London maritime arbitration: an influencer for the 2020s

Maritime arbitration is the quintessence of international commercial arbitration. It falls squarely in the definitions of ‘international’ and ‘commercial’ in Article 1 of the UNCITRAL Model Law and it is found all over the world, in institutions as well as in its traditional ad hoc form. 

The CIArb has a long history of welcoming and training maritime arbitrators from diverse countries, backgrounds and professions including shipbrokers, traders, chartering managers, engineers, naval architects, and master mariners. It is running a nine-day International Maritime Arbitration course in Dubai from 18 March 2020 in conjunction with Middlesex University and EMAC (the Emirates Maritime Arbitration Centre).  Details can be found here.

The institute’s past presidents include the legendary Cedric Barclay, the doyen of English commercial arbitrators.  He was a co-founder of ICMA, the International Congress of Maritime Arbitrators, which was conceived during a boring part of the 4^th ICCA (International Council for Commercial Arbitration) congress in Moscow in 1972.[1]  ICMA XXI is to take place in Rio de Janeiro in March 2020 and the 11^th Cedric Barclay Lecture will be in the programme. [2]

In London, the world’s favourite arbitral seat according to the Queen Mary University of London (QMUL) surveys,[3] maritime outnumber non-maritime commercial arbitrations, just as ad hoc arbitrations outnumber institutional.[4] In 2018, the London Maritime Arbitrators Association’s (LMAA) estimated total number of references (1561) was exactly equal to the sum of the International Chamber of Commerce’s (ICC), London Court of International Arbitration’s (LCIA) and the Singapore International Arbitration Centre’s (SIAC) new cases added together.

Despite its centrality in international commerce, its scale, range and diversity, maritime arbitration often finds itself marginalised in gatherings of arbitration practitioners and confined to footnotes in textbooks, learned articles, rules and guidelines.[5] It can be treated as a specialised sector-based form of arbitration of interest only to the shipping industry as if the cargo loaded on ships was other ships and as if ships were built by ships’ crews.

The reality is that maritime arbitration is open to all parties who encounter ships, which means anyone involved in international trade. It has been used for centuries, even millennia.  Venice, Genoa, Paris and New York have all been leading centres at one time or another.  Singapore and Dubai are looking to become important seats in the 21^st century. In the meantime, London remains in first place as we enter the 2020s.[6]

The advantages of London ad hoc maritime arbitration, including flexibility, speed, and expertise, have been ably set out by Paulo Fernando Pinheiro Machado FCIArb in a CIArb Features article last year.[7]

What is rarely appreciated is the influence which London maritime arbitration has had, and could have, on the development of international commercial arbitration. Here are a few examples of ways in which it has been ahead of the curve:

• Third-party funding: mutual before-the-event legal costs insurers in the shipping industry have been funding the costs of bringing contractual claims in arbitrations for more than 130 years.[8] Recognition of this long and successful tradition, and of the importance of maritime arbitrations in their own caseloads, has contributed to the institutions’ lukewarm reception of calls to regulate the use of third-party funding in arbitration.[9]
  
  
• Costs budgeting: the same tradition of funding by insurers has led to requirements for costs estimates and for transparency about such estimates.  As Sir Rupert Jackson has noted, ‘A mild version of costs budgeting already exists in maritime arbitrations under the LMAA Terms.’[10] He was referring to the scheme whereby the parties are required to provide costs estimates after close of pleadings, which the arbitrators can take into account when assessing recoverable costs.
  
  
• Appeals: it is often said that finality is one of the attractions of international commercial arbitration but, in London, parties have opted out of appeals on points of law in no more than around 10 to 15 percent of international commercial arbitrations, mainly those under institutional rules. The availability of appeals has been a selling point for London ad hoc arbitration. The Singapore government has apparently recognised this and has proposed an opt-in for appeals, which it included in its public consultation on amendments to its International Arbitration Act in 2019.[11]
  
  
• Expedited proceedings: the LMAA’s Small Claims Procedure (SCP), a quick documents-only procedure before a sole arbitrator, with a strict timetable and limits on lengths of submissions and on the production of evidence, is more than twenty years old.  In 2018, 207 arbitrators were appointed in SCP cases and 124 awards were made.[12]  UNCITRAL has had recourse to institutions in its current project on expedited arbitration, consulting them about their rules for such cases.[13] However, the institutions have relatively little experience of expedited procedures.  Working Group II might obtain a better result if it took a more inclusive approach and looked at the success of the LMAA’s SCP.

As Lord Mustill said in the first Cedric Barclay Lecture at ICMA X in Vancouver in 1991, ‘The voice of maritime arbitration is not heard as it should be.  Too little is said to those who ought to be listening, about its practices, its importance and its theory.’[14]

James Clanchy, FCIArb, Aspiring Full Member of the LMAA, is an arbitrator in independent practice and an Associate Member of Six Pump Court chambers.  He works part-time for LexisNexis UK on Lexis®PSL Arbitration. The views expressed in this article are entirely the author’s own and are not necessarily those of his current or any former employer or of any organisation with which he is, or has been, associated.

[1] https://icmaweb.com/history (accessed 22 January 2020)

[2] https://www.icma2020.com/ (accessed 22 January 2020)

[3] https://www.whitecase.com/publications/article/2018-international-arbitration-survey-evolution-international-arbitration  (accessed 22 January 2020)

[4] See James Clanchy, LexisNexis Arbitration Blog, ‘Arbitration statistics 2018: London bucks downward trends’, 20 June 2019, https://www.lexisnexis.co.uk/blog/dispute-resolution/arbitration-statistics-2018-london-bucks-downward-trends (accessed 22 January 2020)

[5] See James Clanchy and Cherine Foty, ‘Conflicting Perceptions of Ethics in International Arbitration’, Arbitration (CIArb Journal) (2019) 85 Issue 2 pp185-202

[6] See HFW, ‘The Maritime Arbitration Universe in Numbers: One Year On’, https://www.hfw.com/The-maritime-arbitration-universe-in-numbers-one-year-on , (accessed 24 January 2020)

[7] https://www.ciarb.org/resources/features/the-advantages-of-london-ad-hoc-maritime-arbitrations/ (accessed 24 January 2020)

[8] James Clanchy, ‘Navigating the Waters of Third Party Funding in Arbitration’, Arbitration (CIArb Journal), 2016, 82, pp222 – 232.   See also James Clanchy, ‘Money Makers’, New Law Journal, 24 June 2016

[9] See James Clanchy, LexisNexis Arbitration Blog, ‘Whatever happened to third-party funding in international arbitration?’, https://www.lexisnexis.co.uk/blog/dispute-resolution/whatever-happened-to-third-party-funding-in-international-arbitration (accessed 24 January 2020)

[10] ‘Jackson calls for costs budgeting to curb high costs of arbitration’, Litigation Futures, 6 June 2018, https://www.litigationfutures.com/news/jackson-calls-for-costs-budgeting-to-curb-high-costs-of-arbitration (accessed 24 January 2020)

[11] https://www.mlaw.gov.sg/news/public-consultations/public-consultation-on-international-arbitration-act (accessed 24 January 2020)

[12] See LMAA table of caseload statistics, http://www.lmaa.org.uk/event.aspx?pkNewsEventID=208da443-7800-4720-84b3-7f4f3f5fc9ce (accessed 24 January 2020)

[13] UNCITRAL Report of Working Group II (Dispute Settlement) on the work of its seventieth session (Vienna, 23-27 September 2019): https://undocs.org/en/A/CN.9/1003 (accessed 24 January 2020)

[14] Bruce Harris and Philip Yang eds, The First Ten Cedric Barclay Lectures, ICMA 2017, pp1-39