Originally from Handbook on International Commercial Arbitration - Second Edition

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The English Arbitration Act 1996 contains a specific provision enabling the tribunal to limit recoverable costs. §65 of the Act provides that, unless the parties otherwise agree, the tribunal may prospectively limit the recoverable costs either of the arbitration or any part of the arbitral process. It is important to appreciate that this does not prevent a party from spending a higher (and disproportionate) amount of costs; the section merely limits the amount that can be recovered.

Any such order can be made or varied at any stage but it is important that it is made sufficiently in advance of the costs being incurred that the limit can be taken into account. For example, at an advanced stage of the proceedings, a party cannot seek an order limiting the costs of the arbitration as a significant part of those costs would have been incurred.

A sample form of words is set out in Appendix 26.

The tribunal may well be assisted if any application for a cap is supported by a schedule of the costs anticipated to be incurred for the arbitration or the particular part of the arbitral process. If a party is conducting its case on the basis of a conditional or contingency fee arrangement with its lawyers, that fact may need to be made known to the tribunal so as to ensure that any cap is made in the knowledge of that fact and the potential for uplift—although it would be inappropriate to reveal the precise terms of the conditionality or contingency.1