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Starting an LMAA Arbitration / Appointing an Arbitrator

How do I start a maritime arbitration in London?

The starting point is the arbitration agreement, usually a clause in the relevant contract but occasionally a specially concluded agreement. That must be complied with in all respects. It is not possible here to set out all the considerations that apply, and specialist legal advice may have to be sought. But a few general principles can be usefully laid down.

Time limits
Some arbitration agreements require arbitration to be commenced within a limited time (e.g. the Centrocon arbitration clause), or a time limit may apply under, e.g. the Hague or Hague-Visby Rules. It is essential properly to commence arbitration in whatever is the appropriate way within that time. Note that under s.14(4) of the Arbitration Act 1996, arbitration is only commenced when one party requires another in writing either to appoint an arbitrator or to agree to the appointment of a sole arbitrator, if that is what the agreement requires. Although the courts do have power to extend time, that power is only rarely exercised.

Sole arbitrator
If the arbitration agreement or clause provides for a sole arbitrator, then the parties must agree on the identity of that arbitrator and obtain his or her agreement to act. Failing that an application has to be made – by lawyers – to the High Court, unless the agreement provides for some other method of appointment, e.g. by the President of the LMAA, in which case that method must be followed strictly.

An arbitration agreement which does not specify the number of arbitrators, but which says, for example, simply “Arbitration in London” is considered to be a reference to a sole arbitrator, and must be dealt with accordingly.

Of course, even if an agreement provides for each party to make an appointment, it remains open for the parties to vary that and to agree that a sole arbitrator should be appointed: indeed, parties can agree almost anything in relation to an arbitration since it is a creature of their agreement, one that is supported by the Arbitration Act 1996.

See the note under Time limits above in relation to the requirements for effectively commencing an arbitration. These must be satisfied if any time limit is involved.

Two (or more) arbitrators
Most standard form arbitration clauses provide for each party to appoint an arbitrator. It is up to the party wanting to initiate the arbitration to make the first appointment and then to give notice of that, calling upon the other party to make an appointment on its behalf within any time specified in the arbitration clause or agreement, and failing that within the 14 days specified by s.16(4) of the Arbitration Act 1996.

Making an appointment requires (i) that the consent of the arbitrator to act first be obtained and (ii) then giving proper notice of the appointment to the opposing party. It is normal at this stage to call upon the opposing party to make an appointment on its behalf. It is desirable that such notice be given to the party itself or someone known to be authorised to receive such notice on its behalf: chartering brokers probably do not have such authority and it may therefore be that a notice given to such a broker is invalid.

See the note under Time limits above in relation to the requirements for effectively commencing an arbitration. These must be satisfied if any time limit is involved.

Any requirements of the arbitration agreement (e.g. “commercial men”, “member of the Baltic Exchange”, “not lawyers”) must be strictly observed when appointments are made. Although if no objection is taken by the opposing party, that party may in time lose the right to complain (s.73 of the Arbitration Act 1996), it is preferable to avoid arguments – and possible time limits expiring – by making appointments correctly at the outset.

What happens if the other party does not appoint an arbitrator?

If the arbitration agreement specifically provides for what is to happen if there is a failure to appoint (e.g. that the LMAA shall appoint, as in certain NSF clauses, or for the first party to appoint a second arbitrator, as in the Asbatankvoy clause) those provisions must be followed.

However, if the agreement says nothing about what is to happen in such a case then, unless the arbitration agreement provides otherwise, the first party may give a further 7 days’ clear notice under s.17 of the Arbitration Act 1996. If, after that, no appointment is made in time, that party’s arbitrator may be appointed sole arbitrator under s.17.

Some clauses, e.g. the BIMCO/LMAA clause , specifically allow the first party to appoint its arbitrator as sole arbitrator if the other party fails to make an appointment in time. In such a case the provisions of the clause override the default provisions of the Act.

Who is a commercial man?

It is sometimes said that whilst it is difficult to describe an elephant, most people know what one looks like. So it is with “commercial men”. There have been cases in the English Commercial Court on this question. One established that a practising barrister whose practice was substantially in commercial matters was, nonetheless, not a commercial man. In another case a former solicitor (and senior partner of his former firm), who at the time in question worked full-time as a maritime arbitrator, was held to be a commercial man. That case provides substantial grounds for believing that any member of the LMAA who is working full-time on arbitration may be regarded as satisfying the requirement, though there may still be a question over, for example, former judges.

When in doubt, a party who wishes to progress a case would be well advised to avoid taking any risks, as otherwise it may find itself time-barred. At the very least, the tribunal may not be properly constituted and valuable time may be lost in rectifying the situation.

What if I am too late to start arbitration?

Some arbitration clauses or agreements provide time limits for the commencement of arbitration (e.g. the Centrocon arbitration clause) and sometimes there are other relevant limits (e.g. in the Hague and Hague-Visby Rules). Any such limits must be respected by properly starting arbitration in time, as otherwise a claim may become time-barred.

If a time limit is (or is thought to have been) missed, legal advice should be sought urgently. The Courts do have power to extend time in certain circumstances (s.12 of Arbitration Act 1996) but it is essential that any application be made as quickly as possible after it is realised that the time limit has been missed.