1 Costs and what we can do about them - PowerPoint Presentation

Slide1

1

Costs

and what we can do about themSlide2

Costs are a cause for concern in all litigation, including arbitration

Costs can exceed the amounts in issueEveryone involved in arbitration has a duty to keep costs under controlThe PartiesTheir LawyersThe TribunalCosts

2Slide3

Provide for the cost-effective handling of small disputes

LMAA Small Claims Procedure (‘SCP’) for disputes up to US$100kIncluded in BIMCO ClauseLMAA Intermediate Claims Procedure for claims from US$100k to US$500kNot included in BIMCO Clause 2015 but included in version found in LMAA HandbookWhat can the Parties

do – 1?

3Slide4

Consider whether it is necessary to instruct lawyers

Can the submissions be prepared in house?Or by the P&I or Defence Club?Particularly in SCP referencesWhat can the Parties do – 2?

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Choose their lawyers with careAre they experienced in the particular field?

What can the Parties do – 3?5Slide6

Negotiate the fee ratesThe market is quite wide

Rates do varyWhat can the Parties do – 4?

6Slide7

Follow the case closely every step of the way

Agree each major step before it is takenWhat can the Parties do – 5?7

Remember it is your money that is being spentSlide8

Use the appropriate level of resources available

What can the Lawyers do – 1?8Slide9

Don’t take it personally

What can the Lawyers do – 2?9Slide10

Be realisticHave the courage to tell your client the truth about the merits of the claim

Do not contest every pointAbandon the weak points early on5 weak points do not make 1 strong oneWhat can the Lawyers do – 3?

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Establish good working relationship with your counterparty

Emails do tell you the tone of voice or the expression on the faceWhat can the Lawyers do – 4?

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Give yourself time to think before you actSlide12

Don’t trouble your tribunal with minor matters

What can the Lawyers do – 5?12Slide13

Agree that the case be decided on documents alone

Note that Tribunal has power to decide on documents alone, unless the parties have agreed that there shall be an oral hearingWhat can the Lawyers do – 6?

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Some 80% of LMAA arbitrations are decided on documents alone

Very cost-effective, as usually no hearings are held

Usually decided by two arbitrators rather than threeSlide14

If you do have to have an oral hearing (less than 20% of cases)

Do you need to engage Counsel – could you do the job yourself?If you do need Counsel, choose with careDo you really need a QC?Could not a good junior do the job well, at half the price?

What can the Lawyers do –

7?

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Negotiate the rates

It’s a very competitive market out thereIs a fixed price deal or a capped deal available

?

Agree your brief fees and refreshers early

When alternatives are still available

What can the Lawyers do –

8?

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Agree its fees on appointment, particularly its hourly rates

Send interim Invoices on a regular basis, depending on the progress of the caseBe ready to provide detail if asked to do soBut few arbitrators have sophisticated means of time-recording What can the Tribunal do – 1?

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Use its powers to run the arbitration cost-effectively

Require the LMAA Questionnaires to be completed fullyto include a breakdown of the costsincurred to date andto be incurred if the case goes to a hearing and to be signed by the client

What can the Tribunal do –

2?

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May 2015 Practice Guidelines

(i)           Where more than one question is raised in any section of the LMAA Questionnaire separate responses shall be provided for each question (for example, 3 separate responses shall be provided to Question 9 re Statement Evidence) .

(ii)          When responding to Question 13 it should be stated whether it is considered necessary for all witnesses of fact and experts to give evidence in person at the hearing or by video, or other similar, link.  

(iii)        When responding to Question 15(a) a breakdown of the figures shall be provided identifying individually, among other things, the fees of solicitors/consultants (and number of each it is anticipated will be required), counsel (specifying whether senior or junior) and experts, including the charge out rates applied by

each.

Costs & the LMAA Questionnaires

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Order security for Costs

Section 38(3) of the Arbitration Act 1996: “The tribunal may order a claimant to provide security for the costs of the arbitration”. Section 41(6): “If a claimant fails to comply with a peremptory order of the tribunal to provide security for costs, the tribunal may make an award dismissing his claim”.

What can the Tribunal do –

3?

19Slide20

Paragraph 14 of the LMAA Terms: “In addition to the powers set out in the Act, the tribunal shall have the following specific powers … …

 (c) if a party fails to comply with a peremptory order of the tribunal to provide security for costs, then without prejudice to the power granted by section 41(6) of the Act, the tribunal shall have power to stay that party’s claim or such part of it as the tribunal thinks fit in its sole discretion”.

What can the Tribunal do –

4?

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When the power to order security for costs cannot be exercised

 Section 38(3) of the Arbitration Act 1996 continues: “This power shall not be exercised on the grounds that the claimant is – 

An individual ordinarily resident outside the United Kingdom or

A corporation or association incorporated or formed under the law of a country outside the United Kingdom or whose central management and control is exercised outside the United Kingdom.”

What can the Tribunal do –

5?

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Criteria to be considered in an application for security for costsHas the Claimant any readily reachable assets with the jurisdiction of the arbitration?

One-ship companies/Brass plate companiesIs the Respondent using the application to intimidate a weaker party into settlement or discontinuance?Is the apparent state of the Claimant’s finances due in part or in whole to the Respondent’s conduct?Is there any significance in the timing of the application?Burden of proof is on the Respondent

What can the Tribunal do –

6?

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Ordering counterclaimants to provide security?

S.82 Arbitration Act 1996: ‘claimant’ includes ‘counterclaimant’Dismissing a claim for failure to provide security for costsDoes not prevent the Claimant from bringing the claim afresh within the statutory time-limit

What form should the security take?

Adopt a stage-by-stage approach?

What can the Tribunal do –

7?

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Securing the fees of the

tribunalSee paragraph E of the First ScheduleBecoming a more frequent practiceMeans of security flexible

Solicitors’ or

PandI

/Defence Club letter of guarantee

Avoids the need for Respondent to meet the Tribunal’s costs where Claimant does not pick up the Award

What can the Tribunal do –

8?

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Where costs are awarded, scrutinise the schedules carefully

What rates have been charged?How many hours have been worked, and by whom?What disbursements have been claimed?Counsel’s feesWas the choice of counsel appropriate?Was their remuneration reasonable and justified?

What can the Tribunal do –

9?

25Slide26

Containing Costs

26The End

Thank you for your attention