Contents 1 London Maritime Arbitration 2 The Arbitration Act 1996 3 Mediation and Arbitration 4 The Arbitration Agreement 5 The Conflict of Laws 6 Disputes about the Tribunals Jurisdiction 7 Stays of English Court Proceedings Brought in Breach of an Agreement to Arbitrate 8 Injunctions and Arbitration 9 Extending Agreed Time Limits for Beginning Arbitral Proceedings 10 Appointment of Arbitrators and Umpires 11 The Arbitrator 12 Procedure and Evidence 13 Confidentiality in Arbitration 14 Remedies for Delay 15 Arbitration and Third Parties 16 Preliminary Issues 17 Security for Costs 18 Security for Claims in Arbitration 19 Arbitration Awards 20 Arbitrators Fees and Expenses 21 Costs 22 Challenging an Award in the English Courts 23 Enforcement of Awards APPENDIX A: Arbitration Act 1996 APPENDIX B: THE LMAA Terms (2006) APPENDIX C: The LMAA Small Claims Procedure APPENDIX D: The LMAA Intermediate Claims Procedure 2009 APPENDIX E: The LMAA/Baltic Exchange Mediation Terms (2009) APPENDIX F: The UNCITRAL Model Law APPENDIX G: CPR Part 62 on Arbitration Claims APPENDIX H: Practice DirectionArbitration APPENDIX I: The Admiralty & Commercial Courts Guide APPENDIX J: Departmental Advisory Committee on Arbitration Law Report on the Arbitration Bill APPENDIX K: Departmental Advisory Committee on Arbitration Law Supplementary Report on The Arbitration Act 1996* APPENDIX L(i): LMAA Standard Procedure APPENDIX L(ii): LMAA ICP Procedure APPENDIX L(iii): LMAA Small Claims Procedure APPENDIX L(iv): Arbitration Claims

Chapter 1London Maritime ArbitrationLondon Maritime Arbitration 1. Introduction 2. The London Maritime Arbitrators Association 3. LMAA Terms 4. The Small Claims Procedure 5. FALCA Rules 6. Intermediate Claims Procedure 7. Maritime arbitration and the Civil Procedure Rules 8. Arbitration and the Human Rights Act 1998 9. Arbitration and European Competition Law1.INTRODUCTIONArbitration is a private method of resolving disputes. It is used when parties agree to refer their dispute to an impartial tribunal consisting of one or more arbitrators. Parties normally agree to arbitration by means of an arbitration clause in a contract made before a dispute has arisen. It can also be agreed after a dispute has arisen. Arbitration differs radically from court proceedings in that it arises out of an agreement and the rules of procedure governing litigation do not apply, thus allowing a flexible and confidential procedure to be adopted to suit the parties convenience. Arbitrators are generally appointed and paid by the parties; they are usually chosen for their familiarity with the commercial, technical or legal aspects of the dispute. The advantages of arbitration are its privacy and its potential as a flexible, speedy means of resolving commercial disputes. However, the efficiency of arbitration depends on the cooperation of the parties (and their lawyers and indeed the arbitrators) in preparing a case and minimising the areas of substantive dispute. The Arbitration Act 1996 places duties on the parties and the arbitrators to ensure the dispute is resolved efficiently. However, in practice it may be difficult to enforce these duties and arbitration can be just as slow and expensive as litigation if the parties will not cooperate and if the arbitrators do not take a firm approach to the proceedings.London maritime arbitration is a broad term usually applied to arbitration taking place in London where the dispute involves in some way a shipfor instance a dispute under a charterparty, a bill of lading or a ship sale agreement. There is, however, no strict definition of maritime arbitration which would require the involvement of a ship and any arbitration carried out on the terms of the London Maritime Arbitrators Association (the LMAA Terms) might be termed a maritime arbitration. This book aims to provide a practical guide to the law and practice of maritime arbitrations in London, particularly arbitrations proceeding under the LMAA Terms.2.THE LONDON MARITIME ARBITRATORS ASSOCIATION (THE LMAA)History and aimsTraditionally, maritime arbitrators were members of the shipping trade who found time to act as arbitrators largely on an honorary basis. Maritime arbitration is now much more time-consuming and formal. Most arbitrations are carried out by full-time professional arbitrators, technical experts, or lawyers who charge a professional fee. It appears that more than half of London maritime arbitrations are being decided by about half a dozen individuals.1The LMAA is a professional association which was set up in 1960, originating from a group of brokers at the Baltic Exchange who were listed as available to be appointed as arbitrators. Unlike the International Chamber of Commerce (ICC) or the Grain and Feeds Trade Association (GAFTA), the LMAA does not actively supervise or administer arbitrations. However, the LMAA may assist in a limited way as agreed by the parties. For example, under LMAA Terms, the President of the LMAA may make appointments where an arbitrator has resigned. The business of the LMAA is managed by the LMAA Committee, which is chaired by the LMAA President and elected by full members.The LMAA plays a central and supportive role in London maritime arbitration. Its members conduct the vast majority of maritime arbitrations in London; most years they receive around 3,000 appointments and issue more than 400 awards.2The LMAA is responsible for drawing up the LMAA Terms (and other rules such as the Small Claims Procedure) and laying down standards of conduct for its members. It has an informative role: maintaining a website, issuing a handbook, publishing a newsletter and generally keeping members informed of relevant developments, for instance by holding seminars. The LMAA website and handbook are very useful sources of information on practice and individual arbitrators.3In addition, the LMAA may be called upon to appoint arbitrators in accordance with the LMAA Terms or an arbitration clause and to give members advice on specific questions. In a wider context it seeks to maintain high professional standards in maritime arbitration and to act as a representative body, for instance by making representations about proposed legislation relevant to its members interests.MembersThe LMAA consists of two main groups of members. There are currently 35 full members who are generally prepared to undertake maritime arbitration of any description or duration. Approximately half of these have a predominantly legal background and the rest have technical or commercial expertise. Many full members arbitrate as a full-time occupation. They would almost certainly be treated as commercial men or engaged in the shipping trade for the purpose of satisfying such a qualification required in an arbitration clause.4To become a full member the applicant must demonstrate his knowledge of the relevant areas of English law and competence in writing awards. The general rule is that an applicant for full membership must have been engaged for at least 15 years in a position of responsibility within the shipping industry, generally in commercial, technical or legal areas. Applicants must be UK residents or otherwise able to attend London hearings at short notice. A substantial commitment to arbitration will normally be required to ensure that sufficient time can be given to arbitrations and to help secure the impartiality of an independent arbitrator. The LMAA election sub-committee will interview potential full members in meetings. The sub-committee will report on each applicant but election to full membership is ultimately decided by the LMAA Committee. The LMAA Committee has powers (which have never had to be used) to remove a member from the LMAA where his conduct is inconsistent with LMAA membership.The second group of LMAA members consists of around 800 supporting members drawn mainly from the shipping trade, solicitors firms, barristers and P&I clubs. Supporting members do not, as a general rule, practise as arbitrators or umpires but they lend their support to the objects of the LMAA. Applicants for supporting membership should be aged at least 28 with suitable commercial or technical experience or be qualified as a lawyer for five years. The application must be supported by one full member or two referees, preferably supporting members. The names of any supporting members who would accept appointments as an arbitrator and are willing to be named as a would be arbitrator are listed in the LMAA Newsletter.The supporting members represent the users of London maritime arbitration. The Supporting Members Liaison Committee plays an important role in raising matters of interest and liaising with the LMAA, for example in the drafting of LMAA Terms. Most significant changes in practice will only be adopted after consultation with this committee. Supporting members also have the opportunity to meet full members throughout the year at seminars, lunches, meetings and the annual dinner.3.THE LMAA TERMSLMAA Terms were first introduced in 1984 and amended versions came into force in 1987, 1991, 1997, 2002 and most recently in 2006 (Appendix L contains flow charts setting out the usual procedure under the 2006 Terms). The Terms are flexible in that the parties and the arbitrators may agree to alter or dispense with any part of them. The combination of clarity, convenience and flexibility found in the LMAA Terms means that they are often chosen to govern arbitrations where the arbitrators are not members of the LMAA, for instance where the sole arbitrator is a practising lawyer. The current version (the LMAA Terms (2006)) applies to all arbitrations commenced on or after 1 January 2006.5The current Terms (like the previous LMAA Terms) largely reflect the provisions of the 1996 Act. Paragraph 7(a) provides a general rule that:The arbitral proceedings and the rights and obligations of the parties in connection therewith shall be in all respects governed by the [1996] Act save to the extent that the provisions of the Act are varied, modified or supplemented by these Terms.The Terms provide further detail and, in some respects, confer greater powers on the tribunal, for example by enabling the tribunal to make orders for concurrent hearings. The changes introduced in 2006 are intended to address needs that have become apparent since 2002. Most significantly, paragraph 22 of the LMAA Terms 2006 now provides for a reasoned award to be made unless the parties agree otherwise, This change reflects the actual practice in LMAA arbitrations, as well as being in line with the trend in other arbitral bodies. The more specific effects of the LMAA Terms are discussed throughout the rest of this book. References to the LMAA Terms in this book are to the current LMAA Terms (2006).When are LMAA Terms applicable?If an arbitration clause specifies that LMAA Terms apply to the arbitration then this agreement will bind the parties and the tribunal. Maritime arbitrators usually accept appointments on or subject to the LMAA Terms in force for the time being, either by expressly stating this or by a printed notice to that effect on their writing paper and fax heading. An arbitrators acceptance of appointment on LMAA Terms will mean that those Terms govern his appointment and his relationship with the party appointing him, for example as regards his right to booking fees. However, this alone will not be sufficient to render the Terms applicable to the conduct of the arbitration because this requires the agreement of both parties, typically by agreement in the arbitration clause, or where the arbitrator is appointed as sole arbitrator or the other partys arbitrator has also accepted an appointment on LMAA Terms. This is reflected by paragraph 5(b) of the LMAA Terms which provides that the parties shall be taken to have so agreed whenever a sole arbitrator or both the original arbitrators have been appointed on the basis that the Terms apply to their appointment. Paragraph 5 further supports this by going on to provide that:Whenever a sole arbitrator or both the original arbitrators have been appointed on the basis referred to at (b), such appointments or the conduct of the parties in taking part in the arbitration thereafter shall constitute between the parties an agreement that the arbitration agreement governing their dispute has been made or varied so as to incorporate these Terms and shall further constitute authority to their respective arbitrators so to confirm in writing on their behalf.Paragraph 5(a) of the LMAA Terms provides that the parties shall be taken to have agreed to the application of the LMAA Terms where the dispute is referred to a sole arbitrator who is a full member of the LMAA, or the original arbitrators appointed by the parties are full members (unless both parties have agreed otherwise). The effectiveness of this provision in making the arbitral proceedings subject to LMAA Terms is doubtfulif the parties have not agreed to the application of the Terms, the Terms cannot effectively bind them to be taken to have so agreed.6The mere fact of appointing full members of the LMAA would probably not, in itself, always amount to an agreement (whether implied or as a matter of custom) to the application of the LMAA Terms. Some full members of the LMAA also accept appointments pursuant to other arbitration rules, for example GAFTA or LCIA rules so it is not a universal practice that full members of the LMAA accept all appointments on LMAA Terms.The decision of Saville J inFal BunkeringvGrecale Inc of Panama7concerned this type of scenario. A dispute arose out of a charterparty which provided for arbitration but without reference to arbitration rules. The owners appointed a full member of the LMAA who expressly accepted the appointment on LMAA Terms. The charterers were not informed of the terms of that appointment and their arbitrator (also a full member of the LMAA) accepted appointment without reference to any terms. The owners applied to the arbitrators for security for costs, relying on the LMAA Terms which gave the arbitrators jurisdiction to grant security for costs. The charterers sought, and were granted, a declaration that the owners were not entitled to apply to the arbitrators for security.Saville J held that the starting point in deciding the terms governing a reference is the parties express or implied agreement. What the parties impliedly agreed was to be found by looking at what each party was reasonably entitled to conclude from the attitude of the other. It was not possible to assume from the fact that both arbitrators were known to be members of the LMAA that, as a matter of usage, the arbitration should be conducted on LMAA Terms. It was not shown that LMAA members universally and invariably only accepted appointments on LMAA Terms. On the facts, there was no agreement on the terms governing the reference. Saville J applied a contractual analysis of the arbitrators relationship with the parties and suggested,obiter, that if the charterers arbitrator had accepted appointment on LMAA terms this would probably have been sufficient to incorporate the LMAA Terms in the reference.8It is questionable as to whetherFal Bunkeringremains good authority that the appointment of full LMAA members as arbitrators (or the appointment of one arbitrator, but not the others, expressly on LMAA Terms) in an ordinary shipping dispute does not in itself mean that the reference is subject to the LMAA Terms. Now it might well be held that it is universal practice for LMAA full members to accept appointments in charterparty or bill of lading disputes only on LMAA Terms.The problem is unlikely to arise in practice since full members of the LMAA usually accept appointments expressly subject to the LMAA Terms. Their correspondence will usually contain notices to the effect that they accept appointment on LMAA Terms so that parties continuing in the arbitration without objection to the Terms would probably be treated as agreeing by conduct to incorporate them.9If an arbitrator accepts appointment on LMAA Terms and becomes the sole arbitrator by default (whether by a court appointment or a contractual mechanism or by statute, see Chapter 10 on default appointments) it is unlikely that the LMAA Terms would apply to the arbitration because there is no agreement as such. However, if the party in default took part in the arbitration he would probably be treated as having agreed by conduct to the application of the Terms (though this may only be the case if the defaulting party knew or should reasonably have known that the arbitrator had accepted appointment on those Terms).Which LMAA Terms apply?The LMAA Small Claims Procedure (or FALCA Rules or the Intermediate Claims Procedure) will normally apply where there is provision to that effect in the arbitration clause or an agreement by the parties after the dispute has arisen. In general, however, maritime arbitrators accept appointments on the current LMAA Terms or those in force for the time being. The LMAA arbitration clause makes clear that the arbitration shall be conducted in accordance with the LMAA Terms current at the time when the arbitration proceedings are commenced. The current LMAA Terms are stated to apply to all arbitrations commenced on or after 1 January 2006.10Uncertainty as to the applicable terms may arise where the arbitration agreement was made before the current rules came into force and it provides for arbitration according to the rules in force at the date of the contract. The question of which version of the LMAA Terms will apply is a matter of construction of the arbitration agreement and the arbitrators terms of appointment. Where an arbitration agreement provides that certain rules apply, thenprima faciethat refers to the rules in force at the time the arbitration is begun.11InThe Robin,12a charter made in January 1997 included an arbitration clause providing that where appropriate the LMAA Small Claims Procedure (1989) will be used. The 1989 procedure had been superseded by a later procedure and Toulson J found that the 1989 procedure did not apply: the probable intention of the parties was that the procedure current at the relevant date (i.e. commencement of arbitration) would apply and the reference to 1989 was an error.It is doubtful whether amendments to arbitration rules made after the commencement of an arbitration would apply in preference to the rules in force at the date of commencement. Amended arbitration rules would probably only be given preference in so far as the old rules had become out of date and impractical to apply.134.THE SMALL CLAIMS PROCEDUREThe LMAA Small Claims Procedure is designed to provide a quicker and cheaper way of dealing with small claims: it is currently suggested for use where neither the claim nor the counterclaim exceeds $50,000 (excluding interest and costs). The procedure will apply if agreed by the parties: typically a charter party arbitration clause may provide that it applies automatically to disputes below a certain sum. The LMAA Commentary on the Small Claims Procedure (2006) stresses that this procedure is not suitable in the case of complex issues, or where examination of witnesses may prove necessary. Further, the LMAA comments that the widespread use of the small claims procedure, regardless of its suitability for the case at hand, is a regrettable tendency which may lead parties to be dissatisfied with the ultimate results. Nevertheless, the LMAA still recognises that the procedure may be suitable for dealing with larger claims involving a single issue where no hearing is required. The Procedure is popular14with parties but it is generally not a lucrative area of practice for arbitrators due to the fixed fees; members of the LMAA agree to deal with disputes under this procedure as a service to the industry.15The procedure is set out in Appendix C (with a flow chart at Appendix L) but the main features are: use of a sole arbitrator; fixed arbitrators fees of a sum to be determined from time to time by the LMAA Committee16and to be paid as a condition precedent to the valid commencement of the Small Claims Procedure; in respect of challenges to jurisdiction, such work must be paid for on aquantum meruitbasis before the arbitrator resolves the challenge. These fees are borne, in the first instance only, by the claimant. This 2006 change reflects the large quantity of work that an arbitrator may have to undertake in resolving a jurisdictional challenge; a strict timetable for exchange of submissions aimed to be completed within three months; no oral hearing unless in exceptional circumstances; only relevant documents to be disclosed on exchange of submissions;17 recoverable costs are limited to such sum as is determined from time to time by the LMAA Committee;18 unless otherwise agreed or requested by the arbitrator, parties are not required to present schedules of the costs claimed: the amount is to be left to the arbitrators discretion; no right of appeal, subject to challenges to jurisdiction allowable under the Arbitration Act 1996;19 pursuant to paragraph 9, in any case where it is determined or agreed, because of the nature and/or weight of a case, that the Small Claims Procedure is inappropriate and shall not be applicable, it shall cease to apply in its entirety. This represents a departure from the earlier versions of the Small Claims Procedure, and is designed to combat the regrettable tendency to over-use this procedure.Further aspects of the procedure are dealt with more fully in Chapter 12.5.THE FALCA RULESFALCA stands for Fast and Low Cost Arbitration. These rules were adopted in 1996 to provide a speedy and more inexpensive method of resolving middle range disputes; typically involving claims up to $250,000 (the sum deemed to be agreed in the FALCA arbitration clause). The FALCA Rules have proved relatively unpopular20as compared to the Small Claims Procedure and it is likely that their use will decline further as the new Intermediate Claims Procedure, discussed below, takes over more medium-sized disputes. Nevertheless, as the FALCA Rules do still exist, they will be briefly discussed.FALCA Rules will apply where the parties have agreed on them, ordinarily in the arbitration clause or after the dispute has arisen. They share many of the features of the Small Claims Procedure: sole arbitrator; timetable designed to produce an award within eight months of appointment; no oral hearing unless the arbitrator requires it; and no right of appeal.Under FALCA Rules, however, neither the arbitrators fees nor the recoverable costs are limited, although the parties may generally not seek security for costs in excess of 7,500.6.INTERMEDIATE CLAIMS PROCEDUREIn March 2009 the LMAA introduced the Intermediate Claims Procedure (ICP) to deal with medium-sized claims deserving a fuller procedure than the Small Claims Procedure but not, on grounds of proportionality, the full procedure offered by the LMAA Terms. FALCA had proved relatively unpopular and the LMAA established a working group in 2006 to investigate alternative methods for dealing with medium-sized claims. The ICP was then developed in collaboration with the Baltic Exchange. The intention behind the procedure is that it should normally provide its own momentum and that costs should be largely predictable at the outset.The full terms of the ICP (together with the LMAA commentary) are set out in Appendix D and should be referred to for details. The ICP will only apply where the parties have so agreed, either in their contract or after the dispute has arisen. Parties may have to consider redrafting arbitration clauses to make reference to the Intermediate Claims Procedure. The LMAA has provided suggestions as to suitable arbitration clauses which provide for the Intermediate Claims Procedure to apply.21The parties may agree on a monetary limit for the application of the ICP but in the absence of such express agreement the ICP will apply where the total amount of claims or counterclaims (excluding interest and costs) is between the size of US$100,000 (or the agreed upper limit for the LMAA Small Claims Procedure) and US$400,000. If either party at any time advances claims or counterclaims which in total exceed US$400,000 then the tribunal has discretion as to whether to continue the reference under the ICP or the LMAA Terms.The full procedure is set out in Appendix D with a flow chart at Appendix L, but the main features of the procedure are as follows: The parties may agree on the composition of the tribunal, but in the absence of agreement, the tribunal shall consist of three arbitrators. There is no automatic right to an oral hearing, and only exceptionally will one be held. If an oral hearing is allowed, it will generally be limited to a maximum of five hours and is intended to allow for cross-examination of witnesses with provision for closing written submissions thereafter. A strict timetable is set up for exchange of opening submissions, with no formal disclosure stage. All relevant documents must be disclosed with opening submissions. Parties must give notice of intention to serve factual witness statements and serve them within 28 days of completion of opening submissions. Expert evidence can be adduced only with the express permission of the tribunal. Supplementary factual and expert witness statements are only allowed with the express permission of the tribunal. There is limited provision for written closing submissions where there is an oral hearing or further evidence has been exchanged following the completion of opening submissions. In order to ensure that the timetable of the arbitration maintains momentum, a party may apply for peremptory orders for failure to comply with time limits. Further, any submissions or evidence submitted after the expiry of a time limit set by a peremptory order shall not be admissible. The tribunal will make every effort to publish the award within six weeks from the service of the last submissions of the parties. Any right of appeal to the courts is excluded, except the parties are deemed to have agreed that there will be a right of appeal where the tribunal certifies in its award that the dispute between the parties involves a question of law of general interest or importance to the trade or industry in question. This novel provision is intended to avoid a dichotomy of views between a tribunal and the courts as to whether the award contains a legal question of general importance and to avoid the cost of applying for permission to appeal where it has been demonstrated to the tribunal that the award involves a question of general importance. The tribunal is to assess costs at its discretion on a summary and commercial basis, according to what is fair, reasonable and proportional to the matters in dispute. The parties recoverable costs are to be capped at a maximum figure of 30 per cent of the claim advanced (plus, should there be a counterclaim that the tribunal considers to be distinct22from the claim, 30 per cent of the counterclaim). If there is an oral hearing the percentage cap on recoverable costs will be increased to 50 per cent (not including the cost of hiring a venue and catering). If non-monetary relief is sought, the tribunal will decide what overall cap to apply following completion of opening submissions. Security for costs will not be granted in a sum above the amount at which the parties respective costs have been capped. Save in exceptional circumstances, the tribunals costs (excluding the appointment fee and costs in respect of a challenge to the tribunals jurisdiction) shall not exceed one-third of the total sum at which the partys costs are capped, or two-thirds thereof in the case of a two- or three-person tribunal.As at publication these provisions are brand new: it remains to be seen how popular they will prove to be with parties and practitioners.7.MARITIME ARBITRATION AND THE CIVIL PROCEDURE RULESThe Civil Procedure Rules (the CPR), first introduced in 1999, are the court rules applicable to civil litigation in the English High Court and county court. At its outset the CPR expressly states its aim, or overriding objective, as follows: (1) These Rules are a new procedural code with the overriding objective of enabling the court to deal with cases justly. (2) Dealing with a case justly includes, so far as is practicable (a) ensuring that the parties are on an equal footing; (b) saving expense; (c) dealing with the case in ways which are proportionate (i) to the amount of money involved; (ii) to the importance of the case; (iii) to the complexity of the issues; and (iv) to the financial position of each party; (d) ensuring that it is dealt with expeditiously and fairly; and (e) allotting to it an appropriate share of the courts resources, while taking into account the need to allot resources to other cases.The parties are under a duty to help the court to further the overriding objective.23Particular features of the CPR involve the use of active case management; this means the court is involved in giving directions to ensure that the case proceeds efficiently, it will identify the issues at an early stage and decide which need trial and which could be decided summarily. The court will also take steps to trim the non-essential features of litigation, in particular by restricting, where possible, the amount of oral evidence, expert evidence and disclosure of documents. Avoiding the accumulation of excessive costs is a high priority and this is given effect in various ways, in particular by the use of settlement offers, encouraging alternative dispute resolution and making the parties more aware of costs being incurred (e.g. by making orders for summary assessment of costs as soon as an application is heard). Delay is tackled in particular by using stricter timetables for preparing a case which cannot simply be extended at the will of the parties. The CPR also aims to be user-friendly; it avoids technical legal terms and Latin expressions.The CPR covers applications to court relating to arbitration,24but has not significantly changed procedure as the court rules adopted to give effect to the 1996 Act already adopted the philosophy of dealing with cases expeditiously. More specific features of the CPR as adopted in the Commercial Court are now features of arbitration, for example the test for disclosure.The CPR has, however, had a wider impact on arbitration because it has raised new priorities in resolving civil disputes. The judge is expected to take a proactive approach in taking charge of a case at an early stage and managing its conduct. The overriding objective clearly echoes the duty on an arbitral tribunal under section 33 of the 1996 Act to act fairly as between the parties and to adopt procedures suitable to the circumstances of the case, avoiding unnecessary expense and delay. The parties duty to give effect to the overriding objective under the CPR also reflects the parties duty in an arbitration under section 40 of the 1996 Act to do all things necessary for its proper and expeditious conduct. Lord Woolf MR has suggested that the underlying spirit of the 1996 Act is very much in accord with that of the CPR in that it sets out in readily understandable terms what is required of the parties.25It is noteworthy, however, that although the 1996 Act encouraged autonomy and independence of arbitration from court procedure, many arbitrators have now adopted practices from the CPR, for example when making costs orders.26The procedural rules set out in the Second Schedule of the LMAA Terms (2006) adopt the CPRs test for standard disclosure of documents and expressly provide that parties will generally not be required to provide broader disclosure of documents than required by the courts. In addition, they adopt a fairly strict timetable for exchange of submissions. However, the LMAA Terms give the arbitrators very wide discretion over procedure and CPR practice would only be adopted if appropriate to combat undue costs and delay.Adoption of some aspects of case management in arbitration will be welcomed since they may be useful, in particular if the parties are failing to cooperate with each other or one party is being obstructive. Cresswell J has recommended that in major arbitrations, arbitrators should consider asking the parties to produce a short agreed list of the important issues and the common ground between the parties, thus following practice under the CPR and the LMAA Terms.27Limiting disclosure is also valuable since this has often proved to be a disproportionately expensive and time-consuming part of the preparation for an arbitration. However, arbitrators should exercise some caution in adopting the CPR. First, in an arbitration the parties may choose the procedure for resolving their dispute; the tribunals broad powers to decide procedural matters only apply to the extent that there is no such agreement. Second, the CPR is designed to cover a wider range of cases where parties have not necessarily entered into a contract (e.g. tort claims). In such circumstances it will be particularly important to ensure that the parties are on an equal footing so that a wealthy litigant cannot exploit the rules to intimidate a weaker party. In arbitration, however, the parties are generally commercial concerns who have chosen to arbitrate pursuant to a commercial contract; accordingly there will often be less need to make allowances for inequality between the parties. Third, judges have to consider how much of the courts finite and publicly funded resources should be spent on a particular case with regard to the interests of other litigants in the queue. In contrast, an arbitrators authority derives from the fact that he was appointed by the parties for the express purpose of spending time to resolve their dispute. He should not accept an appointment if he cannot find adequate time to deal with the case, and accordingly the issue of appropriate allocation of time between appointments should not cause conflict. However, the principle of proportionality will apply in arbitration in accordance with section 33 of the 1996 Act (i.e. choosing a fair procedure and avoiding unnecessary delay or expense) so that an arbitrator can decide on the most appropriate procedure for a particular case depending on its size, significance and complexity. In addition, hearing dates will generally depend on the tribunals other commitments.A final note of caution in case management arises from the fact that the CPR requires the parties to put substantial work into a case at the outset in identifying the issues and the merits of the case. This front-loading effect means that high costs are incurred at an early stage. The CPR also requires the parties to stick to the courts timetable and streamlining measures. Most parties will favour the efficiency of this approach but the fast track is not always the best track;28some may choose arbitration for a more flexible and thorough approach; if that preference is agreed it should be respected by the tribunal.8.ARBITRATION AND THE HUMAN RIGHTS ACT 1998The Human Rights Act 1998 came into force in English law on 1 October 2000 and comparatively quickly it began to have an impact, however modest, in maritime arbitration.29The purpose of the Human Rights Act is to give effect, within English law, to the rights and freedoms protected by the European Convention on Human Rights. This Convention is an international treaty drawn up in the aftermath of the atrocities of the second world war and the European Court of Human Rights in Strasbourg was set up to protect the rights recognised.The Convention is directed towards giving the individual (including legal persons such as bodies corporate) rights which are enforceable against public authorities. Accordingly, commercial arbitration will very rarely involve substantive Convention rights such as freedom of speech since arbitration is normally between private parties and concerns issues of private lawtypically contractual claims. However, the right to a fair hearing is a fundamental human right and its scope is fairly often disputed in a commercial disputeusually in procedural issues such as whether certain evidence should be admitted. Article 6(1) of the Convention provides that everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law. The Human Rights Act has not, however, had any significant effect on confidentiality and procedural autonomy in arbitration because, in accordance with the Strasbourg jurisprudence, the parties choice of arbitration amounts to a renunciation of the guarantees of a public court procedure given by Article 6(1).30Consideration was given to this issue in a non-maritime context inDepartment of Economics Policy & Department of the City of MoscowvBankers Trust Co.31For similar reasons the existing statutory restrictions on access to court would probably be treated as compatible with the Human Rights Act, in particular since mandatory procedural safeguards are maintained under the 1996 Act.32There have been attempts to argue that arbitration clauses as a whole should be found contrary to Article 6 of the Convention because they restrict access to a court hearing. Such attempts have been unsuccessful because Convention jurisprudence accepts that, by agreeing to arbitrate, parties waive their rights to a court hearing under Article 6(1).InStretfordvFootball Association,33the Court of Appeal considered an argument that an arbitration clause in respect of disciplinary proceedings under the FA Premier League Rules (and the disciplinary proceedings carried out thereunder) were contrary to Article 6. The Court of Appeal found, however, that the Arbitration Act 1996 complied with the requirements of Article 6. The only Article 6 requirements not formally met by the Act were those that the hearing be held in public, that the tribunal members be independent, that the tribunal be established by law and the judgment be pronounced publicly. However, by entering into the arbitration agreement voluntarily, the parties thereto were to be considered as having waived their Article 6 rights, provided that the waiver was agreed without constraint and was not contrary to any important public interest. English law itself protected parties from such constraint, and further provided for the courts to put right any partiality or lack of procedural fairness.Similarly inEl NashartyvJ Sainsbury plc,34Tomlinson J rejected the argument that an arbitration agreement was in breach of Article 6 by depriving the parties of access to the courts. Further, an argument that one party could not now afford the costs of arbitration, and therefore was being deprived of access to justice, was rejected. InSumukan LtdvCommonwealth Secretariat35Colman J considered that an exclusion agreement precluding appeals under section 69 of the Arbitration Act, was not in breach of Article 6. The case continued to the Court of Appeal, but on different points.36The Human Rights Act has more commonly been invoked to challenge legislation and practice relating to proceedings linked to arbitration. The courts have taken a robust but carefully considered approach to such human rights points and have generally found that English law is compatible with Convention rights. For example, the civil procedure rules provide that most arbitration claims are heard in private and these rules were carefully considered and upheld inDepartment of Economics Policy & Development of the City of MoscowvBankers Trust Co.37The rule that applications for permission to appeal are ordinarily decided without an oral hearing has also been upheld.38However, some practices have changed in light of the Human Rights Act, in particular judges now give reasons for their decision on an application for permission to appeal under section 69 of the 1996 Act.InNorth Range Shipping LtdvSeatrans Shipping Corporation39Steel J had refused to give full reasons for refusing permission to appeal from an award, instead referring simply to the statutory grounds for refusing permission. The applicants argued that under the Human Rights Act 1998 the court should give full reasons in accordance with Strasbourg jurisprudence on the right to a fair hearing under Article 6(1). The Court of Appeal upheld Steel Js decision but held that the practice of giving no reasons established inThe Antaios40was incompatible with the Human Rights Act. At the very least, the unsuccessful applicant for permission should be told which of the statutory tests he had failed to meet. Whether or not the judge must go further and explain why the test was not satisfied would depend on the circumstances, but very brief reasons would be sufficient.41Statutory restrictions on court intervention have also been challenged but have been found to be compatible with the Human Rights Act because they reflect the parties choice, in the interests of finality, privacy and efficiency, to waive their rights to have a public court hearing in favour of having an arbitrator decide their dispute. In addition, the courts have been willing to uphold statutory restrictions because the 1996 also maintains mandatory procedural safeguards.42For instance, the tribunal is under a mandatory duty to act fairly and impartially between the parties43and the Court of Appeal has a residual jurisdiction to intervene to prevent arbitrariness in a judges decision making.InRepublic of KazakhstanvIstil Group Ltd44the Court of Appeal had to consider whether the restrictions on appeals in section 67(4) of the 1996 Act45were compatible with the right to fair trial set down in Article 6 of the Convention. It decided that section 67(4) was both legitimate and proportionate, in that it was legitimate for Parliament to seek to restrict further appeals and that it was proportionate to limit second appeals to those cases where the judge found there to be a reasonable prospect of success. A further safeguard in the interests of fairness was provided in that it was open to the Court of Appeal to review the fairness of the decision making process engaged in under section 67(4). This exception, which is meant to provide an effective safety net, derives fromCGU International Insurance plcvAztraZeneca Insurance Co Ltd,46where it was alleged that the procedure in reaching the decision was so flawed that the decision could not be properly called a decision at all. Intervention under this residual jurisdiction would, however, be exceptional since it requires a substantial defect in fairness, going beyond even perversity, such that the decision is invalidated. A residual jurisdiction to this effect was considered by the court to have existed prior to the Human Rights Act in any event.These decisions show that the law of arbitration is subject to the Human Rights Act but substantial changes in law and practice have been relatively limited.The applicability of the Human Rights Act within the arbitral process itself has not been fully tested but the Act will probably be applicable in an arbitration governed by English law by reason of an arbitrators implied duty to apply the law. If English law applies to the substance of the dispute, arbitrators would be required to interpret legislation compatibly with Convention rights and to recognise the unlawfulness of public authorities violating Convention rights.47A tribunals failure to apply these principles of law would render the award potentially challengeable for an error of law. More controversial is whether an arbitral tribunal is under a duty to act compatibly with Convention rights in making procedural decisions, for example in admitting evidence which was obtained in breach of the parties right to privacy.48The full impact of the Human Rights Act on arbitration will depend on the development of human rights principles by the courts. Human rights issues are becoming increasingly important in commercial disputes in the same way that European Community points have become increasingly relevant in what might once have been regarded as purely domestic cases. The case law on Article 6(1) (both from Strasbourg and the English courts) is increasingly invoked in arbitration cases.499.ARBITRATION AND EUROPEAN COMPETITION LAWIf a competition law issue arises in a London maritime arbitration it will usually be governed by English law and accordingly will depend on principles of European competition law which now govern English law in this area. This book does not propose any in-depth treatment of European competition law (or any other anti-trust rules) but rather attempts a brief introduction to the growing relationship between this field and maritime arbitration.Substantive European competition law is contained in Articles 81 and 83 of the EC Treaty. The basic principle under EU law is that competition law prohibits anti-competitive agreements and the abuse of a dominant position. Until fairly recently the main means of enforcing competition law was by means of investigation by national competition authorities such as the Office of Fair Trading or the European Commission. Pursuant to Regulation 01/2003, increased power to apply competition law was devolved from the European Commission to national competition authorities and courts of the EU Member States. However, Articles 81 and 83 have direct effect in English law and are therefore enforceable in an arbitration governed by English law. The most common issue to arise in an arbitration is the enforceability and effect of an agreement that breaches competition law.At the outset an issue may arise as to the very arbitrability of such issues. Historically, some jurisdictions held that competition claims were not properly arbitrable since they raised issues of public policy that could not properly be determined in a private arbitration.50However, it is now firmly established that competition issues are arbitrable under English law.51Competition issues do, however, raise particular problems in the context of arbitration. First, an arbitral tribunal will not be able to provide the range of remedies available to official competition regulators (e.g. fines or exemptions). In addition, competition issues may often require extensive disclosure and complex expert economic evidence which may be costly and unfamiliar to most maritime arbitrators. Issues of competition law will also commonly involve third parties that may not easily be bound by the arbitral process.52However, notwithstanding these problems, an arbitral tribunal should generally address a competition issue where it arises since otherwise its award may be unenforceable. The European Court of Justices key ruling inEco Swiss China Time LtdvBenetton International BV53has had a significant, and controversial, impact on arbitration law in this respect.TheEco Swisscase concerned a dispute over a licence to make watches with the Benetton name. Benetton unilaterally terminated the agreement, and subsequently an arbitration was commenced to determine whether Benetton was in breach of its obligations under the licence agreement. During the arbitration neither the parties nor the tribunal raised the issue of whether the agreement was in accordance with European competition law. The arbitrators made two awardsa partial and final awardboth of which found against Benetton. Benetton subsequently applied to the Dutch courts for annulment of both awards on the grounds that they should be considered contrary to Dutch public policy, as the original licence agreement was contrary to European competition law. The matter went to the Dutch Supreme Court, who sought guidance from the European Court of Justice as to whether a national court should grant annulment of an arbitration award if the national court determined that the award was contrary to European competition law.The European Court of Justice concluded that Article 81 was a matter of public policy. Therefore, where a domestic court should, according to its own rules, annul an arbitration award on the grounds of failure to comply with national public policy, it should similarly annul an award if it failed to comply with Article 81. Further, the European Court held that competition law rules should be considered as public policy for the purposes of Articles V(1)(c) and (e) and II(b) of the New York Convention, and therefore national courts should refuse recognition and enforcement of awards which did not comply with competition law. However, the court did not decide whether arbitrators should be obliged to raise competition law issues of their own volition if they were relevant to the dispute before it.This last issue has caused some controversy, and no clear position seems to have been reached in England on this subject. Given the paucity of published arbitration awards, uncovering the reasoning and positions adopted by arbitral tribunals faced with this problem is difficult. Insofar as a tribunal fails to consider competition law points (even if not raised by the parties), it may render an award that is ultimately unenforceable, and therefore may be remiss in its duty to render an enforceable award.54However, maritime arbitrators may be reluctant to deal with competition law issues which frequently involve a quasi-public economic analysis outside their normal experience. This factor should be taken into account when appointing arbitrators, if a familiarity with competition law would be advantageous in the context of the arbitration.55Arbitration tribunals do not have the ability to seek guidance from the European Court of Justice in the way that is open to national courts.56Similarly, if a tribunal sought guidance from the European Commission it could place itself in breach of its obligation of confidentiality to the parties. However, pursuant to section 37 of the Arbitration Act 1996, the tribunal could appoint an expert to provide it with appropriate advice.Parties approaching an arbitration involving competition elements must also consider whether the remedies which an arbitral tribunal can provide are apt to deal with competition law problems. For instance, insofar as a party is alleging that there is some form of anti-competitive collusion between one party to the arbitration and a third party, the arbitral tribunal has extremely limited scope in providing remedies that could bind the third party.57It is difficult to ascertain the frequency with which competition issues are arising in London maritime arbitrations, given the confidentiality of awards. However, the ambit of competition law is expanding in the maritime field and there is an increasing scope for issues to arise. This is particularly the case in respect of joint venture agreements in the field of maritime law, and disputes involving slot chartering.58Parties may find that this is an area which increasingly needs to be addressed in the context of maritime arbitration, and both practitioners and the arbitrators they appoint need to be live to the issues and pitfalls that this may create.1Bruce Harris, [1995] ADRLJ 18 at 19.2See the statistics regularly published in the LMAA Newsletter.3www.lmaa.org.uk. The LMAA can be contacted via the Honorary Secretary. Personal details of said Honorary Secretary may change and therefore reference should be made to the website.4The Myron (Owners)vTradax Export SA,The Myron[1969] 1 Lloyds Rep 411, at 415,Rahcassi Shipping Company SAvBlue Star Line Ltd, The Bede[1967] 2 Lloyds Rep 261.5For the meaning of commencing arbitration, see section 14 of the 1996 Act and Chapter 10 on appointments.6Fal Bunkering of SharjahvGrecale Inc of Panama[1990] 1 Lloyds Rep 369, 373.7[1990] 1 Lloyds Rep 369. At the time of the decision arbitrators only had the power to grant security for costs if this was agreed by the parties.8Saville J at 373 made an analogy withClarkevDunraven[1897] AC 59 where competitors in a regatta had each agreed with the secretary of the yacht club to obey certain rules during the race. It was held that there was a contract on those rules between the competitors.9The last sentence of paragraph 5 of the LMAA Terms would support this view.10The issue of when an arbitration is treated as commenced is considered in Chapter 10. See section 14 of the 1996 Act.11China Agribusiness Development CorporationvBalli Trading[1998] 2 Lloyds Rep 76;PerezvJohn Mercer & Sons(1922) 10 Ll L Rep 584;Bunge SAvKruse[1979] 1 Lloyds Rep 279 andEDM JM Mertens & Co PVBAvVeevoeder Import Export Vimex BV[1979] 2 Lloyds Rep 372 at 383.12Ranko GroupvAntarctic Maritime SA[1998] LMLN 492, see transcript of 12 June 1998.13Bunge SAvKruse[1979] 1 Lloyds Rep 279 at 286.14See statistics in the LMAA Newsletter.15LMAA Handbook, commentary on the Small Claims Procedure.16The fee level will be published on the LMAA website and in the LMAA Newsletter. As of July 2008, the fee stands at 2,000, with an additional fee of 1,250 where there is a counterclaim which exceeds the amount of the claim.17The disclosure aspect of the Small Claims Procedure will probably be viewed similarly to paragraph 9 of the Second Schedule to the LMAA Terms (2006) which provides that a party will only be required to disclose the documents on which it relies or which adversely affect its own case as well as the documents which either support or affect the other partys case. It is likely that a similar test will be applied in practice in the Small Claims Procedure.18As of July 2008, the limitation on costs stands at 2,750 or 3,250 where the counterclaim exceeds the amount of the claim (3,000 for arbitrations commenced before 1 July 2008).19This is an appeal under section 69 of the 1996 Act, challenge under sections 67 and 68 cannot be excluded by agreement.20See LMAA Statistics (e.g. LMAA Newsletter Spring 2000, Autumn 2001).21Seewww.lmaa.org.ukfor details.22In deciding whether the counterclaim is distinct from the claim the tribunal is likely to use the same principles that are in applicable in deciding whether to award security for the costs of a counterclaim, see Chapter 17.23Paragraph 1.3 of Part 1 of the CPR.24CPR Part 62 supplemented by the Arbitration Practice Direction.25PatelvPatel[2000] QB 551.26For example, Harris, Planterose and Tecks,The Arbitration Act 1996.A Commentary(4th edn), p. 289, see also the award set out inEastrade Commodities IncvGannet Shipping Ltd[2002] 1 Lloyds Rep 713.27Petroships Pte LtdvPetec Trading & Investment Corporation of Vietnam,The Petro Ranger[2001] 2 Lloyds Rep 348 at 358.28Mustill & Boyd, 2001 Companion, p. 32.29Mousaka IncvGolden Seagull Maritime Inc[2001] 2 Lloyds Rep 657, upheld on appeal inNorth Range ShippingvSeatrans Shipping Corporation[2002] EWCA Civ 405; [2002] 2 Lloyds Rep 1.30DeweervBelgium, A/35, 27 February 1980, (1980) 2 EHRR 439, E Ct HR, paragraph 49,StretfordvFootball Association[2007] EWCA Civ 238; [2007] 2 Lloyds Rep 31,Department of Economics Policy & Development of the City of MoscowvBankers Trust Co[2004] EWCA Civ 314; [2004] 2 Lloyds Rep 179, para 27. For further discussion see Mustill & Boyd, 2001 Companion, pp. 76-79, C. Ambrose, Arbitration and the Human Rights Act 1998 [2000] LMCLQ 468 at 481-483.31[2003] EWHC 1377 (Comm); [2003] 1 WLR 2885 and on appeal at [2004] EWCA Civ 314; [2004] 2 Lloyds Rep 179.32Notably in sections 24, 33 and 68. InMousaka IncvGolden Seagull Maritme Inc[2001] 2 Lloyds Rep 657, it was common ground that the statutory restrictions on the right to appeal from an award under section 69 of the 1996 Act were consistent with Article 6(1). The requirement of independence in addition to impartiality was rejected in the 1996 Act as unnecessary and undesirable in arbitration, see paragraph 101 of the DAC Report.33[2007] EWCA Civ 238; [2007] 2 Lloyds Rep 31.34[2007] EWHC 2618 (Comm); [2008] 1 Lloyds Rep 360.35[2006] 2 Lloyds Rep 54; [2006] EWHC 304.36[2007] EWCA Civ 1148; [2008] 1 Lloyds Rep 40. An arbitration clause providing for arbitrators to be drawn from a religious class was upheld inJivrajvHashwani[2009] EWHC 1364 (Comm).37[2004] EWCA Civ 314; [2004] 2 Lloyds Rep 179, for further discussion of the case see Chapter 13 on confidentiality.38Section 69(5) of the 1996 Act. The absence of an oral hearing for determining an application for permission to appeal was regarded as compatible with Convention rights inBLCT (13096) LtdvJ Sainsbury plc[2003] EWCA Civ 884; [2004] 1 CLC 24.39[2002] EWCA Civ 405; [2002] 2 Lloyds Rep 1, upholding the decision inMousaka IncvGolden Seagull Maritime Inc[2001] 2 Lloyds Rep 657.40Antaios Compania Naviera SAvSalen Rederierna AB[1985] 1 AC 191.41The Court of Appeals decision that it had residual jurisdiction to intervene inNorth Range Shippingwas confirmed inCGU International Insurance plcvAstraZeneca Insurance Co Ltd[2006] EWCA Civ 1340; [2007] 1 Lloyds Rep 142; [2006] 2 CLC 441.42SeeStretfordvFootball Association[2007] EWCA Civ 238; [2007] 2 Lloyds Rep at 31 andRepublic of KazakhstanvIstil Group Ltd[2007] EWCA Civ 471; [2007] 2 Lloyds Rep 548. InMousaka IncvGolden Seagull Maritime Inc[2001] 2 Lloyds Rep 657 it was common ground that the statutory restrictions on the right to appeal from an award under section 69 of the 1996 Act were consistent with Article 6(1).43The requirement of independence in addition to impartiality in Article 6 was not incorporated into the 1996 Act because it was regarded as unnecessary in arbitration, see paragraph 101 of the DAC Report.44[2007] EWCA Civ 471; [2007] 2 Lloyds Rep 548.45Section 67(4) provides that: The leave of the court is required for any appeal from a decision of the court under this section.46[2006] EWCA Civ 1340; [2006] 2 CLC 441; [2007] 1 Lloyds Rep 142, see alsoASM Shipping Ltd of IndiavTTMI Ltd of England[2006] EWCA Civ 1341; [2007] 1 Lloyds Rep 136.47Human Rights Act 1998, sections 3 and 6, Arbitration Act 1996, section 46.48C. Ambrose, Arbitration and the Human Rights Act 1998 [2000] LMCLQ 468, see, also,Al Hadha Trading CompanyvTradigrain SA[2002] 2 Lloyds Rep 512.49Department of Economics Policy & Development of the City of MoscowvBankers Trust Co[2004] EWCA Civ 314; [2004] 2 Lloyds Rep 179.50E. Lecchi, M. Cover, Arbitrating Competition Law Cases [2008]Arbitration65.51ET Plus SAvWelter[2005] EWHC 2115 (Comm); [2006] 1 Lloyds Rep 251, paragraph 51.52See Chapter 15 on third parties.53Case C-126/97 [1999] ECR I-3055; [1999] 2 All ER (Comm) 44.54P. Landolt,Modernised EC Competition Law in International Arbitration(Kluwer, 2006) No. 7-122.55H. van Houtte, Arbitration and Articles 81 and 82 EC TreatyA State of Affairs,ASA Bulletin, 23/3 (2005); P. Lomas,Arbitration: Jurisdiction over EC Competition Law Issues(Practical Law, 2004).56Nordsee Deutsche Hochseefischerei GmbHvReederei Mond Hochseefischerei Nordstern AG & Co KGCase C-102/91 [1982] ECR 1095.57See Chapter 15 on third parties.58C. Hancock QC, Containerisation, Slot Charters and the Law, Chapter 14 inLegal Issues Relating to Time Charterparties(2008), Ed. Professor D. Rhidian Thomas.

Chapter 2The Arbitration Act 1996The Arbitration Act 1996 1. Introduction 2. History 3. Aims 4. Application 5. Interpretation 6. Time limits1.INTRODUCTIONMost maritime arbitration in London will be governed by the Arbitration Act 1996 (the 1996 Act). This statute came into force on 31 January 1997. It was innovative in many respects, particularly in setting out a fresh statement of the law and imposing duties on the tribunal to adopt efficient procedures. The 1996 Act also maintained many of the established features of the English system, for instance appeals for errors of law. Its main hallmarks are party autonomy and minimising court intervention. However, many provisions apply as a matter of public interest regardless of the parties agreement: for example the tribunals duty to act fairly and impartially.Overall, the 1996 Act has been extremely successful. There is now less anxiety that the English system is losing ground to competing jurisdictions. Those who use arbitration have generally responded favourably to the 1996 Act, due largely to the fact that it reflected careful consultation. For example, a 2006 survey of arbitration users carried out by Bruce Harris for the Commercial Court Users Committee, the British Maritime Law Association and the London Shipping Law Centre concluded that the Act is working well. In particular, the authors of the survey concluded that, despite some unfavourable commentary about the appeals process under the Act (and the general perception that it had become too difficult to obtain permission to appeal, with the result that English maritime law was being starved of nourishment), most users felt that it was effective. The only area of dissatisfaction related to jurisdictional issues, where a significant proportion of users felt that the arbitral tribunal should have the power to rule finally (i.e., without review by the courts) on their own jurisdiction. The survey is available on the International Dispute Resolution Centre website (www.idrc.co.uk). There has been a substantial amount of litigation under the 1996 Act but its drafting has generally withstood tests except for one error regarding rights of appeal.1Overall, the law has settled down remarkably quickly, due in part to the courts respect for the approach adopted by the Departmental Advisory Committee on Arbitration Law (the DAC).2.HISTORYThe Mustill ReportThe starting point for the 1996 Act was the 1989 Mustill Report2produced by the Departmental Advisory Committee on Arbitration Law (the DAC) under the chairmanship of Lord Justice Mustill (now Lord Mustill). The DAC had been asked to consider reform of English law, in particular whether the UNCITRAL Model Law on International Commercial Arbitration (the Model Law) should be adopted. The Model Law is a statement of rules and principles of arbitration adopted in 1985 by the United Nations Commission on International Trade Law (UNCITRAL). It has been implemented in many countries, including Scotland. The Mustill Report recommended against the adoption of the Model Law on the grounds that English law on arbitration was sufficiently well developed and satisfactory to its users; the practical disadvantages of enacting the Model Law would outweigh its potential advantages. The Mustill Report also decided that radical changes to the content of English arbitral law were not needed. However, it indicated that the existing law was unsatisfactory since it was mostly found in case law only accessible to specialist lawyers. The statute law which did exist was dispersed in the Arbitration Acts of 1950, 1975 and 1979 and various amending statutes such as the Limitation Acts. The old statutes provided a disjointed and illogically arranged set of rules which were often drafted in complex terms incomprehensible to the layman.Recommendations for reform were set out in paragraph 108 of the Report:In these circumstances we recommend an intermediate solution, in the shape of a new Act with a subject-matter so selected as to make the essentials of at least the existing statutory arbitration law tolerably accessible, without calling for a lengthy period of planning and drafting, or prolonged parliamentary debate. It should in particular have the following features: (1) It should comprise a statement in statutory form of the more important principles of the English law of arbitration, statutory and (to the extent practicable) common law. (2) It should be limited to those principles whose existence and effect should be uncontroversial. (3) It should be set out in a logical order, and expressed in language which is sufficiently clear and free from technicalities to be readily comprehensible to the layman. (4) It should in general apply to domestic and international arbitrations alike, although there may have to be exceptions to take account of treaty obligations. (5) It should not be limited to the subject matter of the Model Law. (6) It should embody such of our proposals for legislation as have by then been enacted. (7) Consideration should be given to ensuring that any such new statute should, so far as possible, have the same structure and language as the Model Law, so as to enhance its accessibility to those who are familiar with the Model Law.The Report recommended that the proposed legislation should not attempt to codify the entire English law of arbitration or provide a restatement in the style of the American Restatements, but it should do more than merely consolidate the existing statutory provisions since mere consolidation would leave many important principles hidden in the law reports.The Marriott Working GroupThe initiative towards a new arbitration act was taken up by Mr Arthur Marriott QC who led a group of lawyers and arbitral institutions (the Marriott Working Group) in a project for the privatised drafting of the new statute.3They commissioned Mr Basil Eckersley, a distinguished arbitrator and barrister, to draft a bill. His work was widely approved by the arbitration industry. However, in order to obtain the necessary Government support for enactment it was essential that a new statute should be drafted by a lawyer trained as a parliamentary draftsman. The DAC recommended that the Department of Trade and Industry should carry the work forward as a Government bill. This recommendation was taken up by the President of the Board of Trade (Michael Heseltine MP) in April 1992 and the work was taken forward as a public project under the supervision of the DTI. The project was carried on with the assistance of the DAC, including members of the Marriott Working Group.Work under the auspices of the Department of Trade and IndustryA former parliamentary draftsman was instructed to prepare a new bill but his draft failed to follow the structure of the Model Law. Another former parliamentary draftsman was instructed to produce a consolidating measure.4Her work was used as the basis for the draft bill which was published in February 1994 with a consultation paper. The February draft was not warmly received: many felt that a bolder approach than consolidation was needed and that the draft did little to improve the accessibility of English arbitral law. It was felt that a new statute should give clearer emphasis to party autonomy and the role of the courts in supporting the parties choice. Both commentators and the DAC considered that it was essential to make the format and language more user-friendly than that of the February 1994 draft.Lord Justice Saville (now Lord Saville) took over the chair of the DAC from Lord Steyn in the autumn of 1994 and, together with other members of the DAC, he personally undertook much of the work involved in the new draft and a consultative paper (the July 1995 Consultative Paper). Their draft was passed to a parliamentary draftsman, Mr Geoffrey Sellers, to produce the July 1995 draft. Following a consultation period over the summer, the Arbitration Bill was introduced into the House of Lords in December 1995. In February 1996, the DAC published its Report on the Arbitration Bill (the DAC Report). The Bill was supported by all parliamentary parties and underwent the Public Bill Committee Procedure. This procedure, sometimes called the Jellicoe Procedure, had only previously been used for Law Commission bills. It involved experts giving evidence on the impact of the proposed statute at the committee stage in the House of Lords. The Act received Royal Assent on 17 June 1996 and came into force on 31 January 1997.53.AIMS OF THE 1996 ACTThe DAC used the recommendations of paragraph 108 of the Mustill Report (set out above) as its starting point in identifying its aims, but reinterpreted them to the extent that the Report had expressly rejected a restatement of the English law of arbitration.6In 1996 the DAC decided that a bolder approach than consolidation was necessary and in its title the 1996 Act is expressly described as an Act to restate and improve the existing statutory and common law rules. The 1996 Act aims to restate the basic principles of the English law of arbitration within a logical structure: it is not an exhaustive code of the law; some aspects such as confidentiality were deliberately omitted.7Several fundamental objectives underpin the Act:8 to promote party autonomy: most of the provisions only come into play to support the arbitration when the parties have not decided what should happen; to respect the parties decision to choose a private tribunal rather than a court to resolve their dispute; to make arbitration a fair, speedy and cost-effective method of dispute resolution by an impartial tribunal; to limit court intervention to situations where it is obvious that the arbitral process needs assistance or there is likely to be a clear denial of justice; to follow the structure and content of the Model Law as far as possible; to make the law accessible and user-friendly (plain English was favoured, Latin terms were avoided, time limits were included alongside the provision to which they apply, provisions relating to one topic have been located together under headings and recurring terms are defined in one place).Unusually, the general aims of the 1996 Act are enunciated as general principles at the outset. These general principles are routinely referred to by the courts when interpreting the Act. Section 1 provides that:The provisions of this Part are founded on the following principles and shall be construed accordingly (a) the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense; (b) the parties should be free to agree how their disputes are resolved, subject only to such safeguards as are necessary in the public interest; (c) in matters governed by this Part the court should not intervene except as provided by this Part.The main impetus for the 1996 Act came from legal and commercial circles, with the aim of safeguarding the position of London as a world centre for arbitration.9The Act also implemented wider policies: by making the law simpler and more accessible, it was hoped to ensure that business had access to fair and efficient methods of resolving disputes.10The Act was passed following the publication of the Woolf Report11(which ultimately led to far-reaching reform of civil procedure, see Chapter 1) and may be perceived as a parallel projectalthough it was initiated much earlier by the Mustill Report. In addition, the Act was intended to have deregulatory benefits and encourage the competitiveness of the arbitration industry.124.APPLICATION OF THE 1996 ACTCommencementThe title of Part I of the 1996 Act, Arbitration pursuant to an arbitration agreement, indicates that it covers arbitration arising by agreement as opposed to compulsory arbitration imposed by statute or otherwise. (Part I is the part of the Act that is relevant to maritime arbitration and subsequent references to the Act are to that Part; Part II relates to other matters such as consumer arbitration agreements, and Part III governs the enforcement of foreign awards). Section 84 makes clear that the Act applies to arbitral proceedings commenced after it came into force on 31 January 1997 regardless of the date when the arbitration agreement was made.13Thus the Act had limited retrospective effect in that it could apply to an arbitration even though the parties agreement to arbitrate was made before the Act was passed. The question then arose as to whether the Act applied where no arbitral proceedings had been commenced, for instance where a party seeks a stay of court proceedings or an extension of time to commence arbitration. The Act does not deal with this expressly, but the statutory instrument by which it was brought into force makes clear that it applies to any arbitration application made after 31 January 1997, whether or not arbitral proceedings have been commenced.14Relevance of the seatHowever, not all arbitrations will be governed by the 1996 Act: they must have some connection with the English legal system. This connecting factor is the seat of the arbitration: section 2(1) of the Act provides that it applies where the seat of the arbitration is England, Wales or Northern Ireland. The seat of the arbitration is ordinarily the place where the parties have agreed that it should be held. However, the concept of the seat of an arbitration does not refer simply to its geographical location; it connotes the legal place15of the arbitration. By choosing the legal place of the arbitration the parties choose the laws of that place to govern the arbitral proceedings. Thus the parties could choose London as the seat of the arbitration so that the 1996 Act would apply, but hearings could take place in other countries, perhaps for the convenience of witnesses or the arbitrators.16Section 3 goes on to explain that:In this Part the seat of the arbitration means the juridical seat of the arbitration designated (a) by the parties to the arbitration agreement, or (b) by any arbitral or other institution or person vested by the parties with powers in that regard, or (c) by the arbitral tribunal if so authorised by the parties,or determined, in the absence of any such designation, having regard to the parties agreement and all the circumstances.This provision is considered in more detail in Chapter 5, but as a general rule the choice of London for arbitration will be treated as a designation of London as the seat of the arbitration, so the 1996 Act will apply. Similarly, the choice of LMAA Terms17or arbitration under the auspices of an arbitral institution in London will usually mean that the 1996 Act applies to the arbitration.InABB Lummus Global LtdvKeppel Fels Ltd18the parties to a shipbuilding contract had agreed that disputes shall be referred to the London Court of International Arbitration. Disputes shall be settled in accordance with Singapore Law. Clarke J held that this amounted to a choice of London as the seat of the arbitration.Certain provisions of Part 1 of the 1996 Act will apply even where the seat of the arbitration is not in England, in particular sections 9 and 11. These provisions apply by reason of the UKs international obligations under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The courts supportive powers under sections 43 and 44 (to secure the attendance of arbitral proceedings and grant interim injunctions) will also apply even if the seat of the arbitration is not in England or has not been designated unless the court considers this inappropriate. The corollary of this is that, where an arbitration has a foreign seat, the English court will not generally intervene to rule upon matters which would fall within the jurisdiction of the courts at the foreign seat (e.g., injunctive relief. In this connection, section 44 of the Act is intended to confer power on the English court to grant injunctions in support of arbitrations, not to restrain the arbitration itself.19Mandatory provisionsIn accordance with the policy of enabling the parties to decide for themselves how the arbitration should be handled the parties may contract out of most provisions of the 1996 Act. However, some provisions are imposed mandatorily as a matter of public interest and, where the Act applies, these will apply regardless of the parties agreement and are usefully listed in Schedule 1.205.INTERPRETATION OF THE 1996 ACTThe starting point in construing any statute is to give its words their plain, ordinary and natural meaning. The court should generally give effect to the ordinary meaning of the words used by Parliament without regard to evidence as to the statutes history or purpose. However, the court will not adopt a literal approach to the language used. Most questions of interpretation will arise where a statutes wording is open to more than one interpretation. In interpreting a statute the court (or arbitral tribunal) should read it as a whole, taking into account the context and facts known to Parliament when the statute was enacted.21Thus the courts interpretative role may, in exceptional cases, enable it to correct clear drafting errors where the parliamentary purpose is clear.22The court will also use the various canons of statutory interpretation that reflect common sense and justice: for instance, a construction which leads to absurdity will be rejected. Parliamentary materials such asHansardmay be referred to if there is ambiguity in the wording which was dealt with in Parliament by the Government representatives promoting the legislation.23These general principles apply to the 1996 Act although the courts have tended to take a noticeably purposive approach to it. In particular, the courts have been willing to make decisions on the basis of the spirit or philosophy of the Act.24It is not surprising that a purposive approach has been favoured because section 1 expressly sets out the principles upon which it is founded, and against which it should be construed. This is unusual in an English statute and demonstrates the firm intention to give effect to party autonomy and minimal court intervention. In addition, the DAC Report is regarded as an extremely authoritative statement of the purpose of the various provisions. The DAC recommendations were accepted by Parliament save for minor drafting changes. Most of the judges who deal with arbitration cases have had practice in the area and their general readiness to take a purposive approach probably reflects their agreement with the underlying policy of the 1996 Act.The drafters of the 1996 Act intended it to restate the law in a clear and accessible way so that it is readily understandable to all those who are considering arbitration.25This objective has been achieved to a large degree, although inevitably there has been litigation as to the correct meaning of parts of the Act. The proper construction of various provisions of the 1996 Act is considered throughout this book. The general issues that have arisen concern the extent to which cases under the old law remain relevant, the relevance of the Model Law in interpreting the 1996 Act and the authority of the DAC Report.Relevance of earlier case lawSection 81(1) expressly preserves the role of the common law by stating that Nothing in this Part shall be construed as excluding the operation of any rule of law consistent with the provisions of this Part. The DAC commented that it seems to us to be necessary to make clear that the common law (so far as it is consistent with the Bill) will continue to make its great contribution to our arbitration law, a contribution that has done much to create and preserve the worldwide popularity of arbitration in our country. Thus, reliance on previous case law is possible where the 1996 Act does not deal with an issue, (e.g., confidentiality); or if it has left the issue open (e.g., regarding what is required for the incorporation of an arbitration agreement by reference to another contract).26However, where the Act does address a particular area, the proper approach to construing a consolidating statute is to give the words their ordinary meaning without recourse to decisions on the previous legislation unless real and substantial ambiguity arises which cannot be resolved by the usual canons of construction.27Approving the dicta of Thomas J, the House of Lords has indicated that, in general, pre-Act authority is not relevant to its interpretation:28It is also necessary to consider how the 1996 Act should be interpreted. In his speech already cited Lord Wilberforce pointed out that Many laymen have to participate in arbitrations and many arbitrations are conducted by people who are not lawyers (col 777). Can they realistically be asked to interpret the 1996 Act in the light of pre-existing case law? Clearly not. InSeabridge Shipping ABvAC Orssleffs EFTFs A/S[1999] 2 Lloyds Rep 685 at 690 Thomas J (now Thomas LJ), a judge with enormous experience in this field, made valuable observations on which I cannot improve. He said, at p 690: One of the major purposes of the Arbitration Act 1996 was to set out most of the important principles of the law of arbitration of England and Wales in a logical order and expressed in a language sufficiently clear and free from technicalities to be readily comprehensible to the layman. It was to be in user friendly language. (See the Report on the Bill and the Act made by the Departmental Advisory Committee, published in Arbitration International, vol 13, at p 275.) As this has been the actual achievement of the Act, it would in my view be a retrograde step if when a point arose reference had to be made to pre-Act cases. Reference to such cases should only generally be necessary in cases where the Act does not cover a pointas, for example, in relation to confidentiality or where for some other reason it is necessary to refer to the earlier cases. A court should, in general, comply with the guidance given by the Court of Appeal and rely on the language of the Act. International users of London arbitration should, in my view, be able to rely on the clear user-friendly language of the Act and should not have to be put to the trouble or expense of having regard to the pre-1996 Act law on issues where the provisions of the Act set out the law. If international users of London arbitration are not able to act in that knowledge, then one of the main objectives of the reform will have been defeated.The reference to an earlier decision of the Court of Appeal is toPatelvPatel[2000] QB 551. I would respectfully endorse the observation inSeabridge.Despite, this, reliance on case law may be useful where the statute has enacted rules set out in case law: for instance, section 7 states the common law principle of separability, and pre-Act authorities were referred to by the House of Lords when construing this provision.29In general, the courts have been pragmatic in relying on case law under the previous system where it assists.30This is justified on grounds of consistency and justice: the safe and well-known rule of construction is to assume that the legislature when using well-known words upon which there have been well-known decisions uses those words in the sense which the decisions have attached to them.31Recourse to the Model LawThe DAC Report maintained that the Model Law should not be adopted wholesale but that its structure had been followed and many provisions of the 1996 Act reflected its content.32The DAC had adopted the policy of party autonomy and minimal court intervention that underlies the Model Law. The DAC also recognised the need to make the English system more accessible to international users and more competitive with other jurisdictions.33The fact that many provisions reflect the Model Law but do not reproduce its wording gives the courts wide discretion. In some instances the court has relied on the wording of the Model Law,34in others it has rejected it on the basis that the same wording has not been adopted.35Overall, however, the courts will take a purposive approach where it is clear that a provision was intended to follow the Model Law.Use of the DAC reportUnder traditional principles of statutory interpretation preparatory materials such as the DAC Report should only be taken into account where there is an ambiguity in the statutes wording.36However, in many cases relating to the 1996 Act the courts have made reference to the Report and treated it as an authoritative statement as to the Acts meaning. InCetelem SAvRoust Holdings Ltd,37the Court of Appeal described the DAC Report as a valuable aid to construction, and referred to the many other cases where the courts had relied upon it.6.TIME LIMITSIn the interests of speedy dispute resolution the 1996 Act gives effect to time limits for various steps in an arbitration or for challenging an arbitral award. Different types of time limits can be identified: (a) time limits applicable to the making of an appeal or application to court (e.g., section 70(3) imposes a 28-day time limit from the making of an award for making an appealit is considered in Chapter 22); (b) time limits agreed by the parties for any matter relating to the arbitral proceedings (e.g., under paragraph 9 of the LMAA Terms each party is required to appoint an arbitrator not later than 14 days after a request to do so); (c) time limits specified in the 1996 Act applying to the arbitral proceedings in default of agreement (e.g., section 17 imposes a 7-day limit for appointing an arbitrator).Reckoning time limitsCourt rules will apply in reckoning the time limits applicable to court applications so that the 28-day period will not include the day on which the period begins.38Thus if the award is dated 2 July, the application must be made on or before 30 July. As regards time limits agreed by the parties or time limits specified in the 1996 Act, the parties may agree on how time is reckoned, but in the absence of agreement, section 78 applies. It provides that: (3) Where the act is required to be done within a specified period after or from a specified date, the period begins immediately after that date; (4) Where the act is required to be done a specified number of clear days after a specified date, at least that number of days must intervene between the day on which the act is done and that date. (5) Where the period is a period of seven days or less which would include a Saturday, Sunday or a public holiday in the place where anything which has to be done within the period falls to be done, that day shall be excluded.Extension of time limitsThe 1996 Act also allows for time limits to be extended in limited circumstances. The time limits for making court applications under sections 67 to 69 of the 1996 Act apply regardless of the parties agreement but it would be open for a party not to take a point on a late application (although the court could still dismiss the application on grounds of it being out of time). The court has power to extend these time limits under section 80(5). The principles governing its discretion are discussed in more detail in Chapter 22.Section 79 of the 1996 Act applies to the extension of time limits relating to the arbitral proceedings which are agreed by the parties or specified in that Act.39Section 79 provides: (1) Unless the parties otherwise agree, the court may by order extend any time limit agreed by them in relation to any matter relating to the arbitral proceedings or specified in any provision of this Part having effect in default of such agreement.This section does not apply to a time limit to which section 12 applies (power of court to extend time for beginning arbitral proceedings, etc.) (2) An application for an order may be made (a) by any party to the arbitral proceedings (upon notice to the other parties and to the tribunal), or (b) by the arbitral tribunal (upon notice to the parties). (3) The court shall not exercise its power to extend a time limit unless it is satisfied (a) that any available recourse to the tribunal, or to any arbitral or other institution or person vested by the parties with power in that regard, has first been exhausted, and (b) that a substantial injustice would otherwise be done. (4) The courts power under this section may be exercised whether or not the time has already expired. (5) An order under this section may be made on such terms as the court thinks fit.In most cases extensions of time can be agreed or dealt with by the tribunal, only exceptional cases should require court applications. However, the fact that the parties have agreed on a time limit in the arbitration clause or institutional rules will not exclude the courts jurisdiction under section 79.40The requirement of substantial injustice leaves the court with a wide discretion as to whether or not to grant an extension of time. Relevant considerations will include the parties choice of arbitration as a speedy method of dispute resolution, whether the delay is excusable, the amount at stake, the merits (if they are plain), and any prejudice caused by the delay.411Inco Europe LtdvFirst Choice Distribution[2000] 1 WLR 586.2[1989] 6Arbitration International1.3See Steyn LJ (as he then was) in [1994] 10Arbitration International1.4Denning Lecture [1995] 61Arbitration157 at 159.5The Arbitration Act 1996 (Commencement No 1) Order 1996.6Paragraph 107 of the Mustill Report [1990] 6Arbitration International36.7Paragraph 17 of the DAC Report.8See the Explanatory Memorandum accompanying the 1996 Bill, the July 1995 Consultative Paper and the DAC Report generally.9Page 2 of the July 1995 Consultative Paper.10Page 1 of the July 1995 Consultative Paper.11Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Walesby the Rt Hon the Lord Woolf, published in June 1995.12Page 2 of the July 1995 Consultative Paper.13The Arbitration Act 1996 (Commencement No 1) Order 1996the meaning of commencement of arbitral proceedings is defined in section 14. See Chapter 10 on appointments.14The Arbitration Act 1996 (Commencement No 1) Order 1996.15ABB Lummus Global LtdvKeppel Fels Ltd[1999] 2 Lloyds Rep 24 at 33, andUnion of IndiavMcDonnell Douglas Corporation[1993] 2 Lloyds Rep 48 at 50,Dubai Islamic Bank PJSCvPaymentech Merchant Services Inc[2001] 1 Lloyds Rep 65,Arab National BankvEl-Adbali[2004] EWHC 2381 (Comm); [2005] 1 Lloyds Rep 541, DAC Supplementary Report on the Arbitration Act 1996, paragraph 11.16Section 34(2)(a) of the 1996 Act,Naviera