LMAA INTRODUCES INTERMEDIATE CLAIMS PROCEDURE

4 March 2009

The London Maritime Arbitrators Association (LMAA) has introduced a new procedure designed to deal with claims of between $100,000 and $400,000. Developed in conjunction with the Baltic Exchange, the new procedure is intended to limit the cost of arbitrating to suit a wide range of shipping and commodity related disputes.

In essence, the Intermediate Claims Procedure 2009 has been designed to enable any party using arbitration to settle a commercial dispute to predict the cost of proceeding from the outset of the case.

LMAA Honorary Secretary Simon Gault said:

“This is a big step for the LMAA and one designed to help the end users of arbitration services. This new procedure has been developed by an LMAA sub-committee chaired by immediate past President Robert Gaisford to address the need for more predictable and proportional costs involving claims that can be resolved using a condensed mechanism that goes beyond the limitations set by the small claims procedure but which does not merit dealing with the dispute under the full LMAA terms.”

He added:

“A right of appeal has been introduced only where the tribunal certifies in its award that a question of law is involved that is of general interest to the trade or industry. This is a novel provision intended to avoid a dichotomy of views between the tribunal and the Courts and avoids the costs of applying for leave and establishing before the Court for a second time that which would have already been demonstrated to the tribunal.”

Under the intermediate procedure parties’ respective recoverable costs are capped at a sum equivalent to 30% of the claimants’ monetary claims and distinct counterclaims. The percentages are increased to 50% if an oral hearing is involved. The tribunal’s costs are similarly capped at up to one third of the total at which the parties’ costs are capped where a sole arbitrator is involved or two thirds in respect of a tribunal comprising two or three arbitrators.

Other features of the intermediate procedure include:

• Parties are free to agree on the composition of the tribunal, but in the absence of agreement the tribunal will consist of three arbitrators. Provision is also made for the appointment of two arbitrators and an umpire or for the appointment of a sole arbitrator if the parties so agree.
• There is no automatic right to an oral hearing and only in exceptional circumstances will one be held. If an oral hearing is permitted, it shall be limited to a maximum of five hours.
• A timetable for the service of the parties’ submissions is set out and although no formal stage of disclosure is allowed the parties may specifically request in their opening submissions the disclosure of any relevant documents.
• Statements of witnesses of fact and expert evidence are limited in scope.
• Where two or more arbitrations raise common issues of fact or law the tribunals may direct that they be dealt with concurrently.
• The intention is to produce an award within six weeks of the last submissions.

For full details of the new LMAA Intermediate Claims Procedure 2009 please visit www.lmaa.org.uk.

London Maritime Arbitrators Association (LMAA)