Costs and their Allocation in International Commercial Arbitrations – Vol. 2 No. 3


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AuthorsJ. Gillis Wetter* and Charl Prien**

Published: October 1991

Jurisdictions:
England
Sweden
United States
Topics:
Commercial Disputes
Arbitral Awards
Interest and Costs
Costs and Damages
ICC
ICSID
SCC
LCIA

Description: Costs and interest are important elements of claims and counterclaims in most international arbitrations — and sometimes to such an extent that each may exceed in value the principal amounts in dispute. Yet very little has been written on either topic.

The law governing interest (indeed, even the question whether interest is governed by substantive or procedural law), the manner of its computation, and not least of all the proper connection between currency and interest, are matters on which scholarly opinion differs. It is difficult to escape the impression of a prevailing anarchy in the field; almost any solution to a particular problem situation is technically arguable. No doubt practice varies widely in arbitral awards.

By contrast, costs are dealt with in a few laws and almost all rules. However, the laws and the rules are far from exhaustive. Moreover, they are divergent with respect to the definition of allowable and non-allowable costs and tend to permit a large degree of discretion in regard to their allocation to the parties in the award. Most notably, two diametrically opposed principles prevail in the world, i.e. (i) that costs should follow the event and (ii) that each party should bear his own costs and half of the institutional and other costs associated with the proceedings, including the fees and costs of the tribunal.

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*Solicitor-Royal, Sweden; of the Stockholm Bar.
**Associate, Advokatfirman J. Gillis Wetter AB, Stockholm.