ICC Report Examines How Arbitrators Make Decisions on Costs

Decisions on Costs in International Arbitration_source_sourceThe International Chamber of Commerce (ICC) Commission on Arbitration and ADR has released a new report as part of its continued work to improve the management of time and costs in international arbitral proceedings.

The ICC Report, “Decisions on Costs in International Arbitration,” examines how the costs of an arbitration can be allocated between parties and sheds light on the specific roles of arbitrators, parties and counsel in using cost allocation as a case management tool.

Under the 2012 ICC Arbitration Rules, an arbitral tribunal has a broad discretion when it comes to allocating the costs of the arbitration between the parties.

While affirming that there is no definitive approach to costs allocation in international arbitration, the report, produced by the Task Force on Decisions as to Costs of the ICC commission on Arbitration and ADR, describes current approaches and practices that can help arbitrators and parties to conduct ICC proceedings in an effective and cost efficient way.

The report identifies the cost allocation considerations that arbitrators take into account and considers how decisions on costs can be used not only to allocate costs fairly, but also as a means to improve efficiency during the proceedings.

“Users would like decisions on costs to be predictable, but at the same time, the discretion enjoyed by arbitrators needs to be preserved so as to ensure that a fair result can be achieved in each case,” said Christopher Newmark, Chair of the ICC Commission. “The report describes how arbitrators can address both these needs – but it does not establish guidelines or endorse a specific approach,”

Topics covered in the report include the relevance on costs allocation of the procedural behaviour of the parties, how costs issues may be discussed at the early case management conference, how interim decisions on costs can be taken, dealing with in-house costs, the potential impact of third party funding and success fee arrangements, and how tribunals assess the reasonableness of costs.

The report sets out the research upon which it is based, which comprises a review of decisions on costs in hundreds of ICC awards as well as reports from eight other arbitration institutions and summaries of reports on national approaches to cost decisions from over 40 ICC national committees.

Following significant revisions made to the ICC Arbitration Rules in 2012, the new report is ICC’s latest tool for encouraging greater control of time including ICC’s 2012 Report on Techniques for Controlling Time and Costs in Arbitration and 2014 Guide on Effective Management in Arbitration .

For a copy of the full report visit: Decisions on Costs in International Arbitration – ICC Arbitration and ADR Commission Report

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