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Allocating Fees - What are your thoughts?

What factors should arbitrators use in exercising their discretion as to whether and how to allocate between the parties their own compensation and the administering institution's filing fees?

Please provide your thoughts/comments below.

Comments (3)

Judge Gerald Harris:

The first and controlling factor is the agreement of the parties as set forth in the contract. Absent such an agreement an arbitrator often awards recovery of these costs to the successful party. If the outcome is mixed, an appropriate allocation of costs is usually made reflecting the degree of merit demonstrated by each side. Occasionally the award of costs may be affected by the conduct of a party which causes unnecessary expenditure of time and effort.

I am writing an Article related to this question. A lot of commentators suggest that, because of the difficulty of assessing what it means to prevail in arbitration (especially where there are multiple issues, and each side prevails on some, but not all, issues), arbitrators have a tendency to leave the parties each bearing their own costs for the arbitration. That approach, at least, accords with the general "American" rule that each party pays its own costs, win or lose. Since arbitrators generally have discretion to allocate costs (taking into account, for example) delays or excessive proceedings caused by one side, perhaps the rule should be more of a presumption that each side bears its own costs, subject to demonstrated cause for a shift in allocation. In the international sphere, where "costs follow the event" is more commonly the rule, this presumption would not apply.

By soundly exercising their discretion, taking into account factors such as:

-- The extent to which a particular party wins or loses the claims and counterclaims.

-- Whether any claim or counterclaim was exaggerated.

-- Unsatisfactory conduct by one of the parties.

-- Failure by the successful party on an issue on which much time was spent.

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