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Arbitration Costs and Fees – What to Expect.

Posted on 17/12/2016 · Posted in Arbitration

Arbitration is not only increasingly seen as a positive, collaborative and consensual approach to dispute resolution, but also a more cost effective one than formal judicial court proceedings. However, this is not always the case and the cost of arbitration will depend on various factors including the length of the process, the number and level of experience of the arbitrators involved, and even the type of hearing requested by the parties.

What do costs and fees consist of?

One of the key factors that determine the cost of arbitration is the arbitrator’s fees. Unlike a judge, an arbitrator is selected by the disputing parties as an independent and neutral third party who will listen to both cases presented and make a final judgement, also known as an award. Unlike a judge, an arbitrator is also paid by the disputing parties too. An arbitrator will usually charge an hourly fee, but their costs will also depend on their experience, the length and complexity of the case, and possibly also the number of expert witnesses that may need to give evidence throughout the process.

There are risks and costs to action. But they are far less than the long range risks of comfortable inaction”
John F. Kennedy

Arbitration is initiated by agreement of the two disputing parties or else through court referral, and the cost of initiating arbitration also needs to be factored in, with registration fees, administrative charges, and tribunal costs all playing a part. Awarded costs typically include the arbitrator’s fees and expenses, the involvement of any expert witnesses or relevant institutions, and the costs of the parties’ expenses such as travel and venue hire.

See more about the London Court of International Arbitration’s (ICLA) fees

Who bears the costs of arbitration?

The disputing parties can themselves agree how costs will be borne, with the unsuccessful party paying in most cases. If the parties cannot agree then the 1996 Arbitration Act outlines a general principle that guides the tribunal. This states that the costs should follow the event except in cases where this would not be appropriate, in which case the tribunal can decide to apportion the costs between the parties based on their assessment of how each party has conducted itself e.g. whether they caused the arbitration process to be held up in any way.

So is arbitration cheaper than litigation?

In most cases, the answer is clearly yes. Of course there are a few cases where the costs of an arbitration have sky-rocketed due to the length or complexity of the proceedings, but as a whole arbitration is becoming an ever more popular choice for dispute resolution in large part because of the cost savings versus formal litigation. Running to your chosen timetable, and outside of the court system, often translates into significant savings for disputing parties.

Expert Evidence is a professional firm concentrating on the four main areas of dispute resolution; acting as expert witnesses in financial litigation, mediation, arbitration and adjudication. The firm has a civil, criminal and international practice and has advised in many recent cases. Areas of specialisation include banking, lending, regulation, investment, and tax.

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Disclaimer – Please confirm any of the above views with your solicitor. Expert Evidence takes no responsibility or provides any guarantee that the views above are correct for your particular case or jurisdiction.