Lloyd's Maritime and Commercial Law Quarterly
ARBITRATION: THE BASIS AND VALIDITY OF A RESTRICTED REASONS AGREEMENT
D. Rhidian Thomas.*
The practice of giving restricted reasons
There is a practice, particularly prevalent in maritime arbitrations conducted by members of the London Maritime Arbitration Association (LMAA), for the reasons underlying an award not to be made “open” on the face of an award, but for them to be embodied in a separate document issued either at the same time as the publication of an award or shortly thereafter. The practice is explained in the LMAA Handbook (1984) in the following terms1:
Reasons
Even in the many cases where a reasoned award has not been requested under the Arbitration Act, 1979, it is nevertheless customary for London Maritime Arbitrators to provide reasons for their awards. These are however provided on a confidential and informal basis and in a separate document which does not form part of the Award.
The practice has its origin in a determination to circumvent the former and unpopular ground of judicial review based on error of law on the face of an award2. This ground of review has been repealed by the Arbitration Act 19793 and now survives only for transitional purposes4. But the practice lives on and in a way that makes it clear that the prevailing motive extends beyond the initial design of the practice. The current overriding purpose is not solely to divorce the reasons from the award, so that they do not form any part of the award, but to prevent any recourse whatsoever to the extraaward reasons for the purpose of any manner of legal proceeding on or connected with the award.
This object is sought to be achieved by what may be described as a “restricted reasons agreement”. A typical example of such a clause may be taken from the recent case, The Apollon
5. On its facts extra-award reasons were supplied under the following rubric:
These reasons do not form part of the award. They are issued after its publication and are given on the understanding that no use shall be made of them in any action on, or in connection with, the award.
This kind of clause would seem to incorporate two distinct agreements. The first—“These reasons do not form part of the award. They are issued after its publication”—may for convenience be alluded to as a “separate reasons agreement” and the validity of which would appear to be well established6. Its effect is to
* School of Law, University of East Anglia.
1 At p. 11.
2 For judicial comment on the history and rationale of the practice, see, The Tres Flores [1972] 2 Lloyd’s Rep. 384, 391 per Mocatta, J.; The Montan [1985] 1 Lloyd’s Rep. 189, 191 (C.A.) per Sir John Donaldson, M.R.
3 Section 1(1).
4 Section 8(2) and the Arbitration Act 1979 (Commencement) Order 1979 (S.I. 1979 No. 750).
6 See fn. 2, supra.
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