Marine Insurance – Watch Out for Hidden London Arbitration Provisions

Propeller Club Quarterly

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PUBLISHED ON: January 17, 2007

If you are buying a marine insurance policy, be warned – you may find yourself bound to London arbitration. London arbitration provisions are very common in the marine industry. See e.g. In re Standard Tallow Corp. v. Kil-Management A/S, 901 F. Supp. 147 (S.D.N.Y. 1995).

Arbitration is based upon the concept of fairness. Fundamentally, there must be an agreement to arbitrate between the parties – a meeting of
the minds on the issue of arbitration. But, this does not always occur.

Oftentimes, insurance companies attempt to foist an arbitration agreement upon their policyholders, which requires the policyholder to forfeit their right to trial (and the concomitant benefits thereof) and arbitrate their claims (often in a jurisdiction in which the policyholder does not want to be). This is particularly true with marine insurance policies – which often contain arbitration provisions requiring policyholders to submit to arbitration in London, England – a notoriously pro-insurance company jurisdiction.