New LMAA Terms 2017

The London Maritime Arbitrators Association (LMAA) has issued a new set of LMAA Terms, aiming to secure timely and cost-effective arbitrations. The new terms will apply to appointments of arbitrators under the LMAA Terms made on or after 1 May 2017. The LMAA Small Claims Procedure and the LMAA Intermediate Claims Procedure are also revised; entering into effect from the same date as the LMAA Terms 2017.

Appointment of Sole Arbitrator
Under the current LMAA Terms 2012, one would have to apply to the High Court to appoint a sole arbitrator if the parties failed to agree. Such a procedure resulted in significant time delays and increased costs. The new terms provide for the President of the LMAA to appoint a sole arbitrator in these circumstances.

The LMAA Terms 2017 further includes a mechanism for an arbitrator appointed by one party to become the sole arbitrator should the other party fail to appoint its own arbitrator. This mechanism is already found in section 17 of the Arbitration Act of 1996.

Limitation of the Number of Submission
To avoid the never-ending exchange of submissions, a revision is made to the Second Schedule of the LMAA Terms 2017. The parties must now obtain the tribunal’s permission to serve additional submissions after the service of the Reply.

Focus on Efficiency and Costs
The Second Schedule further obliges the parties and the tribunal to adopt measures to make the arbitration as time- and cost-efficient as possible, and to actively consider the guidelines found in the LMAA Checklist.

In order to achieve this, paragraph 19 (b) of the Second Schedule states that the tribunal, when deciding on the liability of costs, shall be entitled to take into account “unreasonable or inefficient conduct”, including non-compliance with the LMAA Checklist.

Small Claims Procedure
The LMAA Small Claims Procedure 2017 now contains an express financial limit of USD 100,000 for the Small Claims Procedure to apply, where the parties have agreed no limit. This limit applies independently to claims and counterclaims.

Arbitration Clause
Examples of arbitration clauses concerning LMAA arbitration are found on LMAA’s website¹. These are rather extensive, and a shorter version is suggested as follows:

“This contract is governed by English law and all disputes arising under or in connection with it shall be referred to arbitration in London. Arbitration shall be conducted in accordance with the LMAA Terms applicable at the date of the commencement of the arbitration proceedings. In cases where neither the claim nor any counterclaim exceeds the sum of USD xxx,xxx (or such other sum as the parties may agree) the arbitration shall be conducted in accordance with the LMAA Small Claims Procedure current at the time when the arbitration proceedings are commenced.”

¹ link to LMAA’s website