LMAA Terms

Any doubt as to the correct rate of interest should be resolved in the light of any factors relevant to the currency in which the award itself is made. In many ways, arbitrators are even more qualified than judges to award interest, since arbitrators are commercially minded men and what is more commercially orientated than the concept of interest? The practice and procedures for maritime arbitration in London have become highly developed and have been codified into the “LMAA Terms”, the latest version in 1987 particularly encouraging speed and early hearings, the power of arbitrators to order the provision of security for costs, and to order rectification of a contract in certain circumstances. There is now also a codified small claims procedure to simplify smaller cases, and which limits costs to a fixed, modest sum, whilst conciliation and mediation procedures are also possible. The LMAA Clause does not refer to the small claims procedure, but parties to shipping contracts are not precluded from adding an extra sentence to their arbitration clause, such as: “Notwithstanding the above conditions, all disputes up to a value of $25,000 are to be dealt with under the terms and conditions of the LMAA Small Claims procedure, 1989”. There are several types of Club, although by far the largest and financially strongest sector are Shipowners’ Protection and Indemnity Associations, mutual and non-profit making organisations which provide insurance cover for shipowners and operators which is complementary to the insurance cover placed on the insurance market. Although there is no precise dividing line between the cover afforded by insurance companies and that provided by P & I Clubs (in fact pandi insurance [pandi = P & I] is also available to a limited degree from the insurance market, whilst Clubs traditionally provide one quarter of a shipowner’s collision insurance liability), in general terms it might be said that Lloyds underwriters and insurance companies insure ships and cargoes, whilst shipowners P & I Clubs insure their liabilities.