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The new LMAA Terms 2021
News & Insights 5 May 2021
With reports of 3,010 arbitrator appointments, 2020 recorded the highest number of London Maritime Arbitrators Association (LMAA) arbitrator appointments since 2015 thus confirming that the LMAA remains a popular...
With reports of 3,010 arbitrator appointments, 2020 recorded the highest number of London Maritime Arbitrators Association (LMAA) arbitrator appointments since 2015 thus confirming that the LMAA remains a popular forum for dispute resolution in the shipping industry.
The LMAA has published a new set of terms for all of the ‘full’ procedures (the LMAA Terms 2021), the LMAA Intermediate Claims Procedure 2021 and the LMAA Small Claims Procedure 2021. All take effect from 1 May 2021 and will apply to new arbitrations commenced after that date.
Though certain amendments are simple fine tuning of the rules, others are particularly important in view of the recent challenges arising from by the COVID 19 pandemic. The amendments have again been spearheaded by David Owen QC, and the revised full terms and procedures can be found on the LMAA website. The below update summarises the key changes and comments from the club’s perspective.
Key changes incorporated in 2021 include:
- Virtual and semi-virtual hearings
The most significant amendment is the publication of guidelines for the conduct of virtual and semi-virtual hearings at the Sixth Schedule of the revised Terms. Those guidelines provide useful directions on the necessary preparation for the hearing including appropriate levels of technical support to be arranged, electronic bundles and their contents, hosting of meetings, ‘break out rooms’ and so forth. The etiquette to be adopted by all participants during the hearings is also addressed, as is the way oral testimony from witnesses should be conducted, and even how many screens may be required.
- Appointment of sole arbitrator
The process for the appointment of a sole arbitrator where one party fails to appoint its arbitrator, has been simplified. The Terms have adopted the procedure set out in the LMAA Arbitration Clause. The new, speedier procedure, compared to the one set out in the Arbitration Act 1996, now allows a party to appoint its own arbitrator as sole arbitrator unless the other party appoints its own arbitrator and gives notice that it has done so within 14 days of receiving a notice of arbitration. The procedure before followed s. 17 Arbitration Act 1996, which provided an additional 7 day notice period before a sole arbitrator could be appointed, and also permitted an application to the courts to set aside the appointment.
- Appointment of substitute arbitrator
The President of the LMAA is now authorised to appoint a substitute arbitrator where it becomes apparent that an original arbitrator is incapable of conducting the proceedings or attending a hearing. Whilst parties can still make an application to court for a substitute appointment, this additional power of the President of the LMAA should help to ensure that arbitrations are conducted more efficiently thus limiting time lost and costs to the parties.
- Electronic signing of awards
The Terms allow the awards to be signed electronically and for parties to be notified by electronic means which provides an enhanced flexibility towards the prompt preparation and publication of awards. The parties are now responsible for informing the Tribunal prior to the issue of the award if they wish the award to be signed with original handwritten signatures in the event that that an electronically signed award may lead to enforcement issues.
- Witness statement
A new paragraph (2(a)) has been added to the Fourth Schedule provides some helpful guidelines regarding the use of factual evidence. It emphasises that a witness statement should ideally be in the witness’s own words and contain only evidence as to matters of fact. The witness should have personal knowledge or recollection of the facts being included in the statement, and the statement shall never be used to argue a case. This development partly reflects recent changes in the English High Court procedures. The LMAA requirements will undoubtedly create challenges, for example, in deciding the best language for a crew member’s statement taken immediately after a casualty, but the intention is to introduce transparency to the process of drafting witness evidence.
ICP and SCP
Whilst most of the amendments to the Intermediate Claims Procedure (ICP) and the Small Claims Procedure (SCP) serve as clarifications to previous terms, there have also been a few key changes as discussed below:
The same simplified procedure regarding the appointment of a sole arbitrator in the LMAA Terms 2021 (see above) has also been incorporated.
- Reasoned awards
A significant step has been taken with ‘reasoned awards’ now the default position unless the parties agree otherwise. However, the exclusion of the right of appeal under the SCP remains applicable to all awards.
- Ruling on costs
The SCP now requires, wherever possible, that rulings on costs should be combined with the main awards in an attempt to streamline the process and remove the need for a separate, second costs award.
- Retention of jurisdiction as sole arbitrator
In the event that the SCP is deemed inappropriate due to the nature and/or the weight of the claim, the sole arbitrator can continue to retain jurisdiction as a sole arbitrator and order the proceedings to continue under the ‘full’ LMAA or the ICP Terms.
- Small claim fees
The payment of the SCP fees is now a condition precedent to continue the proceedings and arbitrators may retain an amount from those fees as compensation for services rendered even if an award is not produced.
The updated procedures reflect recent developments and practices designed to overcome the potential disruptions brought about by the COVID-19 pandemic. The incorporation of provisions and guidelines for the conduct of virtual and semi-virtual hearings demonstrates the LMAA’s ability to adapt to changing circumstances promptly.
The continued efforts to simplify the procedures, with the changes regarding the appointment of sole arbitrators, electronic signatures and the authority given to the President of the LMAA to appoint a substitute arbitrator, should enhance the flexibility and efficiency of LMAA proceedings. In turn, that should help users save costs and time.
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.