LMAA Arbitration
The London Maritime Arbitrators Association (LMAA) is an organization composed of experienced maritime arbitrators that was founded in 1960. Its primary mission is to facilitate the resolution of maritime disputes through customized ad hoc arbitration processes conducted in London. To achieve this goal, the LMAA has developed a comprehensive set of arbitration rules that are regularly updated to stay current with industry practices. The association also maintains a list of qualified arbitrators and supports their qualifications. You can find more detailed information on the website https://fortiorlaw.com/news/gafta-arbitration/
What sets the LMAA apart from fixed, institutional arbitration bodies like GAFTA, FOSFA, LCIA, or ICC is its ad hoc nature. The LMAA’s arbitration process is specifically tailored for each individual dispute and is entirely controlled and managed by the appointed arbitrators, with no direct involvement from the association itself. This process adheres to the terms and regulations set forth by the LMAA.
LMAA arbitrators are held to high standards, requiring a minimum of 15 years of experience in various aspects of the shipping industry, including commercial, technical, and legal domains. They are also expected to possess in-depth knowledge of English contract and tort law, as well as arbitration procedures.
Initiating LMAA arbitration can occur under two circumstances:
- If the contract governing the dispute includes an LMAA arbitration clause.
- Even if the contract lacks an LMAA arbitration clause, it may stipulate that both parties must nominate arbitrators in case of a dispute. Subsequently, the parties can formally confirm in writing their agreement to use LMAA arbitration to resolve the dispute.
Arbitration clauses often specify the terms of the arbitration, including the number of arbitrators, the process for their selection, and the specific LMAA rules that will govern the proceedings. For example, parties may choose to utilize the LMAA Small Claims Procedure for disputes involving amounts not exceeding USD 100,000, which provides a simplified process for such cases.
LMAA arbitration is suitable for a wide range of maritime-related disputes, including charterparties, bills of lading, ship sales and purchases, marine insurance, offshore activities, and disputes within the oil and gas industry, among others. Importantly, there are no limitations on the types of disputes that can be referred to LMAA arbitration. This means that virtually any dispute, even if not directly connected to shipping, can be resolved through this process.
When it comes to appealing an arbitration award, it can be done in the High Court on limited grounds, including errors in the application or interpretation of the law, serious breaches of arbitration procedure, or jurisdictional disputes. However, such appeals to the High Court are typically successful in only isolated cases.
Enforcing an arbitration award involves recognition and enforcement at either the place of the company’s registration or the location of the debtor’s assets. This often requires filing a certified copy of the judgment and the contract containing the relevant arbitration clause with the local court to ensure compliance with the formal legal requirements of the jurisdiction where enforcement is sought. During the recognition stage, the court does not review the award on its merits. Once recognized, the award can be enforced by an executor to seize assets and recover the owed amount from the debtor.
If the arbitration takes place in London, the prevailing party can seek a “worldwide freezing order” (WFO) from the English court to enforce the award. A WFO is designed to freeze the debtor’s global assets to secure the owed amount. Directors and beneficiaries can face penalties, including imprisonment, for failing to comply with a WFO. It is common to obtain a disclosure order alongside a WFO, compelling the debtor to disclose all their assets.
One significant advantage of a WFO is that it can be obtained even before the claimant initiates arbitration proceedings. The court hearing for a WFO is conducted without the presence of the debtor to prevent them from dissipating their assets.
Fortior Law is an international dispute resolution firm with its main office in Geneva (Switzerland) and additional offices in Rotterdam (the Netherlands) and Kyiv (Ukraine). The Ukrainian office, led by Danil Hristich, is highly regarded for its expertise in GAFTA and FOSFA arbitration. Danil Hristich was recommended by The Legal 500 in Dispute Resolution and International Trade in 2020. For further information, you can contact danil.hristich@fortiorlaw.com, sergey.platonov@fortiorlaw.com, or your usual contact at Fortior.
