Arbitration

There are many similarities between London Arbitration and High Court proceedings. After the appointment of an arbitration Tribunal there will be an exchange of semi-formal pleadings (called submissions), and commonly there is disclosure, exchange of witness and expert evidence and a formal hearing (which is similar to a trial). In general, however, London Arbitration is less formal than court proceedings. Interlocutory applications are usually made by exchange of correspondence, not in person. Although barristers may be used at the hearing, they do not wear wigs and gowns. Most particularly, submissions are not usually intended to be formal pleadings as done in the courts. This is because they are often written by non- lawyers. The intention remains, however, that submissions should identify the relevant charterparty terms in dispute, the breaches of the charterparty, the legal and factual issues in dispute and the losses alleged to have been suffered. London Arbitration in general – London is the centre of international arbitration and has several arbitration bodies. For example, the International Chamber of Commerce (ICC) based in Paris can arrange arbitration in London. Lloyd’s Open Form (,LOF’) Salvage arbitration takes place before Lloyd’s of London. The London Court of International Arbitration (‘LCIA’) conducts many international arbitrations. A charterparty dispute if arbitrated in London will probably come before the London Maritime Arbitrator Association (‘LMAA’). These arbitrators are self- employed, working within the LMAA organisation. Unlike the LCIA or ICC no fee is payable to the LMAA if an LMAA arbitrator is appointed. The LMAA arbitrators are drawn from across the shipping field. They include marine engineers, shipbrokers, former deck officers, shipping lawyers, P&I Club claims handlers etc. They can bring practical and technical experience to disputes. A key point to understand is that although each party may appoint ‘his own arbitrator’ the arbitrators are independent. They are not advocates for the party who has appointed them. Typically, an arbitration clause in a charterparty would provide for each party in the dispute (usually two parties) to appoint their own arbitrator and for those arbitrators to appoint a third arbitrator. There are other arrangements, for example, that there may be a sole arbitrator. Arbitrators can be appointed very easily. All it takes is a telephone call. Notice must be given to the other side of the arbitrator’s appointment and the other side must be asked to appoint their arbitrator. That is sufficient to commence arbitration proceedings in most cases. That will protect any time bar. The exact terms of the charterparty arbitration clause should be checked. This is much easier than starting court proceedings in England. It is also cheaper. An LMAA arbitrator’s appointment fee is currently £250. London arbitrators are aware of the concerns about the cost and are increasingly willing to adopt procedures drawn from CPR. For example, the LMAA has now adopted the Questionnaire, similar to the CMC information sheet, based on which the parties set out their proposals on how the case should proceed. The Arbitration Act 1996 undertook a thorough review of what arbitration in England should be, and the services that arbitrators needed to provide to the users of arbitration. The key points of the Arbitration Act are that the parties should have autonomy, that is, be free to choose what they want in the arbitration process, and that the courts should intervene in the arbitration process as little as possible and then only to assist with the arbitrations. The arbitrators have been given overriding objectives, similar to the CPR, to ensure that the arbitration is driven forward promptly and cost effectively, giving each party an opportunity for its case to be heard. The Arbitration Act allows the parties to adopt mutually agreed procedures. Thus, if the parties think that disclosure is not required, they can dispense with it. They can also add other steps in the proceedings which they think will assist, for example, meetings between expert witnesses. Arbitration is confidential. Neither the arbitrators nor the parties may disclose details of the arbitration to anybody else without the agreement of the parties. Instead of a trial there can be a hearing before the arbitrator. This is very similar to a trial but more informal. The arguments could proceed in the same way. After the trial, instead of a judgment, the arbitration will give an Award. A key difference between High Court proceedings and London Arbitration is the costs of obtaining the decision. A High Court judge is paid by the British government. The parties must pay for arbitrators to attend the hearing and to write the Award. These costs can be substantial. An arbitrator’s charge for attending a hearing is about £2,000 per day. For a three-man Tribunal in a Five- day hearing, their costs can go up to £30,000/US$50,000. In addition, there will be the cost of preparing the written Award, which can be significant. The parties to an arbitration can agree that the arbitrator can make an Award without a hearing. This is called an ‘Award on Documents Alone’. The arbitrators will then have the submissions, the documentary evidence presented by the parties, including statements and experts’ reports, and particular submissions from the parties trying to persuade the arbitrators to rule in their favour. This saves the costs of a hearing. There, of course, will be no opportunity to cross-examine witnesses. The LMAA offers other arbitration procedures, designed to save costs. In particular, it has a Small Claims Procedure (SCP), for claims of US$50,000 or less (although the parties can agree to increase that limit). This is a very quick and simple procedure. There is no disclosure, no experts, no witnesses and no hearing. The arbitration is intended to be concluded within three months. In all cases, the parties are free to design the arbitration procedure to ensure they get what they want in terms of speed and costs. A fixed fee of £3,000 is payable by the claimant when starting the arbitration.