The revised LMAA Terms: LMAA Terms 2017

London city river

The London Maritime Arbitrators Association (LMAA) has recently published a revised version of its 2012 procedural terms. The new terms will be applied to all appointments made on or after 1 May 2017 under the revised 2012 terms. A revised version of the LMAA Small Claims Procedure (SCP) and the LMAA Intermediate Claims Procedure (ICP) have also been published. The changes to the revised 2012 terms include the following:

1. In situations where the arbitration agreement provides that the tribunal is to consist of three arbitrators or two arbitrators and an umpire but one of the parties fails or refuses to appoint an arbitrator, the default appointment procedure set out in s.17 Arbitration Act 1996 will apply but only in cases where no other agreed mechanism for default appointment by the parties has been agreed.

2. Where the arbitration agreement provides for a sole arbitrator and the parties do not reach an agreement on who is to be appointed, the President of the LMAA, rather than the High Court, will now make the appointment. This saves the parties the costs of a court application, however, the LMAA will charge a fixed appointment fee.

3. Changes have been made to the tribunal’s power to order security for costs, including which party should be requested to provide security. Under the previous terms, the party seeking a hearing would be requested to provide the security. If security is not provided as ordered, the tribunal has the power to stop work on the arbitration and vacate hearing dates, and could go as far as making a peremptory order. The amendment expressly incorporates the tribunal’s power to dismiss the defaulting party’s case for non-compliance with the order for security of costs.

4. A clear distinction has been drawn between sealed offers of settlement and part 36 offers. The revised Terms clearly state that the Part 36 (court) regime does not apply to LMAA arbitrations. The tribunal will exercise its own discretion when awarding costs, and a sealed offer does not hold the same level of persuasion as a part 36 offer when awarding increased interest or indemnity costs.

5. There is now a recommended monetary limit of US$100,000 for the application of the SCP in the absence of an agreed limit by the parties. The limit applies separately for claims and counterclaims. So for the SCP to apply, both the claim and any counterclaim must be US$100,000 or less.

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