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Arbitration and the BIFA Standard Trading Conditions


From page 14


5. The use of witness evidence and expert evidence is not encouraged, and the arbitrator’s permission is required.


6. The parties can ask for an oral hearing, but generally an exchange of written submissions will complete the arbitration.


7.When the submissions have been served, the arbitrators will issue their award. When the award is ready, the arbitrators will require their fees to be paid before they release the arbitration award.


8. There is a right of appeal on restricted grounds, but permission to appeal has to be obtained from the English High Court.


9. The arbitrator’s fees can be recovered by the successful party if it paid the arbitrators to release the award. The successful party can recover its legal costs from the losing party on a ‘commercial bias’. Previous editions of the rules fixed the costs at up to 30% of the claim amount and in exceptional cases up to 50% of the claim amount.


10.Generally, these arbitrations take four to five months from start to finish.


LMAA Arbitration Rules 2017 If the parties to a contract have specified that they agree to the LMAA Rules, but they do not mention the Small Claims Procedure or the Intermediate Procedure, then the arbitration will be dealt with under the LMAA Rules 2017. 1. The parties must specify in their contract how many arbitrators will be appointed. If they do not identify the number, the default position is one arbitrator. Most parties specify three arbitrators or two arbitrators and an umpire. Each party will appoint an arbitrator – the cost of the appointment is less than £300. It is quite common for the two arbitrators who are appointed to run the arbitration and only to appoint a third arbitrator or umpire if they are in dispute, or an oral hearing takes place.


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2. An arbitrator is appointed by sending an arbitration notice to the other party after appointing an arbitrator, inviting it to appoint an arbitrator, usually with 14 days. If it refuses to do so there is a default mechanism to have the first party’s arbitrator appointed as the sole arbitrator.


3. The parties are generally in charge of the timetable of the arbitration.


4. Submissions are served – there is then an exchange of documents, witness statements and expert evidence (if appropriate).


5. The parties decide whether they want an oral hearing or if they are happy to serve a set of final submissions in writing.


6. Once the arbitration is finished by exchanging written submissions or an oral hearing, the arbitrators will write their award.


7. Once the award is ready, the parties will be told how much it will cost to have the award released.


8. Once the arbitrators are paid, the award is released to both parties.


9. There is a right to appeal on limited grounds, but permission must be obtained from the English High Court.


10.The winning party would expect to recover the majority of its reasonable legal costs and will be reimbursed for the arbitration tribunal costs for writing the award if that was paid by the winning party.


The amount of time these arbitrations take is


up to the parties, but generally we would expect the process to be completed within seven to ten months from start to finish.


For guidance on the LMAA Small Claims Procedures, Intermediate Procedure and Arbitration Rules, go to www.maritimelondon.com/service/arbitration


BIFA is grateful to Linda Jacques of LA Marine for permission to publish this article.


On page 14-16 of this edition of BIFAlink we have published a contribution by a BIFA Associate Member explaining how arbitration works and why it can be a better method of dispute resolution than going to court. There is a provision for arbitration in the BIFA Standard Conditions (STC) in Clause 28. If you are considering pursuing arbitration


you will need the services of a solicitor, preferably one who specialises in freight forwarding. BIFA has a number of such solicitors listed at bifa.org Sub clauses c, d and e of Clause 28 deal


with the BIFA Member’s right to elect to arbitrate rather than litigate and set out how that should be done. This is either by commencing arbitration or


notifying the customer of the requirement to arbitrate. This right is only in favour of the company and this is because the intention is to ensure that any dispute is handled subject to English law and either by the English courts or under rules of the The London Maritime Arbitrators Association (LMAA) based in this jurisdiction. This is to assist companies with clients based in jurisdictions overseas where there are no reciprocal rights of enforcement of judgments. If the customer is suing the company, then it


has to commence action in the English courts. If the company is suing the customer and the customer is in a jurisdiction that does not have reciprocal rights of enforcement of judgments with England and Wales, then if the company was only able to litigate through the courts, it would not have the right to enforce a win against its customer. However, if it arbitrates, most of the


countries that do not have reciprocal rights to enforce judgments with England and Wales have ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, so companies using arbitration in their claims against customers will generally be able to enforce their judgment against their customer in the jurisdiction where they are based.


April 2021


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