Cost and Expenses in International Arbitration
Costs in international arbitration usually fall into two broad categories: (i) costs of the arbitration (i.e. the costs of the tribunal and institution (if any)), and (ii) legal costs.
Although cost efficiency has been one of the major factors leading parties to choose arbitration as a method for dispute resolution, the parties sometimes face unreasonable costs by the end of the arbitration.
Since there is broad flexibility in terms of cost allocation, the methods applied by the arbitral tribunals have vitality for the parties willing to resolve their dispute through arbitration.
The costs associated with arbitration may be grouped as procedural and parties' costs. While procedural costs may be illustrated as fees and expenses of the arbitrators, in addition to the administrative expenses of the arbitration institution, the party costs consist of fees and expenses incurred due to a party's presentation of its case before the arbitral tribunal.
This outcome-based approach that refers to "Loser Pays All," and the losing party is assessed the costs of the arbitration. Thus, the successful party of the dispute gets full indemnification of the legal costs incurred.Most jurisdictions allocate costs and fees in litigation according to the principle that costs follow the event. The costs and fees that may be recovered by the prevailing party are generally those that were reasonable and necessary for the litigation. They typically include filing fees, witness fees, transportation expenses, and attorneys' fees.