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Web Alert: The new LMAA Terms 2017
News & Insights 30 July 2017
This update is intended to be a brief summary of the key changes and comments from the club’s perspective.
The London Maritime Arbitrators Association (LMAA) has published a new set of terms, the LMAA Terms 2017, which took effect from 1 May 2017. The revision follows consultation with users under the chairmanship of senior barrister and arbitrator, David Owen QC. The full LMAA 2017 Terms and guidance from the LMAA can be found on its website. The following update is intended to be a brief summary of the key changes and comments from the club’s perspective.
The LMAA Terms (the Terms) are reviewed and revised from time to time and were most recently subject to amendment in 2006, 2012 and now 2017. The Terms are a set of rules of procedure which are available to commercial parties for incorporation into dispute resolution clauses in their contracts. The purpose of arbitration according to these Terms is to obtain the fair resolution of maritime and other disputes by an impartial tribunal without unnecessary delay or expense. The latest changes to the Terms seek to improve the time and cost efficiency of the LMAA. These will be the governing terms for arbitrations commenced on or after 1 May 2017.
The 2017 revisions
The key changes include:
- Appointment procedure
The revised Terms now provide for appointment by the President of the LMAA where the parties have failed to comply with an arbitration agreement for arbitration by a sole arbitrator. Previously, parties had to apply to the High Court in order to do so. It is anticipated that this measure will save parties time and money where an impasse is reached in agreeing a sole arbitrator or when one party is being deliberately difficult.
- Procedural directions
The Terms now implement the guidance notes included in the 2012 terms. Tribunals are able to make procedural directions and take appropriate action regarding future conduct of proceedings 21 days after exchange of the LMAA Questionnaire, should the parties fail to agree directions between themselves.
- Cost effectiveness and efficiency
The Terms impose an express obligation on both parties and tribunals to actively consider ways to make the arbitral process as cost effective and efficient as possible, taking into account the LMAA Checklist (the Checklist). The Checklist was previously guidance only but the incorporation of same into the Terms will mean that when dealing with costs, the tribunal can consider unreasonable or inefficient conduct, including failure to comply with the Checklist.
- Exclusion of Part 36 procedure
A tribunal can take various factors into account when considering costs including:
- the conduct of the parties
- any failure to comply with the Checklist
- any without prejudice offer
- the estimates provided by both parties in the LMAA Questionnaire.
The Terms clarifiy that Part 36 of the English Civil Procedure Rules does not however apply to LMAA arbitrations.
SCP and ICP
Whilst the focus of the update from the LMAA has been on the LMAA Terms 2017, there have also been some changes to the Small Claims Procedure (SCP) and Intermediate Claims Procedure (ICP). The most notable amendment is that under the SCP the financial limit of small claims is raised from $50,000 to $100,000 where a limit has not been agreed by the parties. The ICP has been subject to only minor amendments to clarify and simplify the procedures.
The recent changes reflect an evolutionary rather than a revolutionary change to the LMAA Terms. The approach reflects the intended cautious approach of the LMAA to ensure any changes act to streamline the rules which have generally operated satisfactorily in practice.
The majority of the changes are unlikely to have any significant impact in practice and largely reflect the previous guidance notes which were published in 2015. However, the renewed focus on ensuring that parties actively consider ways to make arbitration more cost-effective and efficient is welcomed. It is hoped that members who may engage in arbitrations under the revised LMAA Terms 2017 may benefit from speedier proceedings and reduced costs.
Members requiring further information on this topic should direct their enquiries to either their usual contact at the club or to the authors of this article.