Originially from: World Arbitration and Mediation Review (WAMR)

Fees and Costs
By Francis Gurry, Director, WIPO Arbitration Center
Editor's Note: This article originally presented at the Conference
on Rules for Institutional Arbitration and Mediation, Geneva, January 20,
1995.
Few subjects touch the interests of those involved in international
commercial arbitration more closely than fees and costs. Despite its great
importance, however, it is a subject that lends itself only with great
difficulty to a comparative analysis, since many of the principal issues
involve non-comparable data. Three examples serve to illustrate this
problem of non-comparability.
The first example is the comparison between the costs of
arbitration and the costs of court litigation. With the assistance of a
number of assumptions, it may be possible to make an estimated
comparison of the direct costs involved in each. However, account must
also be taken of indirect costs, which involve a series of imponderables
such as costs associated with appeals in the court system, opportunity loss
as a result of delays incurred in waiting for court cases to be called, and
the various costs associated with tactical and strategic decisions that would
ordinarily be taken in the course of litigation. By their nature, these
indirect costs can only be quantified after the fact and, since they require
knowledge of the intentions of both parties, can only rather inaccurately be
estimated in advance.
A second issue illustrating the problem of non-comparability is the
comparison of the administrative fees and charges of the various
arbitration institutions. The system for assessing such fees differs from
one institution to another, some institutions' fees being calculated by
reference to the amount in dispute (such as the International Court of
Arbitration of the ICC (ICC)), and others being based on the amount of
time involved in the administration of a case (such as the London Court of
International Arbitration (LCIA)) or partially dependent on the length of
time for which the arbitral proceedings run (for example, the hearing fee
and the processing fee levied by the American Arbitration Association
(AAA)). Moreover, even if, with the help of some brave assumptions, a
comparison is made, the nature of the administration of an arbitration
provided by institutions differs, justifying different levels in the fees
charged.