New Nordic Arbitration Clause in the Plan

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Optional for Nordic leads – Mandatory for non-Nordic leads.

The new version of the Plan now includes an arbitration clause referring disputes to arbitration under NOMA Rules (Nordic Offshore & Maritime Arbitration Association). This is optional for a Nordic claims leader but the default  for a non-Nordic claims leader. This may come as a surprise to some.

For those assured on the Plan with Nordic claims leaders:

The head office of the claims leader will determine the choice of law and jurisdiction. So, if the claims leader is Norwegian then Norwegian law will govern the insurance contract, and any dispute will be subject to the jurisdiction of the court where the claims leader has its head office. Correspondingly, if the claims leader is Danish with its head office in Copenhagen, the insurance contract is governed by Danish law and disputes must be referred to the court which according to Danish law is the competent court.

For those assured on the Plan with non-Nordic claims leaders:

It is automatically agreed that Norwegian law and Clause 1-4B on Nordic Arbitration applies. The text of the arbitration clause is available here.

Brexit and questions of enforcement of a Norwegian court judgment in England provide a partial explanation for the change to arbitration.

What are the choices?

Changes could be made to the choice of law or jurisdiction including altering the agreement to arbitrate. An agreement to mediate in case of dispute could also be chosen. Any agreement must be in writing.

A non-Nordic lead or a non-Nordic assured might prefer a non-Nordic choice of law or different venue but that would undermine the point of insuring on Plan terms. Indeed, the Plan provides for Norwegian law if the lead is not in the Nordics.

Careful thought needs to be given to alternative choices.

In my view, it would not be appropriate to choose non-Nordic law to govern a Plan insurance contract. There are significant underlying differences from English law for example. The Plan is an ‘all risks’ rather than ‘named perils’ cover, and there are significant differences of the effect of breach of warranty.  The English Marine Insurance Act could have a detrimental impact and there would be friction between interpretation of the Plan and the English statute. The same would also follow for other choices of law outside the Nordics.

The default of Norwegian law (or choosing another Nordic law) with a non-Nordic venue would certainly increase legal costs, expert evidence on the relevant law being required.

The Nordic Way

The Plan’s success lies in its history and in its continuous development by the Nordic Revision Committee: having been discussed and amended over time to create a standard contract between the insurer and the insured, without much interference from statute. There is a Nordic tradition of reliance on local average adjusters, which works well although some non-Nordic assureds (and their brokers) view this with scepticism. There is also reliance on the Commentary to the Plan which is also discussed and approved by the Revision Committee. The Commentary is therefore regarded as an integral component of the standard contract which the Plan constitutes. (In the event of conflict, the Plan text prevails as the primary legal source over the Commentary.)

Similarly, Nordic Arbitration builds on a pragmatic approach to dispute resolution with focus on efficiency and impartiality.

What is Nordic Arbitration?

Nordic Arbitration is Nordic Offshore & Maritime Association (NOMA).

There may be some scepticism internationally to a new arbitration forum and a new set of rules. However, in practice, many disputes that have been arbitrated in the Nordics have done so based on loosely agreed principles that have now been reproduced in the ‘Best Practice Guidelines’. The Rules themselves are based on the UNCITRAL Arbitration Rules which are familiar to many. The reference is to three arbitrators, although a sole may also be agreed. A detailed notice of arbitration is recommended although not mandatory.

The parties are expected to appoint the arbitrators (all three) jointly. NOMA Rules require that NOMA is copied in to the appointment so that they receive information on the type of dispute and can consider a suitable arbitrator in case of lack of agreement. The aim is to appoint a diverse Tribunal with complementary competencies.  If unable to agree, each party shall appoint one arbitrator and the two appointed shall try to agree on the third arbitrator who will act as chair of the tribunal. In case of default, the party having appointed its arbitrator may request NOMA to appoint the second arbitrator, and/or may request NOMA to appoint the chair.

Note that in arbitrations where the parties are of different nationalities, NOMA shall, unless the parties agree otherwise, not appoint an arbitrator of the same nationality as one of the parties.

Other points to note:

An arbitrator considered for appointment is expected to confirm availability within the time frame required, declare possible conflicts of interest and their applicable rates.

There is an immediate commitment to a case management conference (as soon as possible) to agree a timetable, the discovery process is limited and a speedy path to an award is promised. There is power to remove an arbitrator if the arbitrator is not able to prepare for and attend a hearing within a reasonable time.

There is no right of appeal – attractive to some, not to others.

More information is available on the website: https://www.nordicarbitration.org/

There is not yet a panel of independent arbitrators to choose from on the NOMA website. There is no requirement that the arbitrator has to be Nordic or a lawyer although it makes sense to appoint an arbitrator that is familiar with the Plan, its Commentary and marine insurance in the Nordics.

For those overseas that may have concerns about independence and neutrality, there are non-Nordics (including myself) that are very familiar with the Plan and its working who could be appointed under NOMA Rules.

Mediation is always a viable alternative, by agreement. I can also assist with a mediated resolution of a dispute as well as arbitration, as can many other mediators (Nordic or not) that I could recommend.

Version 2019 of the Nordic Marine Insurance Plan (‘the Plan’, latest version published 1 October 2018) is published on the Plan website. The complete text and Commentary is available there, and the Nordic Plan is also available as an App.

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