Costly business

Costly business

ARBITRATION is not cheap. Nor should it be. It should represent value for money, and in most cases it does. Be that as it may, it does seem that the cost of using London arbitrators could increase by 17.5 per cent following a recent ruling of the European Court of Justice that the services provided by arbitrators and those provided by lawyers are not similar.

The upshot of this is that any foreign company wishing to appoint an arbitrator in Europe from now on must not only pay for the service but must in addition pay Value Added Tax for the privilege. Our good friends at Davies Arnold Cooper, alerting the industry to this development, point out that the general rule of European law had previously been that tax was paid in the place where the service was provided, but a special exemption was made for, among others, lawyers and "other similar services". In these excepted cases, tax was payable in the place where the customer was established.

As a result of the European court ruling, arbitrators can no longer consider themselves to be in this bracket. For London, where most of the arbitrations are for foreign principals, this is portentous news.

One just wonders how the European courts - also the spiritual home of the straight banana, square tomato and cricket pitch of less than 22 yards in length - can arrive at such a decision. Apart from anything else, if the two professions are not similar, why do so many lawyers earn a living at arbitration, and why do judges not infrequently become arbitrators? Perhaps Cedric Barclay's observation - which the Advocate has adopted as its credo - that a judge is supposed to know nothing while an arbitrator is supposed to know everything, is being taken literally by the burghers of Brussels.

Going up

STILL on the subject of costs, I hear that there is continuing concern about the high level of some arbitrators' fees in a number of centres. In New York recently, for example, an award which saw arbitrators ask for $20,000 as security in a case decided on documents only has raised a few eyebrows. "Ludicrous" is how it was described by one US attorney, while another observer compared it to The Good, the Bad & the Ugly, saying that two out of three for this award wasn't bad.

Agree or go

DISSENTING must be a matter of conviction and not convenience or politics. So says Manfred Arnold in this magazine. He is, of course, right. So what to make of a recent court ruling in the UK holding that an arbitrator who disagreed with the majority view was not entitled to insist on inserting his dissenting reasons before signing the award, when there was no provision in the rules for him to do so?

The rules in question are those of GAFTA, which decree that an arbitrator who refuses to sign an award because he or she is not allowed to insert a dissent is not acting within the rules and can therefore be substituted. I don't know. Rules may be rules, but I fail to see the sense in refusing to allow dissents to be inserted. Dissents, properly constituted, must have a role to play in the development of commercial practice.

I have commented before on dissents. I rather like them. But two out of three people disagree with me.

Following through

FOLLOW-UP from last year's CMI conference in Antwerp continued through to November, when the executive council met to review its future in response to a great deal of feedback given to Patrick Griggs, the new president.

Griggs was able to make a number of recommendations to the executive, including the establishment of a new planning committee one year before each conference to identify work topics in advance and bring focus to the event. There is also a mandate to review the medium- and long-term work programme of the CMI. Non-members of the executive will participate on this committee, which will be chaired by the president.

Griggs has continued to encourage national MLAs to broaden the base of their membership beyond the legal profession. The executive council has also instructed the nominating committee to do two things. Firstly, to increase the geographical spread of its own members in order to stop the domination of European nations on the council. Secondly, to appoint younger people to the executive council.

Attention had been drawn to the negative aspects of the international working groups (IWGs) and standing committees (ISCs). The executive nevertheless concluded that these are still the best format for using the CMI's resources but that, from now on, they will only be appointed when a topic has been identified that is worthy of study by the CMI. This places a heavy burden on both the executive and the new planning committee to identify work topics and to make sure that IWGs and ISCs are appropriately manned.

Griggs says, "The CMI will continue its search for new projects for uniformity of maritime law but will avoid spreading its resources too thinly. It will deal only with practical problems which need international solutions." Well said.

Perception and reality

PERCEPTION: Arbitration? Pah! Too long, too expensive, and too heavily infiltrated by lawyers to be true to its cheap, quick roots of peer judgment.

REALITY: The London Maritime Arbitrators Association reports a case involving a dispute under a voyage charter party as to whether discharging port orders had to be complied with by owners or whether owners were entitled to demand alternative orders, the crucial point being whether or not the orders given were for ports in geographical rotation.

During the evening the arbitrators were appointed. The next day the appointments were confirmed on the basis that the arbitrators would sit to hear the matter at noon. The tribunal was fully constituted at about 10 am, with the appointment of a third arbitrator. The hearing started at the offices of the owner's solicitor at noon. The charterer's representative participated by way of a conference telephone call, and an oral award was published by the same method at 1.15 pm.

In another case reported by the LMAA, involving an owner's entitlement to withdraw a vessel from the charterer's service, a hearing was arranged at short notice and attended by counsel and solicitors. An oral decision was given at the end of the hearing, and a fully reasoned award published the next day.

The LMAA says these are by no means isolated cases and that they "show what can be achieved with the right approach and an element of goodwill". Four things occur to me. First, full marks to the LMAA for its fleetness of foot and mind, and for writing about it in its newsletter. This sort of thing is a shot in the arm for maritime arbitration, and the more people who know about it the better the feelgood factor will be. Sadly, only LMAA members get to see the newsletter, and they should know all this anyway.

Second, we would like to hear more examples of speedy dispute resolution from other maritime arbitration centres. Third, if the LMAA can tell us this much about a dispute, how much more difficult and sensible would it be to add two more sentences telling us how the dispute panned out?

Appearances count

YOU are excused for thinking I had forgotten the fourth. But no. If the LMAA is going to have a newsletter - and I one for one am very much in favour of it doing so - then let it be a proper one, not a few sheets of crudely typed copy on yellow paper stapled together in the top left-hand corner.

The nicest thing I can say about the LMAA newsletter is that it is better than the one produced by the Society of Maritime Arbitrators in New York, which is singularly wretched and printed on blue paper to boot. What is it that makes arbitrators print outdated material on coloured stock? Is it a perceived sop for the lack of time and money spent on producing a proper newsletter? If it is, it doesn't work. It just looks shoddy and makes the thing hard to photocopy, which is in nobody's interests. Stop it. Better to do nothing at all.

On the other hand, if you want to make a proper job of it, a measly hundred dollars set aside from each award delivered in London and New York would be enough to produce a newsletter worthy of the name, with sufficient left over for a kipper tea. In publishing, as in everything else, you get what you pay for.

Electoral role

THE LMAA has elected two new members. One is a retired solicitor, the other is a retired barrister. Meanwhile, in New York, the SMA has just taken on a seventy-year-old. Nothing wrong with any of this, of course, but it hardly smacks of the new young blood that arbitration is said to need.

A topic on the programme for the recent First International Shipping Masterclass in London, then, may not be unconnected. It reads, "The New English Arbitration Act - New Teeth".

Situation vacant

I KNOW I'm on dangerous ground before I start, but what's life without a little risk? A US law firm has sent me a resume of a case in which a female dental assistant alleged that she had been sexually harassed by a doctor, and that her employer knew about it. The allegations were unproven, although the doctor was later demoted after it was found that he had acted inappropriately and unprofessionally.

The nurse was unhappy with the outcome, and refused to go back to work, although the employer offered the nurse "several new positions, all of which she rejected". I suppose it is exactly the sort of people who find this choice of words amusing who run the risk of being accused of sexual discrimination. Fortunately, a smile does not come across on the printed page.

ICMA well met

In 1999 the International Congress of Maritime Arbitrators will add Auckland, New Zealand, to the list of spectacular venues at which it has met over the years - the first time the southern hemisphere has hosted the congress. I was talking to some arbitrators recently about the reasons for choosing New Zealand, and I was told - in all seriousness - that the choice had been between New Zealand and Australia, and that Australia had been deemed by the majority to be "too boring". What sort of lives do these people lead?

Smokescreen

I AM persuaded to follow through on my comments about the anti-smoking brigade. I have received support from a number of readers, and have even been chided by some for not taking a tough enough line with the bullies. I am encouraged to go further, having recently sat next to a lady solicitor at the London Maritime Arbitrators Association lunch in London who smoked pretty much throughout the two courses. (Three is too many for an arbitrator). She apologised for doing so, but I told her not to be silly. I need all the smoking I can get, passive or otherwise.

I have a great fondness for America and for Americans generally. But, while in California recently for the Maritime Law Association meeting, I walked into the hotel restaurant and - stickler for protocol and inveterate obeyer of written instructions that I am - waited to be seated. "Two for breakfast, smoking please," I intoned in my best-mannered voice, already repeatedly murmuring under my breath "Over easy, over easy" so that, when the time came to be asked how I would like my eggs, I wouldn't embarrass myself by saying 'fried'. When in America...

"Good morning sir. My name is Charlene," said Charlene, "and I will be attending to your needs today. There's no smoking anywhere in here, sir, so you won't have to worry about that. Wheat toast, white, rye or wholemeal? Brad will be with you in a moment to take your breakfast order".

Charming. Everywhere we went in Desert Springs, we ran into little knots of people gathered together for a smoke outside buildings. If you're a smoker, it is demoralising, but then I suppose that is the whole idea. The final insult came when, at the MLA black tie dinner on Friday night, half the guests disappeared with the coffee still warm and the band just about to play its second number.

Outside, there were more black ties and black dresses than there were palm trees. One lawyer, hanging off the end of an enormous cigarette, told us that somebody is trying to push through a bill in California which will make it illegal to smoke in your own home.

Enough. The time has come to fight back. I once sat next to a man in a New York drug store who tied a handkerchief round the lower part of his face when I lit up a cigarette. While I started looking for the Cisco Kid, he placed a menu over his head. When this failed to persuade me to put out my cigarette, he started looking at me as though I had been sleeping with his wife.

When I win the lottery I am going to open a restaurant in New York. You will be able to sit where you like, and the waitresses won't tell you their names unless you ask them to. Your decision as to how you would like your eggs cooked will be made for you, and the pepper will be kept in a pepperpot-sized pepperpot marked 'Pepper' and not in a wine bottle the size of a church with a medium-size separator pump jammed into the neck. You will be given one of two kinds of toast - white or well-done - and you will be able to smoke anywhere on the premises. This will put an end to any arguments before they start. Before you walk through the door it will all be over. Easy.

Job lot

SOMETIMES, people do get the perfect job. Witness the recent appointment of Tony Nunn as the International Union of Marine Insurance special liaison officer with IMO.

Tony Nunn knows well what happens at IMO and at IUMI, two organisations which, for different reasons, never manage to achieve their true potential. Considering the political constraints under which it operates, IMO does a remarkable job. Considering the self-imposed restraints under which IUMI operates, it is no surprise that it achieves so little. Without Tony Nunn these past fifteen or so years, IUMI would have struggled even to keep the conversation going at its annual conferences. Things can only get better.

Double identity

WELCOME news from the International Group of P&I Clubs, which is reportedly in the process of doubling its secretariat from two to four. This is long overdue, and might even surprise some who didn't know that the group had two people in its secretariat.

The International Group is potentially one of the most powerful forces for the good in shipping. It wastes that potential by forever keeping its head below the ramparts when it clearly has an important role to play. Lloyd Watkins has done the best he has been allowed to do over the years, but that is precious little. In a shipping industry which has enough windbags of both an individual and an organisational nature, the International Group's reluctance to get involved in any sort of industrywide safety initiative is reprehensible.

The IG is a remarkable organisation, and it must be hoped that perceived threats to its continued existence emanating from Brussels can be quickly defeated. And, once it has sorted out its own future, the group should start doing its bit for the general good of the industry. Doubling the secretariat will help, but only if they increase its power.

Invisible cargo

IN stark contrast to the International Group, the International Maritime Industries Forum pulls ten times the weight its constitution bestows on it. It is said the IMIF has no teeth, but that has never stopped it taking a big bite of all the major issues in shipping. At its annual dinner at the end of last year, Lars Lindfelt - who has been a prominent figure at IMIF for many years and who has just stepped down as managing director of the Swedish Club - proposed that the International Association of Classification Societies should be renamed the Association of International Classification Societies. It is only a small change, but think what a difference it might make.

Lars, bless him, will be greatly missed if he allows the mere fact of his retirement to stop him participating in the fight for a better shipping industry. For many years, he has tried to shame cargo owners into taking their share of responsibility for the maritime adventure. But these people are not easily roused. Lars told the IMIF dinner how he had once booked to attend a conference in Paris for the sole reason that a cargo owner was booked to appear and he wanted to know what such a person looked like. Lars went, but the cargo owner didn't. If Lars stops going, who will there be to tell us that the cargo interests are still not there?

Pause for thought

HAIGHT Gardner and Holland & Knight made the right decision to drop the commas from their amalgamated name, even if it did take them a month of Sundays to decide it. I wish other law firms would follow their lead. Watson, Farley & Williams, and Holman, Fenwick & Willan are two firms which spring to mind as candidates to hold the commas, if for no other reason than that they figure in our Chums on Seats page in this issue.

I don't hold out much hope, and I don't fool myself that the omission of the offending commas from the pages of this magazine would have any effect. As a jobbing journalist, I consistently left the ridiculous inverted commas out of the name of "K" Line, and still the Japanese carrier insisted on putting them in. But I am nothing if not persistent, and it could be worse. At least Constant & Constant gives us no pause.

Splinter group

IN England, the Lord Chancellor has recently said that the legal profession has fallen lower and lower in public estimation in recent years. This may be so. In my own estimation, however, lawyers continue to go up.

I was recently invited to dinner at the house of a senior partner in one of London's leading shipping law firms. Halfway through a most pleasant evening I reached over to pat the back of a colleague when, in a terrific explosion of wood and glue, the back of the antique chair on which I was sitting snapped off with a tremendous crack and flew through the air like a heat-seeking missile.

The best I could manage was a feeble joke, remembered from my days of reading the Beano, about it being a good job that it was an old one. My colleague didn't help matters either by loudly declaiming the ancestry of the chair. Untrammelled by any sense of etiquette, or knowledge, he suggested the chair was a crude fake. Happily, it wasn't. The point of the story is that our host took the whole thing in good part, and since that evening has continued to treat me the same as he always has. Warily.

Ruby con

FULL marks to Richards Butler, which at the back end of last year held a first-class symposium at its magnificently appointed London offices to discuss the finer points of the 1996 Arbitration Act. It was well-attended and very well-organised. Guests were treated royally, and sent home with, among other things, a really good curry inside them. Now that is what will raise lawyers in the public's estimation.

The ILU - merging but keeping its own identity

Getting together

BIG changes are afoot with the likely merger of the Institute of London Underwriters and LIRMA. The membership of both organisations seem to be in favour of getting together, so who are we to vote it down? One thing, though. It is important that the ILU does not lose its identity in the reshuffle. In troubled times for marine insurance, the ILU has always stood for the right things, and done the right things at the right time, when it mattered. It even had the sense not to move into the wilfully hideous Lloyd's building when it had the chance.

I see they are advertising for a chief executive for the merged organisation's secretariat. This may be no more then a technicality, but I reckon they already have the right man, at the ILU. Time will tell.

Grim toll

FIGURES from the Institute of London Underwriters show that, in the third quarter of last year, merchant ship losses continued to fall. Thirteen vessels were lost, an inauspicious if comparatively low total. More worrying, though, is the increase in the numbers of people killed or missing - 74 in the three-month period, 47 of them from two casualties alone. This, rather than the mechanics of the loss or the implications for the insurance industry, is the true cost of operating a ship.

Skirting the issue

I'M still not sure what I think about Women in Shipping. I don't mean women as such, of course. I mean things like Women in Shipping - Navigating to the Top, the symposium held in Washington at the back end of last year, with the predictably chic subtitle of "A Look over the Bow".

If women want to be taken seriously in shipping - and for my money they already are - we need to have an end to events such as this. Women have nothing to prove, and in attending conferences with sessions on "Maritime Women and Change" they are doing themselves a disservice.

Would-be delegates to the conference were recommended to pursue an individual or corporate sponsor if they had trouble getting their employers to pay for them to go. Failing that, they should use their feminine wiles. Actually, I made that last bit up. But women shouldn't need special treatment in shipping. If they do, we are doing something wrong. Ask Lucienne Bulow. Ask any number of women who have made it to the top in shipping. And ask yourself if anybody would put on a seminar entitled Men in Shipping.

Cut off

I AM indebted to the London Maritime Arbitrators Association for the news that "Alex Kazantzis has discontinued his telex". I hope he finished it first.