Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence

Memorandum by the London Maritime Arbitrators Association (FUS 9)


  This written memorandum is sent in response to the Press Notice of 22 October 1998 in connection with the Transport Sub-committee's inquiry into the present position of the UK shipping industry and its potential. The submission is made on behalf of the London Maritime Arbitrators Association.


  London is—and has been for many years—the international centre for the ancillary activities essential to shipping. It is home to the Baltic Exchange, Lloyd's of London, FONASBA and the Institute of Chartered Shipbrokers, Lloyd's Register of Shipping, the International Maritime Organisation, the major P&I Clubs (through their managers' agents), the Admiralty and Commercial Courts and all the services that are required to sustain those bodies. The quantity of expertise available, not least in the legal profession, is unrivalled. As appears more fully below, London is also the principal venue for maritime arbitrations.


  The London Maritime Arbitrators Association ("the LMAA") is, as its name implies, an association of maritime arbitrators, presently numbering 37, who practice in London. Their backgrounds are extremely diverse and include master mariners, marine engineers, surveyors, ship brokers, lawyers, those involved in the trading and chartering of vessels, those with marine insurance backgrounds and a retired Lord Justice of Appeal.

  London has been for many years by a clear margin the pre-eminent centre of maritime arbitration in the world. In fact, more maritime arbitrations are conducted in London than in all the other national arbitration centres put together; it has been estimated that 70 per cent of all the maritime arbitrations conducted worldwide are conducted in London. In 1996 (the last year for which statistics are currently available) members of the LMAA received 3,384 appointments and made 919 awards. The arbitrations involved disputes arising out of a wide range of maritime activities, including the performance of charterparties, bills of lading, and contracts for the sale and purchase of ships; ship operations and management; shipbuilding; and commodity and oil trading contracts. The value of the disputes dealt with ranges from tens of thousands to hundreds of millions of United States Dollars.

  It should be stressed that in most of the cases dealt with in London, neither party will be UK resident.


  It would not be appropriate for the LMAA to comment on the first four terms of reference, which might broadly be termed issues of national interest or policy. The purpose of this letter is to comment on the fifth and seventh terms of reference, in particular:

    (i)  on the effects of any present and future shortage of skilled personnel in the shipping industry and in related on-shore industries; and

    (ii)  the role and importance of on-shore shipping services provided in the UK.

  London developed as a maritime arbitration centre for the obvious reasons that many ship owners were based there, their ships were traded on the Baltic Exchange, and their hull and P&I insurance was placed in London. To the extent that other expertise needed to be called on (such as maritime lawyers, surveyors, engineers, naval architects, etc.) that was also readily available.

  Experience shows that if a city or place is to succeed as a centre for maritime arbitration, it must also be the home of a large and diverse shipping community. Only then, are there available those who can provide the services essential to the conduct of maritime arbitration: specialist lawyers; cargo and ship surveyors; consultants (engineers, chemists and others); and experts in other relevant fields such as ship management and operation, insurance, chartering and sale and purchase broking, commodity and oil trading.

  It is a matter of considerable concern that there is a serious possibility that, with the contraction of the UK fleet, the skilled personnel that previously provided a number of these services may well not be available to the same extent. The effect of this might well be, in the long run, seriously to damage the support services underpinning London's role as the centre of the maritime arbitration world. The knock-on effect could be very serious indeed. It should also be stressed that the available pool from which practising maritime arbitrators with a seafaring or technical background are drawn would also be seriously diminished and that would obviously be to the detriment of London maritime arbitration.


  The role and importance of London maritime arbitration is unrivalled and is integrally linked with other on-shore shipping services such as insurance, shipbroking, law and technical expertise. The concern is that any present and future shortage of skilled personnel in the shipping industry could have a serious effect on the service offered by the LMAA and on other, mutually dependent, support services.

Patrick O'Donovan


2 December 1998

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