Costs Capping - Chapter 37 - Handbook on International Commercial Arbitration

Author(s):

Peter Ashford

Page Count:

4 pages

Media Description:

PDF from "Handbook on International Commercial Arbitration"

Published:

October, 2009

Jurisdictions:

International

Practice Areas:

Commercial Disputes,

Costs and Damages,

Apportioning of Costs

Author Detail:

Peter Ashford is Solicitor of the Supreme Court and a Partner at Cripps Harries Hall LLP and is Head of the firm's Commercial Peter Ashford is a Partner and Head of commercial dispute resolution in the leading United Kingdom Firm of Cripps Harries Hall LLP, Tunbridge Wells, United Kingdom. Mr. Ashford advises on a wide range of commercial disputes with a particular emphasis on substantial commercial contract disputes, especially those involving an international aspect, partnership and LLP disputes, professional issues for solicitors and professional negligence. He is particularly experienced in complex, high value claims and acts for many international clients. He handles disputes in court, arbitration, mediation and disputes without any formal process. Mr. Ashford received his training in London and qualified in 1986. He joined Cripps Harries Hall LLP in 1987 and became a partner in 1991.

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Description:

Originally from Handbook on International Commercial Arbitration

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The English Arbitration Act 1996 contains a specific provision enabling the Arbitral Tribunal to limit recoverable costs. §65 of the Act provides that, unless the parties otherwise agree, the Arbitral 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 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 Arbitral 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 needs to be made known to the Arbitral 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.

The exercise of cost capping before the English courts has no equivalent statutory basis to the provisions of §65 of the Act. Nevertheless, the courts have an undoubted jurisdiction to cap costs in the same way as under the Act. It does so under its general case management powers. Such powers are likely to be very similar to the general powers bestowed on the Arbitral Tribunal by virtue of most institutional rules. For example, Article 15 (1) of the ICC Rules provides: “The proceedings before the Arbitral Tribunal shall be governed by these Rules and, where these Rules are silent, by any rules which the parties or, failing them, the Arbitral Tribunal may settle on . . . .” It follows that an Arbitral Tribunal will, as do English courts, have inherent jurisdiction to cap costs if deemed appropriate.