How arbitration works
LME arbitration is a private dispute resolution system, designed to settle disputes fairly, expertly and economically, without having to resort to action in the UK or other courts.
Designed to lead to a final enforceable award and is distinct from mediation or conciliation. The parties will have agreed that an independent decision on their dispute will be made by a third party, in the form of one, two, or even three arbitrators under the LME arbitration rules.
The LME's arbitration service is generally recognised as the best available for the metals industry, which includes physical as well as market trading. Indeed, so well regarded is the LME's arbitration facility that the service is used by a growing number of enterprises who have no direct involvement in metals.
The arbitration rules have been drawn under the framework of English law. Any awards are enforceable by the High Court. Awards are also enforceable in virtually all overseas countries under the New York Convention of 1958, for the Recognition and Enforcement of Foreign Arbitral Awards.
The amount of the Registration Fee (referred to in the Arbitration Regulations) is £2,400 (including VAT).
The amount of the Deposit (referred to in the Arbitration Regulations) is £5,000 (no VAT payable).
Cheques should be made payable to "The London Metal Exchange".
All queries regarding LME arbitration are to be addressed to the Arbitration Secretary, Tom Hine (email@example.com), or the Legal Counsel, Andrew Olsen (firstname.lastname@example.org), at The London Metal Exchange.
Selection of the arbitration panel
Members of the LME arbitration panel are carefully selected. Panelists do not have to be members of the LME, or even associated with the Exchange, but they are generally only admitted to the panel if they can show a broad knowledge based on the practical experience of trading in metals. A legal or arbitration background is now an added requirement but is not the sole requirement. Appointments to the panel are made by the Arbitration Panel Committee.
The arbitrators, whether appointed by parties to a dispute or by the company, remain totally impartial and do not represent any party or act as advocates.
On 14 December 2009, the Arbitration Regulations contained at Part 8 of the LME Rules & Regulations were amended to establish a process to circulate a notice to members in the event that a counterparty has defaulted on an LME arbitration award.
The default notice process only applies to arbitrations where one of the parties is a Category 1, 2 or 4 member of the LME. This encompasses disputes relating to LME registered contracts, but not disputes relating to contracts in the physical metals industry or general commercial contracts.
The notice will only be circulated once the time for payment of the award and for any appeal has elapsed. Before circulating the notice, the LME will allow the counterparty a further 14 days to make payment.
If, following publication of a notice stating that a party has defaulted, that party then pays all amounts owing under the award, the LME will issue a further notice stating that payment has subsequently been made in full.
The new process will apply to agreements entered into on or after 1 June 2010. The new process is set out in Regulations 12.11 to 12.15 of Part 8 of the LME Rules.
Download the LME arbitration regulations
Download the LME arbitration consolidation guidance notes