London maritime arbitration adapts to the changing times
English law remains ‘lex franca of the maritime world’
A special webinar entitled ‘Maritime Arbitration in London – Present and Future Challenges’, hosted by law firm HFW, attracted an audience of over 300 listeners from 43 countries at this year’s London International Disputes Week (LIDW21) in mid-May.
Following introductory remarks by HFW Partner and webinar host Jonathan Webb, webinar chairman Lord Hamblen, UK Supreme Court Justice and a leading shipping lawyer at the Bar before becoming a judge, introduced Ian Gaunt, Arbitrator and Past President of the London Maritime Arbitrators Association (LMAA).
Gaunt began the panel discussion by pointing out that the LMAA had reacted quickly to the onset of the Covid-19 pandemic last year by drawing up new rules for virtual and semi-virtual hearings, in order to “allow business to move on and maintain the reputation of London as the leading dispute resolution centre”.
First drawn up in May 2020, the new protocol for remote hearings forms one of the most important changes in LMAA’s revised Terms and Procedures (LMAA Terms 2021) that entered into force as of May 1. The move to virtual or semi-virtual hearings represents what Gaunt described as “arguably the biggest change to have faced maritime arbitration in decades”.
Virtual hearings bring benefits in terms of cost, convenience and the “greenness” of reduced carbon footprint, he said, and have proved remarkably efficient thanks to the rapid development of remote technologies during the pandemic.
Even when current restrictions are lifted, semi-virtual hearings are likely to continue, Gaunt suggested, since “flying witnesses half-way across the world to give 15 minutes’ evidence” no longer makes sense. However, it is also noticeable that there has been a slight reduction in the number of cases decided after hearings. Some 80% of the 500-odd arbitration awards issued each year by LMAA members are already decided on the basis of “documents only”, he added.
Arbitration’s resilient appeal
Karen Maxwell, Barrister and Arbitrator at Twenty Essex and co-author of ‘London Maritime Arbitration’ (now in its fourth edition) said that London maritime arbitration had enjoyed a record-breaking year in 2020 in terms of number of cases according to LMAA statistics, while the number of challenges to its awards in Commercial Courts continued on a declining trend.
Nevertheless, London’s maritime arbitration sector is not resting on its laurels, she stressed. To coincide with the 25-year anniversary of the 1996 Arbitration Act the English Law Commission launched a consultation in March into the potential reform of the Act entitled ‘How do we ensure that the UK remains at the forefront of dispute resolution?’.
Lord Hamblen urged all those with views on how maritime arbitration could be improved to take part in the Law Commission consultation since “such opportunities come around rarely, perhaps once in a generation”.
Nick Austin, Partner at Reed Smith, pointed out that it is English maritime law that underpins the choice of London as a venue for maritime arbitration. English law is favoured by the shipping industry for its “certainty and consistency”, he said, as well as for the fact that it is in “constant evolution to reflect market practice”. Also, English law’s influence “doesn’t end on these shores” but extends to other common law systems, showing its “global reach”.
In turn, English maritime law “would not, and could not, develop without arbitration”, Austin continued. By evolving in response to real-life events in today’s geo-political climate – such as the pandemic, piracy, international trade disputes and sanctions, and vulnerability of supply chains as shown by the recent Suez Canal blockage – it mirrors the breadth of disputes evidenced in LMAA case summaries, arbitration demonstrating “the impact of these events on shipping and trade”.
HFW Partner Jean Koh spoke about cargo misdelivery claims, being a good example of the sort of issues that arise for determination in LMAA arbitration.
Asked in the webinar’s Q&A session about the threat to London from rival maritime arbitration centres, Ian Gaunt acknowledged that “Yes, we do have geographical competition” but that Singapore, for example, had had “less than 10%” of London’s new cases in 2020 based on a comparison between LMAA statistics and those of SCMA (Singapore Chamber of Maritime Arbitration) and SIAC (Singapore International Arbitration Centre).
“English law is quite clearly the ‘lex franca’ of the maritime world,” Gaunt concluded. “Many people want a decision under English law with a right of appeal to the English courts and the best place to litigate or arbitrate under English law is England.”