Whether you are new or well informed on arbitration as a genuine method to resolve disputes both domestically and internationally, it is essential to know that Arbitration costs play a central feature in the whole process. In fact, costs in arbitration are one of the major concerns in disputes and are customarily considered even before a case is handled.
While litigation costs are considered in domestic states cases, attention is normally turned towards Costs of International Arbitration as disputing parties tend to spend more in cases that consist of more than one jurisdiction.
This article aims to outline areas of Arbitration costs, Costs of International Arbitration, and possible effective methods or approaches that parties can take for efficient and effective cost management,
AREAS OF ARBITRATION COSTS
Costs of Arbitration is usually considered in four areas, and they include
• Costs of arbitral tribunal fees
• Arbitrators cost incurred from travels and other relevant expenses
• Costs from Administrative Fee and Institute expenses
• Costs incurred from other legal costs that are related to the disputes.
For arbitral tribunal fees and expenses incurred from travels and other areas, the institute shall be in charge of exclusively determining the costs. When determining the fees of a sole arbitrator or presiding arbitrator, the institute will have to abide by Appendix II of the arbitration rules or Table B.
When fixing the arbitrator’s fees, the institute usually considers the type of dispute, its complexity, and the expected time the case may take. In addition, the efficiency and diligence of the arbitrator are also considered.
For Costs incurred from Administrative Fees and Institute expenses, the institute gets to determine this in line with Article 47.2(d) of the Arbitration Rules according to Table A or Appendix II of the Arbitration Rules.
Usually, at the initial stage of a dispute, disputing parties would have to handle their costs themselves. However, whether the winner of the dispute would get compensation is what will be revealed further in this article.
Costs of International Arbitration
Usually, as a standard rule, arbitration cost is individually by parties involved in disputes, but in the event of a party being successful, the losing disputer is mandated to pay the former its incurred costs. However, the rule varies across jurisdictions, but a successful party usually gets to recover at least 60 percent of its total costs from the other party in almost all states. This can only change because there is a former agreement that each party takes responsibility for its own cost irrespective of the resolution reached.
In International arbitration, Costs are broadly categorized into (i) Arbitration costs – tribunal and institute costs where it may apply (ii) Legal Costs.
While a successful party cost is initially recoverable and is normally awarded in full, the tribunal gets to take into account certain factors that could hamper a full claim. These could include subjective inclinations, such as the party success level if it is highly significant and the efficiency of the process.
Costs of international Arbitration are still an expanding area of concentration that the ICC is still looking to improve for higher efficiency.
ICC Arbitration on Costs of International Arbitration
The International Chamber of Commerce on Arbitration has continued to state its commitment to ensuring that parties looking to settled disputes do not spend more than is necessary.
According to ICC, most costs incurred in arbitration are on lawyers’ expenses and fees, costs related to expert and witness evidence, and costs accrued by disputing parties in the arbitration process. These costs make up about 83% of the total costs in an arbitration proceeding. Arbitrators fees and cost of case administration on an average amount for only or below 27%.
As it stands, there are a number of works set up by the commission to reduce party’s costs, and one of the most popular of these is the proposed guide of 2014, Effective Management of Arbitration: A Guide for In-House Counsel and Other Party Representatives. Other works have been set up by the commission, including the 2012 report on techniques that ensure control of costs and time which led to the current 2012 ICC Rules at the time.
In particular, the 2012 ICC rules in particular established 2 new rules that enhance better time and cost control by arbitrators. According to Article 37(5), when making decisions that concern costs, In making decisions as to costs, the arbitral tribunal may consider such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration expeditiously and cost-effectively.
Having a firm understanding of the ruling of arbitration cost is extremely important and will help individuals and parties involved in disputes make the best decisions. Usually, arbitration costs are highly dependent on the duration of a case. So it is extremely important that both parties understand their responsibilities in a dispute, including the possibility of handling the other party’s cost in situation of losing the award.
The many possibilities of how a dispute may go and how costs could skyrocket. Hence an individual or institution needs to hire a great arbitration professional team for efficient solutions and cost reduction.
A couple of firms are dedicated to helping their clients reduce their costs during disputes, and one of those firms is Rattsakuten.
Rattsakuten is home to highly skilled professional arbitrators that have years of experiencing in helping clients reduce their cost while increasing their chances of coming out if a case with the desired results. The firm can be contacted via this link.
Rattsakuten is a leading law firm focused on Commercial Arbitration and Dispute Resolution. Based in Sweden, Rattsakuten handles dispute resolution and Arbitration matters before the SCC (Swedish Chamber of Commerce), ICC, HKIAC, and several other Arbitration tribunals.