CONTENTS
With effect from 1 January 2022, the new fourth edition of the SCMA Rules (“Rules”) shall apply to all SCMA arbitrations, that is where the parties have agreed to refer disputes to arbitration in accordance with the Rules.
In maritime contracts (charterparties and ship sale & purchase agreements for example), the agreement to arbitrate is usually contained in a written arbitration clause in the contract. Arbitral institutional rules such as the Rules, or LMAA (The London Maritime Arbitrators Association) Terms with which Members may be more familiar, are typically incorporated in the arbitration agreement either expressly by reference, or where an institution’s model arbitration clause is used.
Given the Rules were last amended in October 2015, these were updated to ensure continued relevance to the ever-evolving maritime arbitration landscape, and with the aim of facilitating the dispute resolution process whilst keeping costs down. We summarise the key changes below.
Adoption of Technology
The ongoing Covid-19 pandemic and consequent restrictions have no doubt affected the way dispute resolution is conducted today. The Rules now reflect current market practice.
Documents will be deemed effectively served and received when sent to the addressee’s designated email address.
Any case management meetings and hearings may be held in person, by telephone, by video-conference, or in other manner the constituted tribunal deems appropriate.
Arbitral awards may be signed by the arbitrators electronically and/or in counterparts.
Streamlining of Proceedings
An oral hearing is no longer the default. The constituted tribunal will have the power to decide if an oral hearing should be held or if the matter is to proceed on a documents-only basis. However, a hearing will still be held if a party so requests.
The default number of arbitrators under the Rules is three. However, two party-appointed arbitrators may now see a documents-only arbitration to its conclusion without the appointment of a third arbitrator unless (a) there is a substantive hearing or (b) the two arbitrators cannot agree on any matter.
Any change of a party’s authorised representative(s) after the tribunal is constituted will now be subject to the Tribunal’s approval, primarily to prevent a party from deliberately changing counsel at a late stage to try and delay proceedings. The Tribunal will be able to withhold its approval where it is satisfied that there is a substantial risk that the change requested may prejudice (a) the conduct of the proceedings or (b) enforceability of any award.
Arbitration proceedings shall be deemed closed three months from the date of any final written submissions or final hearing unless the parties agree, or the tribunal directs, otherwise. The Rules separately provide for a tribunal to make its final award within three months from the close of proceedings.
The Expedited Procedure, previously known as the Small Claims Procedure, shall now apply to any dispute where the aggregate amount of the claim and counterclaim (if any) is no more than USD 300,000 (excluding interests and costs). The procedure is intended to be a quick and cost-effective method of resolving a dispute, with there being a sole arbitrator, no oral hearing (unless required by the tribunal) and an award being issued within 21 days from receipt of the parties’ case statements.
Others
To ensure greater certainty and transparency in the appointment of arbitrators, the newly introduced SCMA Standard Terms of Appointment shall apply to all arbitrations by default. The terms cover matters such as independence and impartiality of arbitrators, arbitrator fees, and the exclusion of liability.
The amendments are, overall, a welcome update to the Rules which are likely to improve the cost-efficiency of SCMA arbitrations. The new and improved Rules can therefore be expected to broaden the attractiveness of SCMA arbitrations going forwards, particularly among parties trading in Asia and/or with Asian counterparties.
By Eileen Lam