Costs in arbitration is one of those many issues that arises constantly (at least in any arbitration that gets underway), but as to which there is by no means any universally accepted standard of judgment. It is also not particularly usual for parties to address the issue of costs directly in their arbitration agreement, or for the matter to be addressed in the law of arbitration of the seat. If the rules of arbitral procedure that the parties may have incorporated into their arbitration agreement address the matter, they may not do so in highly informative terms. The Rules of the AAA’s International Center for Dispute Resolution (ICDR) provide as follows:
Article 34: Costs of Arbitration
The arbitral tribunal shall fix the costs of arbitration in its award(s). The tribunal may allocate such costs among the parties if it determines that allocation is reasonable, taking into account the circumstances of the case.
Under this approach, the decision is left to the Tribunal’s unfettered discretion. (The UNCITRAL Rules on International Commercial Arbitration, cited below, are somewhat more constraining.) Of course, costs is also not viewed as a “merits” matter and so is not governed by the law of the contract (whether selected by the parties or determined through the operation of choice-of-law rules).
Dispute Resolution and Arbitration | International Law | Law
George A. Bermann,
Costs Allocation in International Arbitration: What Normative Source, If Any?,
Finances in International Arbitration: Liber Amicorum Patricia Shaughnessy, Sherlin Tung, Fabricio Fortese & Crina Baltag (Eds.). Kluwer Law International
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/4378