norms in order to attempt to invalidate the arbitration agreement.^[1] Arbitration has a multiparty substantive background and third parties with an interest in the outcome of the arbitration should not be excluded from the arbitration process.

The legal framework applicable to an arbitration agreement may involve different domestic or conventional laws applicable to the parties, the seat of arbitration, the contract and the arbitration agreement. Enforcement of the award may be subject to yet another law. Parties are advised to make express choices of applicable law (ensuring that the arbitration clause meets the requirements of that law and that the dispute is regarded as arbitrable), the language of the arbitration and the method of appointing arbitrators. In the absence of express provisions agreed to by the parties, most arbitration rules afford arbitrators discretion to make these choices for the parties. The parties signing the arbitration agreement must have the capacity to do so and, where relevant, the authority to bind the party to the arbitration. The substantive law applicable to the arbitration clause should also be specified, in case a dispute leading to arbitration occurs.

Freedom of contract allows parties to choose a law applicable to disputes about the arbitration contract that is different from the one applicable to the main contract. To clarify whether the judge will uphold the clause or assume jurisdiction, it will be necessary to consider one of the more ratified conventions worldwide, the New York Convention (see Chapter 2).

• [1] See Klaus Peter Berger, International Economic Arbitration (Deventer 1993) 118; Mahmood Baghen, International Contracts and National Economic Regulation: Dispute Resolution Through International Commercial Arbitration (Kluwer Law International 2000) 123. 2 Brekoulakis (n47) 1187-1988. 3 Tony Cole and others, Legal Instruments and Practice of Arbitration in the EU (DG for Internal Policies, European Parliament 2014) 8. 4 511 William Rowley, QC (ed), Arbitration World: Jurisdictional Comparisons (4th edn, Thomson Reuters 2012) 8-9. 5 Margaret L Moses, The Principles and Practice of International Commercial Arbitration (3rd edn, CUP 2017)43-58. 6 International Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘1958 New York Convention’) (adopted 10 June 1958, entered into force 7 June 1959) 330 UNTS 38. 7 Jean-Michel Jacquet, Le contrat international (1st ed, Dalloz 1992) 112-120; Jean-Michel Jacquet, ‘Retour sur la règle de conflit de lois en matière de contrats’ (1991) 3 JDI 679; Jean-Michel Jacquet, ‘Contrats’ in Encyclopédie Dalloz: Répertoire de droit international (2nd edn, Dalloz 1998) 1-50; Alfonso-Luis Calvo Caravaca and Javier Carrascosa Gonzalez (eds), Derecho Internacional Privado: Vol II (Comares 2016) 928-931 ; Javier Carrascosa González, La Ley aplicable a los contratos internacionales: el reglamento Roma I (Colex 2009) 164-168.