Expenses in the LCIA: Considerations and Traps for the Unwary
16th October 2020
Article 28 of the London Court of International Arbitration 2014 Rules sets out the rules the Tribunal will follow when awarding costs. The main principle is the general one that costs should reflect the parties’ relative success and failure in the award. Preparation for the expenses outcome at the LCIA should be something that is taken into account at the earliest stage.
The starting point is the Arbitration Agreement. Are there any pre-existing agreements as to costs? Depending on applicable law, such clauses may not be enforceable. However, Tribunals may still take them into account in the exercise of their discretion.
The Tribunal will compare the award with the remedies sought by parties, and the extent to which any defences advanced were ultimately successful. It will be rare for a case at the LCIA to be so simple that a quick assessment of victory is possible. There are likely to be several claims and counterclaims. Within a single head of claim there may be different legal bases to argue. The Tribunal is likely to follow what is known as an “issue based” analysis. This allows the Tribunal to take into account every single specific argument advanced and assess whether that argument was successful or not. So if a Pursuer were to advance four different bases or arguments for liability and succeeded on only one of them but still recovered the majority of the sums they asked for, the Tribunal may reduce an award of expenses to reflect the fact that three of the issues tried failed and only the fourth succeeded.
The transcription technology preferred by Tribunals also allows the precise time spent in evidence and submissions to be calculated. The Tribunal can accurately assess how much of an entire case has been taken up by specific arguments.
Parties also need to be wary of their conduct of the case and their behaviour during procedure. If that was particularly egregious, the Tribunal may consider that, even if there has been an element of success, the behaviour of parties would either merit a nil award or an award in favour of the opposing party. Accordingly, late withdrawal of part of a claim, obstruction or contrariness during procedure or a failure to adhere to tribunals’ timelines run the risk of adverse awards being made.
This article first appeared in the GGI Litigation & Dispute Resolution newsletter
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