In arbitration, the tribunal costs typically refer to the fees paid to the arbitrators for their time, expertise, and services in resolving the dispute. These costs are a significant component of the total arbitration expenses. A common question is whether tribunal costs can be split between the parties to the dispute.
The allocation of tribunal costs is not automatic and can depend on several factors, such as the arbitration rules governing the proceedings, the amount in dispute, and the discretion of the arbitral tribunal. In most cases, the general principle is that the losing party bears the costs, but this may vary based on the specifics of the case and the agreement between the parties.
The arbitration agreement between the parties can specify how costs, including tribunal fees, will be allocated. If the agreement does not provide guidance, the tribunal is typically empowered to decide how the costs will be split.
Most arbitration institutions have specific rules regarding the allocation of costs. These rules typically allow for flexibility but may set certain expectations. For example, the ICC, LCIA, and SIAC often provide that:
For instance, the ICC Rules state that the costs of the arbitration (including tribunal fees) shall be borne by the parties as the arbitral tribunal considers appropriate, but usually, the losing party is responsible for the costs.
The tribunal itself has discretion in allocating costs. While the losing party often pays the costs, tribunals may order the costs to be shared equally if both parties are partially successful or if both parties' conduct is considered equally responsible for the costs of the proceedings.
For example:
The size and complexity of the case may influence the tribunal's decision on how to allocate costs. In cases involving large amounts or complex issues, the tribunal may consider that both parties should bear a portion of the costs, even if one party ultimately prevails.
The behavior of the parties during the arbitration proceedings can impact cost allocation. For instance:
In some cases, the parties may have reached a prior agreement on cost-sharing. This could be agreed upon in the arbitration clause or as part of the settlement agreement. If the parties agree to split costs equally, this agreement may be honored by the tribunal unless there is a compelling reason not to.
If the tribunal issues interim orders or partial awards during the course of the proceedings, it may also address the issue of costs at various stages. For example, a tribunal might order a party to pay costs incurred up to a certain point or make an interim allocation based on the progress of the case.
The ICC provides flexibility in how costs are allocated. The tribunal is empowered to allocate costs in a manner it deems appropriate based on the parties' conduct, the nature of the dispute, and the outcome. Generally, the tribunal fees are paid by both parties, but the losing party is often ordered to pay most or all of the tribunal's costs. However, in situations where both parties win and lose on certain issues, the tribunal might split costs equally or according to the level of success.
Under LCIA Rules, the tribunal has discretion to determine the allocation of costs based on various factors, such as the conduct of the parties, and the outcome. If the tribunal determines that both parties were equally responsible for the arbitration, it may decide that costs are to be shared equally. However, in most cases, the tribunal will allocate a portion of the costs to the losing party.
The SIAC rules also allow the tribunal to decide how costs should be allocated. In complex or high-value cases, the tribunal may split costs between the parties, even if one party is more successful than the other.
Imagine two companies, Company A and Company B, have a dispute over a $2 million contract. Company A claims a breach of contract, while Company B counters with a claim of non-performance.
The tribunal rules that Company A is 80% successful in its claims, but Company B wins the remaining 20%.
The tribunal may decide that Company A should pay 20% of the costs, and Company B should pay 80% of the costs based on the relative success of each party.
Alternatively, if the tribunal finds that both parties engaged in delay tactics or disregarded procedural rules, it might order an equal split of the tribunal costs even if one party won more of the claims.
Yes, tribunal costs can be split between the parties in arbitration, but the decision depends on several factors, including the arbitration rules, the discretion of the tribunal, the amount in dispute, the complexity of the case, and the conduct of the parties. Generally, the losing party is expected to bear the majority of the costs, but in cases of shared success or misconduct by both parties, the costs can be divided in a way that is fair and proportional. The arbitration agreement and the specific rules governing the arbitration will guide the tribunal's approach to cost allocation.
Answer By Law4u Team
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