John D. Kimball and Noe S. Hamra ●
A recent consolidated arbitration conducted under the rules of the Society of Maritime Arbitrators, Inc. (“SMA”) highlights several advantages of SMA arbitration for maritime and transportation disputes. The case is The M/V Della, SMA No. 4526 (2026). The dispute arose out of back-to-back booking notes for the carriage of approximately 10,000 to 12,000 metric tons of bagged polyester pellets from Taichung, Taiwan, to the United States, with one booking note between Centurion MPP Pte Ltd. (“Centurion”), as disponent owner, and Industrial Maritime Carriers, LLC (“IMC”), as charterer. There was a second booking note between IMC and DYLO, Inc. (“DYLO”), as sub-charterer.
The consolidation procedure in the SMA Rules was particularly important. Section 2 of the SMA Rules provides for consolidation of arbitrations before a single panel of three arbitrators when disputes arise under two or more contracts subject to the SMA Rules and involve common questions of fact or law, or substantially involve the same transaction or series of transactions. Section 2 provides for the panel to hear and decide the disputes and issue final and binding awards in the consolidated cases. In this matter, Centurion, IMC, and DYLO agreed to consolidate their disputes because the two booking notes were back-to-back and the claims involved many of the same facts and legal issues.
The consolidated hearings and briefing produced a more efficient and commercially coherent result than parallel proceedings would have offered. The same panel was able to decide Centurion’s claim against IMC and IMC’s pass-through claim against DYLO in a single proceeding, reducing the risk of inconsistent factual findings or conflicting rulings across separate arbitrations. Witnesses for all three parties testified and documents were produced by all parties. Consolidation of the arbitrations was especially important for IMC as the middle party in a pass-through situation.
The award also demonstrates the advantages of SMA arbitration in addressing security for arbitrators’ fees and expenses. Under Section 37 of the SMA Rules, each panel member determines his or her compensation, which is the joint and several obligation of the parties, and the panel may require the parties to post security for estimated fees and expenses before issuance of the award. The SMA Rules also contemplate that those deposits will be held in a segregated escrow account administered by the SMA. In this case, the application of this Rule resulted in all parties depositing funds in the SMA escrow account to ensure payment to the panel.
The award in this case also highlights the ability of an SMA panel to resolve complex maritime disputes by applying industry-specific contract terms and commercial realities. The panel found that IMC breached the Centurion-IMC booking note by failing to tender cargo within the agreed laycan and rejected the argument that Centurion was required to send the M/V DELLA, or another nominated vessel, to the loading port before asserting its dead freight/liquidated damages claim. The booking notes at issue contained specific wording that the panel relied upon in reaching its decision. The panel awarded Centurion damages against IMC and ordered DYLO to fully indemnify IMC. The panel also awarded Centurion and IMC pre-award interest, attorneys’ fees and expenses, and arbitrators’ fees. In this respect, the award is consistent with the settled practice in SMA arbitration of awarding attorneys’ and arbitrators’ fees, or at least a substantial percentage thereof, to the prevailing party. Many in the shipping industry view this rule as an asset of SMA arbitration.
This recent award is a useful reminder that SMA arbitration can provide maritime parties with a practical forum for efficiently resolving multi-party, back-to-back disputes in a single proceeding. It also shows the importance of selecting arbitration rules that provide procedural tools, such as consolidation and security for arbitrators’ fees, that can materially affect the efficiency, cost allocation, and enforceability of the ultimate result.
There is a cautionary lesson as well. In deciding to pursue arbitration of a claim, parties should bear in mind that attorneys’ and arbitrators’ fees, or at least a substantial part thereof, will be awarded to the prevailing party. This is contrary to the usual American rule in litigation by which each party bears its own fees and costs. Thus, before engaging in arbitration, parties should have sufficient confidence that their claims or defenses will prevail before electing to demand arbitration.
This article is one in a series of articles written for Blank Rome’s MAINBRACE: August 2026 edition.