London remains the best place for maritime arbitration

Events, Conferences,Forums and Symposiums, London Shipping Law Centre — By on September 27, 2017 at 9:45 PM

The panel

London continued to be a vibrant and successful centre for international maritime arbitration, according to a range of leading practitioners assembled at DLA Piper’s offices in London on September 11th. They were considering how arbitration supported London at a seminar organised by the London Shipping Law Centre as part of London International Shipping Week.

The City’s advantages included the practical application of the 1996 Act, the relationship with the English courts, the reservoir of practitioner talent, the concentration of insurance expertise, and statistics showing that London hosted far more arbitrations than any other centre.

However, there were no grounds for complacency in the light of ‘opposing’ decisions in arbitration cases, adjusting to post-Brexit circumstances and pressure for more diversity among the arbitrators of the future.

Chairing the seminar, Sir Bernard Eder attacked the notion that London was not a good place for arbitration. “That’s Fake News. It is untrue. This claim has been circulated by people around the world jealous of London being the best place to do arbitration.”

The statistics showed that London was by far the most important centre for maritime arbitration and had remained consistently so. The role of the English courts was very important, allowing appeals on a point of law, (whereas no other country offered this facility).

“We need more arbitrators and we need to process arbitration more quickly,” continued Sir Bernard. He would like to see more women and ethnic minorities taking part in arbitration—more people prepared to do a 10-day arbitration within 12 months.

Arbitrator Christopher Moss provided an introduction to the latest LMAA terms, in the context of making arbitral proceedings “as efficient as possible.” He presented them “straight from the horse’s mouth.” He covered the appointment process and the circumstances in which the LMAA might appoint a sole arbitrator; speeding up concurrent arbitrations; limiting submissions; efficient preparation for hearings—“a motherhood and apple pie” consideration; changing representatives during proceedings; agreements between parties outside the normal mechanism; costs security and the consequences of failing to provide it; unreasonable and inefficient conduct; the position on High Court procedures; efficient case management; and small claims procedures and compliance; and related questions of jurisdiction.

Consolidation could be pursued in relation to concurrent proceedings but differences in cases might effectively prevent this.

It was vital that a tribunal be told immediately of any agreements reached independently by the arbitrating parties. Such agreements could become de facto orders of the tribunal, providing all procedural requirements were met.

Small claims procedures—now up to $100,000—could be deployed for much larger sums if the parties agreed. However, this could cause problems, for example, with counter claims arising from the main claim.

Clare Ambrose, of 20 Essex Street Chambers, covered the changes taking place in injunctions supporting London Arbitration.

Under the 1996 Act, injunctions covered interim/provisional orders, agreed final orders, directions on procedure and property and court injunctions, such as freezing orders and anti-suit injunctions.

The LMAA 2017 Rules did not provide for emergency arbitrator provisions or give tribunals powers to grant interim injunctions.

There was much to commend the present rules. Courts could act quickly and effectively while emergency powers accorded to tribunals would present problems of enforceability (not being binding on third parties), a lack of due process and possible restriction on court powers.

Brexit would make little or no difference to EU Rules concerning injunctions as they were not designed to cover arbitration. Schemes under the 1996 Act and LMAA Rules would be unaffected, being designed for international disputes—with arbitration taking place outside the scope of EU law and the Recast Brussels I Regulation. Further, the New York Convention took precedence over EU Rules.

However, jurisdiction and recognition of judgements in commercial matters within the EU depended on the Recast Brussels I Regulation. According to current EU law, an English court could not restrain a party pursuing EU proceedings in breach of an arbitration clause. The Rules did not stop parallel proceedings or prevent inconsistent decisions.

However, EU Rules largely delivered the certainty in jurisdiction and enforcement required by business and London.

Post-Brexit in 2019, the UK Government would be seeking a new agreement with the EU based on the existing Recast Brussels I and would have to consider joining the Lugano Convention 2007 and engage with the Hague conference and UNCITRAL. As a very last resort, returning to the Common Law was an outside possibility.

After Brexit, European Court of Justice cas law would still be a significant force. Anti-suit injunctions would probably remain unavailable for EU proceedings. There would be limited specific impact for injunctions in arbitration. The prospective 2022 amendment of Recast Brussels I might bring more changes.

Ms Ambrose speculated:“what will happen to arbitration when the UK is no longer sitting at the table.”

Clare Ambrose is co-author of London Maritime Arbitration, the 4th edition of which has been published this year.

Juliet Blanch considered the role of diversity in shipping arbitration. Ms Blanch, of Arbitration Chambers, London and Hong Kong cited statistics which indicated that international arbitrators were predominantly male (over 82 per cent) and largely European or North American (61 per cent). Some 22 per cent were from Eastern Europe and Central Asia with just 13 per cent from the Middle East and North Africa.

Women’s representation on tribunals had risen in recent years but still only stood at 17 per cent. She did not know of a single instance where a woman had been appointed as sole arbitrator.

Given an unconscious bias in favour of appointing western men, there was a need to raise the awareness of potential candidates, despite a lack of role models and mentoring opportunities. “You can’t be appointed if no one knows you exist. To get experience, you have to acquire experience.”

Fairness mattered to ensure the best people took up arbitration. “Merit and diversity should not be in competition.” Equal opportunity for equally qualified arbitrators would benefit the entire maritime community as a prospective increase in conflict issues would require a bigger pool of arbitrators.

She cited research, according to which companies with a higher proportion of women in top positions achieved better financial results. Men’s and women’s brains worked differently. Men’s were larger but women had greater capacity for problem solving and decision making.

Kieran Moore, of the UK Defence Club, presented a mutual insurer’s concerns about cost efficiency in managing disputes. He said all insurers, including Defence clubs, disliked uncertainty, particularly over budgets, the prospect of litigation and a lack of transparency. He disliked the notion of using up a budget just because the money had been allocated. “No clients have an open chequebook.”

He recommended an innovative approach to fees. While hourly rates were still charged, there was now a strong emphasis on fixed and capped fees.

Flair and creativity should play a major role in arriving at the most suitable costing approach. This might or might not mean savings but an agreed and structured approach to costs would enhance London’s reputation as a suitable centre for arbitration. So would consistency in arbitral decisions.

Linos Choo, a DLA Piper partner, reviewed recent decisions and prospective decisions in arbitration law. He surveyed the court powers exercisable in support of arbitral proceedings under the 1996 Arbitration Act. This encompassed taking and preserving the evidence of witnesses; and making orders relative to the property involved in the proceedings.

Mr Choo provided examples of Section 44 applications against non-parties in respect of inspection of property and injunctions. However, whether an application could be made against a non-party to an arbitration, when that party was outside the jurisdiction, was a controversial question. No such powers existed and there were differing views on whether they should.

These cases had highlighted a number of policy considerations and concerns.

While the main respondent agrees to arbitration in London, thereby submitting to the supervisory jurisdiction of the English court, there is no basis under English law for assuming subsidiaries, as separate legal entities and not parties to the arbitration agreement, would do likewise.

A non-party can thwart an arbitration agreement or award without themselves being subject to an injunction. “The absence of a remedy in this scenario is of acute concern.”

Construction of jurisdictional gateways must be construed in favour of foreign dependants. The power to bring a foreign person or company, who is not a party, into proceedings within this jurisdiction is not to be taken lightly.

A major current case concerned DTek Trading SA versus Sergey Morozov and Incolab Services Ukraine. A hearing was listed in the Court of Appeal for March 2018. DTEK’s appeal position was that the Court should be entitled to exercise powers under Section 44 against non-parties to the arbitration agreement with particular reference to disclosure, granting injunctions and property.

 

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