Why do many LMAA arbitrators’ awards not contain reasons, as required by s.52(4) of the Arbitration Act 1996?
Awards under the LMAA Terms 2002 often did not contain reasons because para.22(b) provided that the parties agreed to dispense with reasons (as part of the award) unless notice is given requiring such reasons under para 22 (a) before the award is made.
However, the position under the LMAA Terms 2021 is different. Para 25 (a) provides that the award will contain the reasons for it unless the parties agree otherwise. If the parties agree to dispense with reasons the tribunal will issue an award without reasons together with a document which does not form part of the award but which gives, on a confidential basis, an outline of the reasons for the tribunal’s decision. The effect of such an agreement is to exclude the Court’s jurisdiction under section 69 of the Arbitration Act 1996. It is thought that this change in the LMAA Terms will have the result that many more awards will contain reasons than was the case with awards made under the LMAA Terms 2002.
What is the status of privileged reasons that accompany some awards of LMAA arbitrators?
Privileged reasons will be given if the parties agree to dispense with reasons as part of the award under para 25 (c) of the LMAA Terms 2021.
Such privileged reasons are not part of the award and thus cannot be relied upon in support of an attempt to appeal against the award on a question of law. They are intended to explain briefly and confidentially to the parties the tribunal’s reasoning. However, it may be possible to rely upon such reasons in support of a challenge to an award under s.68 of the Arbitration Act 1996 on grounds of “serious irregularity”.