Punitive Damages in the Context of Maritime Arbitration: Myth or Reality? Lessons Drawn from the American Perspective and the Existing Practice of the Society of Maritime Arbitrators

by Naimeh Masumy

Abstract

The award of punitive damages in maritime arbitration raises unique, vexing questions of domestic and international legal frameworks. Despite the rapid growth and popularity of maritime arbitration, the availability of punitive damages, as a potential award to parties in maritime arbitration, has received sparse and insufficient attention. Whether or not punitive damages are being awarded within maritime arbitral disputes, is obscured by the private nature of arbitral hearings, and the opacity surrounding arbitral decisions. Regulatory regimes regarding the recoverability of punitive damages in arbitration vary greatly across different jurisdictions. Whilst some jurisdictions, like the U.S., provide a comprehensive framework with regard to punitive damages in arbitration, other jurisdictions like the U.K. have exhibited reluctance to recognize the availability of such relief within the context of arbitration.

This article, in short, will shed light on this academically neglected area, of how punitive damages operate, or may operate, within the context of maritime arbitration. It is argued that that the introduction of such awards has concrete benefits in regulating commercial conducts and prevents opportunistic behavior in maritime spheres. Existing arbitral decisions, particularly the Society of Maritime Arbitrators awards, demonstrate how arbitral tribunals rightly exercise caution in evaluating and making such awards. The article proceeds to elaborate how maritime arbitrations deals with criticism leveled against punitive damages schemes in arbitration. This article contemplates that awards of punitive damages within maritime arbitration may increase in the near future. Finally, the ways in which arbitration clauses should be drafted will be suggested, that encapsulate full enforcement of awards of punitive damages.

Punitive Damages in the Context of Maritime Arbitration: Myth or Reality? Lessons Drawn from the American Perspective and the Existing Practice of the Society of Maritime Arbitrators is available here www.transnational-dispute-management.com/article.asp?key=2801