The majority of costs in an arbitration are usually incurred in instructing legal counsel and other professionals to pursue or defend a case. Since arbitration, unlike State-court litigation, is a private process, the arbitrators appointed to determine the dispute will also have to be remunerated for their time and expenses. If the arbitration is an institutional one (as opposed to an ad hoc arbitration) the arbitral institution which administers the dispute must also be paid for its work.
There has been a lot of discussion in recent years about the cost of arbitration. Has arbitration become too expensive? Is it still cheaper than court litigation? To counter some of this criticism, many arbitral institutions have modified their rules in order for arbitrations to be conducted in a more cost-effective manner.
This chapter will address key questions such as what costs may be recovered by a successful party and what approach tribunals take in deciding on the allocation of costs. Specifically, we will identify and detail the costs of an arbitration (II), discuss the laws and rules that apply to the question of costs (III), highlight the powers and duties of arbitrators in awarding costs (IV) and set out the policy considerations underlying the tribunal’s discretionary powers (V). We will then identify the elements that tribunals may take into consideration when deciding costs (VI), discuss security for costs (VII), and third-party funding (VIII) before addressing the timing of costs awards (IX) and the enforcement of and available remedies against cost awards (X).