London law firm Lawrence Graham says users of dispute resolution services should be aware of pitfalls arising in relation to claims for interest under the Arbitration Act 1996. In its latest shipping newsletter - dubbed Shipping Lawgram - Lawrence Graham's shipping team comments on the Commercial Court case of Walker -v- Rowe, in which it was held that the courts had no power to make an order for interest to be paid on unpaid arbitration awards unless the interest had actually been set by the arbitrators.
Lawrence Graham notes that, under the 1996 Arbitration Act, a party seeking post-award interest must apply to arbitrators to provide for it in the award and, if the arbitrators forget to award it, must immediately apply for a correction or a further award.
Imogen Rumbold, partner at Lawrence Graham and a Fellow of the Institute of Arbitrators, says, "The question of interest on awards is only one of the pitfalls ready to trap the unwary since both the practice and legal basis of London arbitration and civil court procedures have both been extensively overhauled in the last few years. "There is an increasing tendency for parties to handle smaller cases without taking independent legal advice. This can lead to useful cost savings but it can also lead to costly mistakes, especially when there has been a recent change of legislation or practice."
Yuriy Savych, Ukraine-born managing director of UK-based shipmanager Genmar Shipping, says that, while results are not always as predictable as a court judgment might be, London arbitration does work. He adds, though, that, "We can win a dispute but still get nothing, if the other party goes out of business. Everybody in shipping should have some sort of performance guarantee insurance. That way we could all avoid defaults."