Bahamas potential 'centre of choice' on cruise disputes


Tribune Business Editor


The Bahamas has “a very good chance of being the arbitration centre of choice” for the thousands of employment-related claims generated annually by cruise ship crews, an industry expert believes.

Michael Crye, a former Cruise Line International Association (CLIA) executive vice-president, said the Bahamas’ long-standing ties to the cruise industry had left it in pole position to “grab a substantial amount of this opportunity”.

Addressing the Pre-International Council for Commercial Arbitration Congress’s seminar in Nassau on Friday, Mr Crye said the sector’s preference for arbitration, coupled with potential changes to a key US law, could perfectly position the Bahamas to capitalise on its position as the world’s largest cruise ship registry.

The US law in question is the Coast Guard Authorisation Bill 2014, which is presently being assessed by the Congress. The cruise industry has lobbied for a provision to be included in this Bill that would restrict compensation for foreign sailors on passenger vessels in the event they suffer illness, injury or death while on board.

Mr Crye said the provision, if passed, would prevent such crew related-claims being brought if the sailor in question was a ‘non-resident alien’ in the US, and if the incident in question occurred outside US waters.

Critically, the proposed provision also requires that foreign crew members have the right to seek compensation “under the laws of the nation where the ship is registered” or flagged. If such rights are in place, then the Bahamas’ position as the shipping registry with the largest number of cruise ships opens the doors to potential new possibilities.

“If, for all these Bahamian-flagged vessels, there is a right of compensation and reasonable compensation, and if this provision passes into law, the Bahamas has a very good chance of being the country of choice for arbitration for cruise ships flagged in the Bahamas,” Mr Crye said.

“It’s a fact that makes you the convention, the forum of choice for thousands of claims that arise every year in the cruise passenger industry. It [the proposed US law provision] will be the genesis for many more crew member claims going forward.”

Mr Crye’s comments will be ‘music to the ears’ of those behind the Bahamas’ drive to establish itself as a commercial arbitration hub, as they suggest this nation is on the right track.

This nation is seeking to capitalise on its existing industries to carve out an initial arbitration niche, and has targeted maritime and trust disputes, in particular, as building blocks for its plans.

Arbitration, and other alternative dispute resolution (ADR) methods, are widely viewed in commercial and legal circles as cheaper and quicker than the courts in resolving complex matters. The parties have access to specialists in the necessary field, while they also benefit from the extra confidentiality provided by not going through the court system.

Mr Crye further praised the Bahamas’ “very significant, robust connection” to the maritime industry by extolling the Grand Bahama Shipyard’s virtues, describing it as performing “the lion’s share of [repair] work on vessels operating in the Western Hemisphere”.

Pointing out that cruise ship crews frequently ranged from 800-1,600 persons, he added that “crew claims are brought to the US courts in increasing numbers every year”.

But, with cases time consuming and costly, and the outcome of jury trials unpredictable, Mr Crye added: “The cruise industry in general is increasingly relying on arbitration clauses in crew employment agreements.”

These agreements typically base adjudication and damages sums on either English or Filipino laws, with many foreign crew members coming from the latter country. US courts frequently enforce arbitration award, with the cruise industry “committed” to using this method of dispute resolution.

“The Bahamas, given all the circumstances relating to the passenger ship industry, I think is in a very good position to grab a substantial amount of this opportunity,” Mr Crye said.

“The Bahamas has taken a number of steps to make itself a maritime centre of arbitration. It has acceded to the New York Convention, and you do have some legislation that needs to be tweaked to make the arbitration system work more efficiently and speedily.”

And Mr Crye said that arbitration claims relating to Bahamas-flagged cruise ships would not necessarily stop with the crew. The industry, he added, had introduced a Passenger Bill of Rights that lays out how persons should be compensated if their cruise fails to live up to what is promised.

The cruise ship industry is prone to numerous schedule disruptions, via incidents such as mechanical breakdown, grounding and on-board sickness epidemics. Mr Crye said that while no legal actions had been launched yet invoking the Passenger Bill of Rights, it was only a matter of time.

Lawrence Teh, a partner at a Singapore law firm, urged the Bahamas to broaden its arbitration horizons and not confine its ambitions to the cruise ship industry.

Speaking on the same panel as Mr Crye, he said: “I would certainly suggest arbitration for the cruise industry is the low hanging fruit for the Bahamas, but you should not stop there.

“Use that as a springboard to tourism arbitration, visitor arbitration and mergers and acquisitions, and all that goes well.”

The chair of Singapore Law Society’s Alternative Dispute Resolution (ADR) Committee said other maritime arbitration niches the Bahamas could explore included onshore/offshore ship building and repair contracts.

And, looking ahead to the impending Freeport Container Port expansion, and the likelihood that the Panama Canal’s widening will see more vessels call on the Bahamas, Mr Teh said there was the potential for increased arbitration activity related to vessel arrests in this nation’s waters.

And, with ships on the Bahamas’ registry also requiring financing, Mr Teh said there was potential for work here. He noted that ship financing was increasingly coming from syndicated loans and private equity funds.

Kenia Nottage, a Bahamian attorney serving as a legal consultant to the Government, called for a Maritime Lawyers Association or Committee to be established as part of the Bahamas Bar Association.

“I think it will be critical for us, certainly from a maritime arbitration point of view,” she said of such a development. Apart from showing the Bahamas is serious, such a move would also build capacity and expertise.

Ms Nottage added that the Government was also moving to introduce lightering regulations, and seeking to amend the existing Fisheries Act.


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