LMAA Terms 2021 – new rules for marine arbitrations reflect COVID-19 impact
No one really knows what patterns or practices we will all adopt once the COVID-19 crisis has passed its peak, but there are already clear signs that some changes are here to stay. Industries that had either never imagined functioning virtually, or thought that such change would take years to implement, have adapted and acclimatised to the ‘new normal.’ The legal industry certainly falls into this category and has adapted at pace.
In the advent of this new chapter comes a new set of LMAA terms and procedures – to be known formally as the LMAA Terms 2021, the LMAA Intermediate Claims Procedure 2021 and the LMAA Small Claims Procedure 2021.
Largely as a result of the challenges presented (and solutions found) during the COVID-19 pandemic, the updated terms include a number of key revisions designed at digitalising the arbitration procedure.
When will the new terms apply?
The new LMAA rules relate to any new appointments commenced after 1 May 2021. However, arbitrations appointments made before this date will continue in accordance with the earlier (2017) terms and procedures.
Guidance for virtual hearings
One of the welcomed provisions can be found in the Sixth Schedule of the LMAA Terms 2021 – the guidance for virtual and semi-virtual hearings.
The questionnaire contained in the Third Schedule now also includes a provision which gives the parties the option to choose a virtual hearing. It is noted that for parties opting for a virtual or semi-virtual hearing, the Fourth Schedule requires the parties to follow the guidelines set out in the Sixth Schedule.
In addition, and no doubt in response to the need for greater flexibility, the LMAA Terms now include an express provision (at Paragraph 24) which provides that awards may be signed electronically and in counterparts, and may be notified to parties by electronic means.
However, caution is advised in relation to this addition and it is noted that the terms themselves warn that there may be issues with enforcement in relation to electronically signed awards. Owing to such issues, the commentary confirms that Tribunals should still be encouraged to provide hard written signatures on an award where possible.
In line with the new civil procedure rules on witness statements which came into force on 6 April 2021 imposing new stringent requirements on the form and content of trial witness statements, the new LMAA Terms have also followed suit.
The terms now include a requirement that witness statements should be in the witness’s own words and confined to the evidence that a witness can give and not - as has been the case in recent times - be an attempt to argue the case.
We suspect that the terms envisage statements to be much shorter and more selective as to what they address, in line with the amended Practice Directions. It is key to note that arbitrators will have the authority to impose cost sanctions for non-compliance.
In what can only have been exacerbated by the impact of a global pandemic, the LMAA Terms now include a provision giving the President power to appoint a substitute arbitrator when it becomes apparent that an original arbitrator is no longer capable of conducting the proceedings or attending the hearing. The new rules confer on the President the power to decide when such a tool might be appropriate.
The new rules are designed to ensure that future arbitrations are conducted efficiently and effectively in a new age of arbitration. These rules undoubtedly represent a clear progression for the legal industry and are a positive take-away in world adapting to the challenges of COVID-19.