The LMAA Committee recently announced that the revised terms and procedures have been finalised. The LMAA Terms 2021, LMAA Intermediate Claims Procedure 2021, and the LMAA Small Claims Procedure 2021 came into effect on 1 May 2021 (“2021 Rules”). Allen Marks, Keeley Edmondson and Deven Choudhary of CJC’s Newcastle Office provide an update.
Summary: Virtual Hearings, Witness Statements and Arbitrator Appointments
Primarily the 2021 Rules aim to “fine tune” the current rules and procedures, however there are a number of key changes that reflect recent developments.
In particular, the key changes reflect the impact the Covid-19 outbreak has had on the way arbitrations may be conducted; the 2021 Rules will now provide for virtual hearings and set out detailed protocol for how they are to be carried out.
The second important change is in respect of witness statements. The amendments aim to reflect recent changes made to English court requirements so that witness statements should be in the witnesses’ own words, confined to the evidence that they can give. In other words, not drafted by their legal team.
A third important change to watch out for is the time limit to appoint an arbitrator following a request to do so.
LMAA Terms 2021
Appointing a sole arbitrator: Tightening of the Deadline to Appoint a Co-Arbitrator
Previously, the rules referred to section 17 of the Arbitration Act. The referring party gave 14 days for an appointment by the other party and, absent a response, the referring party would then give a subsequent notice that they would appoint a sole arbitrator if the defaulting party did not respond within 7 days. However, now a referring party can simply state in their original appointment notice that their arbitrator will be appointed as sole arbitrator if the other party does not appoint their own arbitrator within 14 days and subsequently notify the referring party. There is no requirement to send a second notice, the referring party can simply appoint their arbitrator as sole arbitrator and advise the other party accordingly.
Therefore, it is important that a party who receives notice of appointment of an arbitrator responds within the 14 days to avoid facing a sole arbitrator tribunal appointed by the opposing party.
Arbitrator no longer able to conduct proceedings
The new paragraph 12 gives the President power to appoint a substitute where an original arbitrator is incapable of conducting the proceedings, whether it be because of resignation, death, or another reason. This power becomes appropriate once an application is made by a party, notice is given to the other party (or parties) and it appears to the President that it is necessary for them to intervene.
Virtual Hearings
The terms now include provisions which allow for virtual or semi-virtual hearings and incorporate the new Schedule Six which gives guidance for the conduct of virtual hearings. The Sixth Schedule guidance states that all parties are to have tested the technology and it is suggested the parties have a “practice run” prior to the hearing. Where the case requires, it may be appropriate to have some IT support available during the hearing and this is to be provided by the solicitor’s firms or a third party.
Practically this may not work for all hearings, particularly where experts, witnesses and clients, for example, are in different countries/time-zones.
The Award
Arguably the most significant change to the terms is that awards may now be signed electronically, which includes transfer of a scanned signature and/or in counterparts. It is important therefore for parties to state if they require the award to be signed with handwritten signatures where there may be additional requirements for enforcement out of the jurisdiction. Although arbitrators are encouraged to continue to sign hard copies where possible, there will undoubtedly be an increase in electronic signatures and therefore particular caution should be taken when considering the risk of non-payment of the award and likelihood that enforcement steps will be needed.
LMAA Questionnaire
There is now an additional question which asks if the hearing will be conducted virtually, or semi-virtually, and if so, the party completing the questionnaire must also give details of the arrangements contemplated.
In addition, the questionnaire now specifically states that the cost estimate should be in the form of a breakdown which identifies the actual/estimated fees of the solicitors, Counsel and experts. Although this is not new wording to the terms, it is now repeated in the costs question, and therefore reiterates that all such details must be included.
Checklist – The Fourth Schedule: Witness Statements
As mentioned above, there is now wording which reflects the updated court requirements for witness statements to be evidence as to matters of facts which are to be proven by the evidence of the witness only, and not simply a repeat of the arguments of the case. They must also ideally be in the witness’ own words.
This is bringing the Terms in line with recent English High Court CPR Rules for witness statements.
LMAA Intermediate Claims Procedure 2021
Appointing a sole arbitrator
This reflects the amended LMAA Terms 2021
Closing Submissions if no oral hearing
At paragraph 12 (previously paragraph 11), clarification has been provided with respect to the timing of the respondent’s submissions. Specifically, it has been clarified that if witness statements are served pursuant to Statement of Witness of Fact and there is no application made to adduce expert evidence pursuant to Expert Evidence, or for an Oral Hearing, the 14 days period for the respondent submissions shall run from 14 days after service of the witness statement.
Extension of time
A small addition has been made to paragraph 13 (previously paragraph 12), that gives the tribunal discretion to permit or require the party not in default to provide further material to the tribunal, following a default by the other party.
Parties’ costs
It has been clarified that the parties’ costs as defined in paragraph 16 (previously paragraph 15), applicable to the parties’ recoverable costs are to be calculated without including interest and costs.
LMAA Small Claims Procedure 2021
Introduction
It has been clarified in paragraph 1(b) that where a demand is made for the claim and counterclaim to be dealt with under the LMAA Terms or LMAA Intermediate Claims Procedure, if the parties agree, the arbitrator originally appointed retains jurisdiction over the dispute, and is to continue as a sole arbitrator.
The Arbitrator’s Fee
In paragraph 3(b), it has been made compulsory that proceedings will not continue unless the arbitrators’ fee has been duly paid.
Whereas in paragraph 3(d), it has been clarified that in certain circumstances when an award is not produced, the arbitrator may retain an amount from the Small Claims fee, to compensate for services rendered.
Procedure
Under paragraph 5(g), which deals with the regime of granting of extension, a number of revisions have been made. It has been particularly specified that an application for extension of time can be made before expiry of the relevant time limit, however, the arbitrator has been given discretionary power depending upon the circumstances of the case and the need for expedition. The arbitrator has also been given the discretionary power to adduce further material from the party not in default before delivering the award.
The Award
Paragraph 7 has been substantially amended and it has been now made clear that the award by the arbitrator should contain reasoning unless the parties agree otherwise. Arbitrators have also been given power to correct an award or to make an additional award. An application by the party has to be made within 28 days from the date of the award to amend the award. The Arbitrator will also provide an opportunity to the opposing party to make representations. Any amendment, if deemed fit by the arbitrator, has to be published within 56 days of the date of the original award or such longer period as the parties may agree.
Costs
There have been inconsistencies in practices in relation to submissions as to costs, and the new rules make it much clearer that the preference still remains for a single award containing the ruling as to costs to be issued, rather than a separate, second costs award. However, parties are permitted to submit a breakdown or explanations regarding costs (limited to 500 words) provided within 7 days of the service of the last submission referred in paragraph 5, failing which arbitrator may proceed as he or she deems fit.
Conclusion
The real takeaway points:
- Be careful to watch the time limit for appointing a second arbitrator
- Witness statements to be in line with CPR