UK: New LMAA Terms Coming Into Effect 1 May 2017

The LMAA has published new Terms and Procedures which will apply to arbitration proceedings commenced on or after 1 May 2017.

Key differences between the LMAA 2017 terms and the previous (2012) version are:

LMAA Terms 2017: Previous Position/Extent of change:
Specific reference is now made to s. 17 Arbitration Act 1996 (the "Act"), permitting appointment of a sole arbitrator in circumstances where the other party fails to appoint an arbitrator. (Paragraph 10). Subject to agreement to the contrary. The previous position remains essentially unchanged; clarification only.
Provision is made for the appointment of a sole arbitrator by the President of the LMAA (for a fee) where there has been a failure to comply with an arbitration agreement providing for arbitration by a sole arbitrator. (Paragraph 11). In the absence of agreement, the current position is that an application would need to be made to the Court for the appointment of an Arbitrator under s. 18 of the Act.
Arbitrators have been granted an express power to implement time limits for service of submissions which may be abbreviated or modified in concurrent proceedings. (Paragraph 16 (b) (i)). No previous equivalent term – such power may have been exercisable by a tribunal under its general case management powers.
LMAA Terms 2017 – First Schedule:
Clarity has been given as to the timing of a request by the tribunal for security for its costs and the time for provision of such security. Security to be requested whenever a tribunal considers it appropriate. (Section (E) Paragraphs 1 to 4). Previously security was to be provided no later than 21 days before the start of any oral hearing intended to lead to an award (or before tribunal started reading in documents only arbitration).
Failure to comply with a security for costs order for the tribunal's costs enables tribunal to make a peremptory order pursuant to s. 41 of the Act. Failure to comply with such an order can lead to dismissal of a claimant's claim. (Section (E) Paragraph 8). No previous equivalent term – such power may have been exercisable by a tribunal under its general case management powers.
LMAA Terms 2017 – Second Schedule:
Exhibits to submissions must now be served on all other parties. (Paragraph (1)). The Schedule did not specifically state that documents exhibited to submissions must be served on other parties, although this was generally the practice.
Following service of a reply (or a reply to defence to counterclaim), parties must obtain permission from the tribunal if they wish to serve further submissions, giving reasons. (Paragraph 5). No former limit on the exchange of pleadings between parties existed.
A party may include provision in an application for security for costs for those costs of the tribunal that it has already paid, or for which it has provided security. (Paragraph 7). No previous equivalent term – but guidance had been released previously to this effect.
Tribunals are now able to give procedural directions and take appropriate action regarding future conduct of proceedings 21 days after exchange of the Direction Questionnaire, should the parties fail to agree directions between themselves. (Paragraph 11). No previous equivalent term – however guidance has been released previously issued to this effect.
In the context of costs, a tribunal will be entitled to take account of unreasonable or inefficient conduct, including non-compliance with the Fourth Schedule Checklist (see below). This supplements the factors which a tribunal can take into account when exercising its discretion in relation to costs.
Also in the context of costs, a tribunal will be entitled to take into account offers made without prejudice to costs. It is stated that Part 36 of the CPR does not apply to LMAA Arbitration. (Paragraph 19 (b)). This supplements the factors which a tribunal can take into account when exercising its discretion in relation to costs, and provides clarification.
Parties should now give prompt notice of appointment of, or changes to, legal or other representatives to the other parties and the tribunal. (Paragraph 20). No previous equivalent term.
Orders or directions agreed between the parties must be notified to the tribunal and will be deemed as orders or directions of the tribunal, unless tribunal directs otherwise. (Paragraph 21). No previous equivalent term.
Parties will now be at liberty to apply for directions contrary to those within Schedule 2, but must give clear reasons why it is appropriate for a different course to be followed. (Paragraph 22). No previous equivalent term.
LMAA Terms 2017 – Third Schedule:
Further guidance is provided as to the completion of the LMAA Questionnaire and its importance to case management.

Greater detail now required, particularly regarding factual witnesses, experts and costs.
LMAA Terms 2017 – Fourth Schedule:
The Checklist has been added to the terms to ensure efficient conduct of arbitrations. Non-compliance may lead to costs penalties.

Key changes, although simply embodying good practice, in relation to:
  • Arbitration on documents alone
  • Witnesses
  • Expert evidence
  • Hearing bundles
  • Skeleton Arguments
  • Transcripts
LMAA Small Claims Procedure 2017:
Financial limit increased to US$ 100,000, where a limit has not been agreed between the parties. (Paragraph 1 (a)).

The financial limit was previously US$ 50,000.
Form of letters of submission is now provided. (Paragraph 5).

The new provisions set out guidance as to the form of letters of submission.
An arbitrator "may" make an award dismissing a claim for failure to serve claim submissions within 14 days of the appointment of the sole arbitrator. The word "may" has replaced "shall". (Paragraph 5 (g)).

Previously the arbitrator lacked discretion to decide whether to make an award dismissing the claim in the event of a failure to serve a letter of claim in time.
LMAA Intermediate Claims Procedure 2017:
Form of submissions is now set out. (Paragraph 6).

New broad guidance as to form of submissions.
An arbitrator may make an award dismissing a claim for failure to serve claim within 14 days of the appointment of the second or sole arbitrator. (Paragraph 5 (g)).

Previously the arbitrator lacked discretion to decide whether to make an award dismissing the claim in the event of a failure to serve a letter of claim in time.

The main amendments appear to be aimed at improving the efficiency, in terms of the time and costs, of arbitration proceedings, and to allow for the imposition of cost penalties for failure to manage the proceedings in an efficient and cost-effective manner.

The updated terms and commentary can be found here.

We have also published a client alert which can be found here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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