Originally from the ICDR Handbook on International Arbitration Practice - Second Edition

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I.    Introduction

There is little hard data available on the subject of costs awarded in international commercial arbitration cases. Most modern arbitration statutes provide for costs to include legal fees but it is not at all clear that full legal costs are awarded in most cases. An informal survey indicates that many North American arbitrators are overly influenced by litigation precedents and only award full legal fees and other party expenses on rare occasions. At the same time, there is anecdotal evidence that some of the most experienced international arbitrators from the United States commonly award legal fees and, indeed, believe that this represents a major reason to choose arbitration over litigation for the resolution of international commercial disputes.

This chapter will examine the principles underlying the award of costs in international arbitration and propose a common approach in allowing legal fees and other expenses of the parties to be covered by an award.

II.    Costs Jurisdiction

In most jurisdictions, it is axiomatic that costs will follow the event. It was not always so. Costs were unknown at common law although entitlement to costs was recognized early on in equity.