The London Maritime Arbitrators Association, whose LMAA Terms govern a wide range of maritime disputes, has published an updated version of the Terms, which come into effect on the 1^st May 2017.

The new terms apply to arbitral proceedings commenced on or after 1^st May 2017.

There has been recent case law, notably Gerald Metals v Timis (Vasile Frank) [2016] EWHC 2136 (Ch), that many considered may affect the LMAA’s revision of the Terms. It appears that they have endeavoured to maintain the ability of LMAA arbitrations to remain amongst the most efficient and cost effective choice for parties seeking to arbitrate. However, in Gerald Metals, Leggatt J gave guidance on the availability of court’s powers to grant interim relief in support of arbitral proceedings where similar relief may be available through institutional rules like the LMAA Terms or the ICC Rules and that the court may only intervene where the powers of the Tribunal are considered inadequate. Such guidance has almost certainly informed some of the amendments and indeed, given the LMAA cause to avoid cutting down the Court’s powers to intervene, should it be considered necessary, thus allowing scope for a “nuclear option”, should one be required, that is one of the great strengths of an LMAA Arbitration.

It is probably not especially helpful to anyone, other than lawyers, to list all of the changes in the Terms and whether they represent an amended approach or an entirely new provision, but rather to set out which changes have a direct effect on the conduct of a case from the point of view of the client. As such, what follows is a summary of changes that clients familiar with the LMAA Arbitration process will note represent a departure from the status quo.

There are few changes to the Terms in general, with the majority of evolution in the Schedules. However, particular provision has been made for the appointment of a sole arbitrator, in circumstances where the Arbitration agreement provides for a sole arbitrator and parties fail to agree on the appointment. The final decision can now be made by the President of the LMAA, for a fee (Paragraph 11). Previously, an application to the Court would have had to be made.

The section relating to the Powers of the Tribunal has been updated to allow the Tribunal to amend the time limits for the service of submissions. This was always within the gift of the Tribunal, under its general case management powers, but it is expressly stated as being in the interests of minimising cost and delay, which seems to have been a particular aim in the drafting of amendments to the Terms.

As mentioned above, there are several changes of note in the Schedules. Paragraph E of the First Schedule is perhaps the most important update, from a commercial point of view. It has been amended to expand the Tribunal’s right to require security for their costs. Previously security was to be provided no later than 21 days before the start of a hearing but as many Tribunals can incur significant costs for some time before any hearing, the power has been extended accordingly. Parties should be aware that an order for security for the Tribunal’s costs may now come at any point during an arbitration, whenever the Tribunal considers it appropriate. Similarly, where once a Tribunal could order security from the party requesting an oral hearing or, in the case of a documents only arbitration, from the claimant, the Tribunal can now use its discretion to order security, in whole or in part, from another party. The Tribunal may suspend its work if security is not provided within the time set and ultimately, a failure to provide security constitutes a failure to comply with an order of the Tribunal. This would enable the Tribunal to make a peremptory, or “unless” order, which, if a claimant fails to comply, would inevitably lead to an award dismissing the claimant’s claim entirely.

The Second Schedule is related to Arbitration procedure. The Terms now include a provision that, following the service of a Reply, or a Reply to Defence and Counterclaim, parties must obtain permission from the Tribunal if they wish to serve further submissions, explaining why such further submissions are necessary. Further, in relation to an application by a party for security for costs, that party may include provision for those costs of the Tribunal that it has already paid, but not any future costs.

If, 21 days after the exchange of the Directions Questionnaire, the parties have failed to agree directions between them, the Tribunal will make such directions.

In assessing costs, the tribunal is entitled to exercise its discretion as to liability for costs and in assessing such costs, to take account of unreasonable or inefficient conduct by a party, giving credit for when a party has attempted settlement by way of offers made without prejudice save as to costs. Of course, in reality, it can often be very difficult to remain reasonable and efficient, when matters are being fiercely contested or particularly complex. However, parties should always be aware that an obstinate approach will often do more harm than good and an efficient approach in complying with orders, and all matters in an arbitration, will not only benefit them in a costs reference, but also in keeping costs down in the first place, ensuring that bills and subsequent cost submissions are somewhat lower than if a wholly combative approach was taken, regardless of the situation.

In the same vein, parties that instruct legal representation late, or change representation, will not be permitted to rely on such facts to delay the progress of an arbitration, nor to use such situations as valid grounds for the adjournment of a hearing. Prompt notification of such situations, to the Tribunal and other parties, is essential.

Parties are at liberty to apply for directions which differ from those contemplated in the Second Schedule but a clear justification must be given.

The Third Schedule is the LMAA Questionnaire. Greater detail is now required in the Questionnaire, meaning that parties must set out their stalls early on what issues will be addressed by, amongst other things, statement evidence or expert evidence and whether parties consider it necessary for all factual witnesses to give evidence in person or whether video link evidence may be used. At all times, cost effectiveness is expected to be a particular consideration, with costs estimates properly broken down into the various fee estimates of solicitors, counsel, experts and so forth, as is required in High Court costs estimates.

The Fourth Schedule comprises a checklist to assist parties in adhering to those principles set out in the foregoing Terms. The checklist simply represents what is already good practice relating to (1) Arbitration on documents alone; (2) Factual evidence (witnesses); (3) Expert evidence; (4) Documents for hearing; (5) Skeleton Arguments; and (6) Transcripts.

The revised version of the LMAA Terms is clearly an improvement on the 2012 Terms, setting out a clear framework that must be followed, whilst still allowing the flexibility for tailored procedures to suit the nuances of a particular case. The Terms achieve this by avoiding a raft of new provisions, yet including several amendments that either crystallise current arbitration practice into institutional rules, or seek to encourage parties to maintain a cost effective and efficient approach at all times.