THE ARBITRATION ALTERNATIVE

No one really wants to go to Court.  It can be expensive, time consuming, and you have to wear a suit and tie.  Arbitration is a method to resolve disputes without resulting to the court system.  It allows you a greater degree of control of the schedule, a more business-like, less combative and perhaps even congenial atmosphere.   The Marine Council has long suggested placing an arbitration clause in your contracts. 

This Spring in the case of MAKAIRA, LLC/JAMES MASSEY, f/u/b/o ST. PAUL FIRE & MARINE INSURANCE COMPANY vs. INTEGRITY YACHT BROKERS, INC, the United States District Court for the Southern District of Florida, ruled that such an arbitration clause in a listing agreement was enforceable and threw a claim against a yacht broker out of Court.  The Judge ruled that the dispute should be decided by arbitration.  In this case, a yacht broker was dragged into a dispute between a yacht owner’s insurance company and a delivery captain concerning damage to the vessel that occurred when the vessel was being moved.  The yacht broker immediately moved to stay the proceedings pending arbitration.

The Court granted the motion and stayed the case pending arbitration and administratively closed the case against the yacht broker.  The Court recognized that there is a strong federal policy favoring arbitration over litigation and requiring Courts to construe arbitration clauses generously, resolving all doubts in favor of arbitration.  Even though the underlying claim involved the delivery of a vessel, the Court found that the allegations underlying the claims “touch matters” covered by the agreement and those claims must be arbitrated.

Here, the Plaintiff’s insurance company sued both the delivery captain, who was not a party to the contract, and the Broker.  The Court found that it must respect the terms of the contract which the parties (the owner and the Broker) themselves chose to enter, and the Plaintiff’s insurance company could not defeat that the clear  intent of the contract by suing an additional party not subject to said contract.  The owner’s insurance company, should they wish to continue to pursue the claim against the broker, could do so only in an arbitration forum.  (At the time of this time of this writing, the insurance company has not chosen to do so as of yet.)

So, where does this leave us?  Review your contracts and, if applicable, include an arbitration clause in your agreements.  This can operate to keep you out of the courthouse. The Miami Maritime Arbitration Council (MMAC) has been a vehicle for marine arbitration here in South Florida for many years.  It has a panel of local admiralty lawyers, marine surveyors and insurance specialists who are available to serve as arbitrators under its rules.  You may still have to arbitrate your differences, but you would do so under different circumstances where, in an arbitration setting, you have a greater deal of control.

Michael R. Karcher is a maritime lawyer with the South Florida law firm of Karcher, Canning & Karcher.

For more information contact:

Michael Karcher

mrk@ukandk.com

(954) 356-6999

or

Kitty McGowan