It’s no secret that the harsh shipping market makes it difficult for clients to justify spending money to resolve legal problems. Clients understandably want to know the best and worst case scenarios at the outset. They also want to cap their legal costs as far as they can. The LMAA Small Claims Procedure (SCP) is one way to achieve this. We have seen an increase of clients opting for this procedure even where the claim limits are above the levels prescribed in the charter party. Where limits are prescribed they are also increasing so that more claims now fall within the SCP procedure: we recently saw one charter party that provided for claims of less than US$200,000 to be referred to SCP (the usual limit is US$50,000). The LMAA arbitrators would of course need to consent to an arbitration of more than $50K being pursued under the SCP.
Since our establishment BDM has handled dozens of claims under the SCP. Due to our unique structure and lower overheads, we are able to operate on a fixed cost or capped fee basis whilst not compromising on quality service. Many of the SCP claims that we handle settle at an early stage. Often just receiving a claim letter from us is enough to persuade the opponent to seek a compromise. However, we have also won every case that has gone to a final award. Our most recent win saw the client recover almost all of their legal spend which gave them a net recovery of over 90% of their claim.
As well as keeping costs down, the SCP is also much quicker than a conventional arbitration and there is no appeal to worry about. Our most recent win was achieved within three months of the first instruction. That also included an application to the LMAA to have a sole arbitrator appointed. It took a further month to deal with the issue of costs and to secure a recovery for our client.
For more details on the LMAA SCP click here to go to their website http://www.lmaa.london/uploads/documents/2012SCP.pdf.
BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please check out our website or follow us on social media by clicking below.