New Arbitration Notice Clause Released

Could this clause help avoid your claim being time barred?

The London Maritime Arbitrators Association (LMAA) has released the Arbitration Notice Clause, which should ensure that notices of arbitration are validly served if the procedure in the clause is followed. 

Identifying the need

In Signals 113, an article “Don’t be Time Barred – a Trio of Decisions” highlighted the importance of being aware of, and complying with, contractual time bars. One of the cases (London Arbitration 19/18) involved the charterer having a complete defence to the owner’s demurrage claim because the owner had not served the demurrage claim on the charterer. Instead, owners had served the claim on a broker, who the Tribunal held was an intermediary broker and not acting for the charterer. It was then too late for the owner to serve the claim on the correct party because the claim, by that point, was time barred. 

There were also cases in 2017[1] where arguments were raised that notices of arbitration had not been served on the correct party. Indeed, we understand it was as a result of these cases that the LMAA considered the need for, and drafted, this Arbitration Notice Clause.

In the Sino Channel v Dana Shipping case, the Court of Appeal held that the person on whom the notice of arbitration had been served (who was not employed by the charterer/respondent) had authority to accept service. However, the owner had to spend considerable time and resources to get this decision (which had been decided differently by the first instance court). In the Glencore v Conqueror case it was held that the service of the arbitration notice on the particular employee on whom it had been served was not effective service.

Had there been a clause in the charterparties in Glencore v Conqueror and the 19/18 arbitration that set out exactly who should be sent notices and claims, then the claim or arbitration respectively may have been protected. Indeed, in the Sino Channel v Dana Shipping case such a clause could have saved the parties considerable time and money fighting the point to the Court of Appeal.

About the clause

The Arbitration Notice Clause provides for the parties to designate e-mail addresses for the service of notices and communications in relation to arbitration and should be completed by the parties when concluding a contract.

While this clause is specific to notices and communications in relation to any arbitration proceedings, there would be no harm extending this clause so it applies to notices and communications in relation to all claims under the charterparty. This would include communications, for example, relating to presentation of demurrage claims and supporting documents.