Maritime and Arbitration: A Real Time Connection?
By Suela Dervishi
Introduction
The English legal system has a history of dealing with maritime disputes dating back hundreds of years and resulting in a highly significant amount of case law and legal theory in this area.[1] Lately, there has been a rise in the welcoming attitude of arbitration as a preferred method of resolving maritime disputes in an effective and commercial manner.[2] As mentioned in the previous blog posts, arbitration presents many benefits to the parties, such as the privacy of the arbitral process and perceived certainty in the binding nature of arbitral awards. Arbitration clauses are used mostly in time, voyage, and bareboat charter parties; sale and purchase agreements; and specialist contracts for towage, wreck removal, agency agreements, shipbuilding, and ship repair.[3]
London: the capital of maritime arbitration
Two studies published in July 2020 have highlighted the leading position of London as the preferred place for the resolution of maritime disputes by arbitration[4], with 83% of all such arbitrations heard in the city.[5] Only in 2019, London saw an almost 14% increase in its international maritime arbitration caseload.[6]
Where English law and arbitration as provided for in a contract, it will be governed by the Arbitration Act 1996.[7] The Act gives the parties the freedom to agree on how disputes are to be resolved.[8] The parties can either choose industry-specific rules or reside for more general rules. Parties may wish to consider the use of UNCITRAL Rules, which are frequently adopted for ad hoc arbitration. [9] Otherwise, parties may wish to consider the use of an arbitration clause which expressly provides for the proceedings to be subject to the London Maritime Arbitrators Association (LMAA) Terms & Procedures.
The LMAA’s leading role in maritime arbitration internationally
The LMAA was founded in February 1960 and celebrated its 60th anniversary earlier this year.[10] The LMAA is an association of practicing maritime arbitrators. Unlike the London Court of International Arbitration (LCIA) or the International Chamber of Commerce (ICC), it does not administer arbitrations.[11] Instead, it produces arbitration terms and procedures which are very widely used in maritime arbitration in London.[12]
Research by HFW, a leading law firm, in its report entitled “The Maritime Arbitration Universe in Numbers One-Year On” (May 2019), confirms that approximately 80% of all maritime arbitrations worldwide take place on LMAA Terms.[13] Craig Neame, who heads the shipping practice at HFW, said that the LMAA retained strong “credibility and trust” among commercial clients, accounting for 96% of all arbitrations globally in 2019.[14] Similarly, a LMAA report demonstrates a substantial increase in arbitral cases, with an estimated number of LMAA arbitrations rising by nearly 15% from 2018 figures. A total of 1,756 LMAA cases were reported for the 2019 year, and 529 awards were published (up from 508 in 2018).
The LMAA has recently reassured its members that much of their current activity is business as usual and remains unaffected by Covid-19 restrictions.[15] The LMAA is also no stranger to conducting remote hearings using video conferencing software, and as such has been able to adapt quickly to the new reality.[16]
The LMAA’s position in an international context by comparison to some of the leading arbitral institutions is as follows:[17]
The Maritime Arbitration Association (MAA) and the Houston Maritime Arbitrators Association (HMAA) do not make their arbitration statistics public and have not been able to provide their 2018 or 2019 data to HFW.
LMAA advantages against other arbitration institutions
One of the big advantages that LMAA offers is flexibility. LMAA principal arbitration procedure provides an opportunity of case consideration upon the documents without oral hearings, with an essential decrease of arbitration costs.[18] The parties can agree on other LMAA rules and procedures for their dispute settlement, such as LMAA Small Claims Procedure, LMAA Intermediate Claims Procedure, and LMAA FALCA Rules – Fast and Low-Cost Arbitration. The main features of such procedures are low arbitration costs, short consideration terms, clear structure of arbitration proceedings, and enforceability of the awards.[19]
Secondly, in the framework of proceedings, the parties may be represented not by only by English but by the local lawyer whom they trust and whose services are much cheaper.[20]
Thirdly, the LMAA comes handy to those who wish to mediate rather than arbitrate, by having a set of Mediation terms.[21]
Last, but not least, filing a claim does not provide any payments except the arbitration appointment fee.
Conclusion
The thriving shipping industry and its demands have promoted the maturity of maritime arbitration and have exerted an impact worldwide, which thus made London as the center of international maritime arbitration.[22] The domestic arbitration service in London has shown to serve the shipping and commodity trades on a worldwide basis. In the wider commercial arbitration context, the number of LMAA arbitrations are significantly more than those administered by any international arbitration institution [including the ICC, LCIA, SCC (Stockholm Chamber of Commerce), SIAC or HKIAC). The LMAA keeps striving to have its members provide an excellent service and the statistical figures clearly suggest that it is succeeding.
[1] Fiona Gavin and Reema Shour, ‘London Maritime Arbitrations’ Association (LMAA) – National Arbitration Institution’ in Loukas Mistelis and Laurence Shore (eds), World Arbitration Reporter (WAR) (2nd edn 2010).
[2] Ibid.
[3] LMAA, ‘Arbitration: Principles and Practicalities’ < http://www.lmaa.org.uk/uploads/documents/Chamber%20of%20Shipping%20Webinar%20-%20Presentation%20by%20Donald%20Chard.pdf> accessed 28 September 2020.
[4] The LMAA London, ‘London leads in Maritime Arbitration – again!’ < https://lmaa.london/london-leads-in-maritime-arbitration-again/> accessed 28 September 2020.
[5] Ben Rigby, ‘London rules the waves in maritime arbitration cases’ (Globallegalpost.com, 12 August 2020) < https://www.globallegalpost.com/big-stories/london-rules-the-waves-in-maritime-arbitration-cases-19652908/> accessed 28 September 2020.
[6] HFW, ‘The Maritime Arbitration Universe in Numbers: London Remains Ever Dominant’ (July 2020) < https://www.hfw.com/downloads/002203-HFW-Maritime-Arbitration-in-Numbers-July-2020.pdf> accessed 29 September 2020.
[7] Steamship Mutual, ‘English High Court Proceedings v London Arbitration’ < https://www.steamshipmutual.com/publications/Articles/english-high-court-proceedings-v-london-arbitration0717.htm> accessed 28 September 2020.
[8] Ibid.
[9] Craig Tevendale, Rebecca Warder, and Caitlin Eaton, ‘Ad Hoc Arbitration Alive and Well in London: The Latest Statistics’ (Herbert Smith Freehills, 13 May 2020) < https://hsfnotes.com/arbitration/2020/05/13/ad-hoc-arbitration-alive-and-well-in-london-the-latest-statistics/> accessed 28 September 2020.
[10] LMAA, ‘Arbitration: Principles and Practicalities’ (n 3).
[11] Ibid.
[12] Ian Gaunt, ‘What makes LMAA arbitration different’ < http://lmaa.org.uk/uploads/documents/Halliburton%20v%20Chubb%20-%20LMAA%20position%20paper.pdf> accessed 28 September 2020.
[13] Ibid.
[14] Ben Rigby, ‘London rules the waves in maritime arbitration cases’ (n 5).
[15] HFW, ‘The Maritime Arbitration Universe in Numbers: London Remains Ever Dominant’ (n 6).
[16] Ibid.
[17] Ian Gaunt, ‘What makes LMAA arbitration different’ (n 11).
[18] Interlegal, ‘London Maritime Arbitrators Association (LMAA)’ < https://interlegal.com.ua/en/lmaa/> accessed 28 September 2020.
[19] Ibid.
[20] Ibid.
[21] The London Maritime Arbitrators Association, ‘The L.M.A.A. Mediation Terms (2002)’ < http://www.lmaa.org.uk/terms-mediation-terms.aspx> accessed 29 September 2020.
[22] Hangzhou International Arbitration Court, ‘London Maritime Arbitrators Association’ (13 June 2019) < http://www.ci-ca.org/English/caseShow_47.html> accessed 28 September 2020.