By Foluke Akinmoladun
London maritime arbitration remains the dispute resolution forum of choice for a significant proportion of African shipping, trade and logistics disputes, mostly because of standard form contracts that incorporate English law and LMAA arbitration clauses. Within that landscape, the LMAA Small Claims Procedure 2021 (“SCP”) holds the potential to grow in importance as a mechanism for resolving lower-value disputes involving African shippers, freight forwarders and shipowners, many of whom operate in commercially constrained environments where cost, time and predictability are critical considerations.
Effective from 1 May 2021, and with an expanded monetary threshold of up to US$100,000, the SCP is designed to deliver speed, procedural economy and cost certainty. For many African market participants, these features make London arbitration accessible in circumstances where it might otherwise be commercially unjustifiable. However, the SCP also imposes significant procedural constraints and delivers finality at a price that is not always fully appreciated at the outset. This two part article looks into the structure of the SCP, its practical attractions, and its less-discussed limitations, with a particular focus on the implications for African maritime users and the practitioners who advise them.
Scope and Threshold
The SCP applies where parties agree to arbitrate under it and in the absence of an express monetary limit, where the total value of the claim does not exceed US$100,000, excluding interest and costs.
For arbitrations conducted under the Small Claims Procedure (SCP) and commenced after 31 March 2024, the arbitrator is entitled to an advance fixed fee of £5,000, plus VAT where applicable. This fee covers the arbitrator’s appointment, all interlocutory matters, the conduct of a hearing of up to one day where ordered: the preparation of the award and any assessment of costs. It does not extend to out-of-pocket expenses, such as the cost of hiring an arbitration venue, which are to be met initially by the claimant.
Where the respondent advances a counterclaim that exceeds the value of the original claim, a further fixed fee of £3,000, together with VAT where applicable, becomes payable by the respondent. This additional fee must be paid within fourteen days of service of the defence and counterclaim. In the event of non-payment, the arbitrator retains discretion to stay the counterclaim while allowing the arbitration to proceed in respect of the claim. Counterclaims are treated independently for the purposes of the SCP and remain subject to the same applicable financial limits.
If the dispute is resolved by agreement before an award is issued, the arbitrator may retain from the Small Claims fee a sum reasonably reflecting the work performed, with any balance returned to the paying party. It should also be noted that the commencement of arbitration under the SCP operates to interrupt any applicable contractual or statutory limitation periods, providing an important procedural safeguard for parties.
Appointment and Fees
The procedure contemplates the appointment of a sole arbitrator, either by agreement or, failing that, by the President of the LMAA upon application. A defining feature of the SCP is the fixed fee structure. The Small Claims fee covers the appointment, interlocutory matters, a documents-only determination, a limited oral hearing if exceptionally required, the award, and costs assessment.
This predictability is attractive. However, payment of the SCP fee is a condition precedent to the continuation of proceedings, and additional fixed fees may arise where counterclaims exceed the claim. Once paid, the fee tends to harden parties’ positions, with significant implications for settlement dynamics.
Procedure: Discipline by Design
The SCP is deliberately prescriptive. Submissions are subject to strict word limits, disclosure is effectively front-loaded with submissions, and expert evidence, where permitted, is tightly controlled. Oral hearings are the exception, not the rule, and if ordered, are capped at a single working day.
The arbitrator is empowered to enforce compliance robustly, including rejecting late or non-compliant submissions and, in extreme cases, proceeding to an award on the material before them. The procedural emphasis is unmistakably on expedition rather than forensic depth.
Awards are usually reasoned and are typically delivered within one month of submissions closing, reinforcing the SCP’s reputation for speed.
Practitioners should note that LMAA arbitrations are conducted under English law, with the courts of England and Wales holding exclusive jurisdiction to set aside an award. Under the Small Claims Procedure, there is no avenue for appealing an award, meaning that once the arbitrator issues it, the decision is final and binding. Parties should therefore approach SCP arbitrations understanding that the award represents the conclusive resolution of the dispute.
Specifically, article 4. of the SCP states thus:
“RIGHT OF APPEAL EXCLUDED
The right of appeal to the courts is excluded under this procedure. By adopting the Small Claims Procedure the parties shall be deemed to have agreed to waive all rights of appeal. For the avoidance of doubt, this provision does not apply to any ruling by an arbitrator on the arbitrator’s own jurisdiction.”
Costs and Finality
Recoverable legal costs are capped at figures published by the LMAA, and the successful party will ordinarily recover the Small Claims fee. For claimants, this means that downside exposure can be quantified with some precision before proceedings are commenced.
However, the SCP excludes any right of appeal as noted above, save for challenges to jurisdiction. This waiver of appellate oversight is central to the procedure’s efficiency, but it also places considerable pressure on arbitrators and leaves parties with no recourse if complex legal issues are decided incorrectly.
The Practical Upside
From a client’s perspective, the SCP offers three compelling advantages:
• Speed: disputes can often be resolved within three months if properly advanced.
• Cost certainty: fixed arbitral fees and capped recoverable costs reduce financial unpredictability.
• Risk visibility: parties can assess best and worst-case scenarios with relative confidence.
It is therefore unsurprising that the SCP has seen increased uptake, particularly since the jurisdictional limit was raised from US$50,000 to US$100,000, and in some cases parties are contractually required to use the SCP for disputes falling within that limit. In 2021 alone there were almost 200 SCP appointments.
