Controlling Costs in International Arbitration
Because arbitration is a private form dispute resolution parties have somewhat more influence over controlling costs than they would in ordinary litigation. One way of controlling cost is by choosing to have the dispute decided by a sole arbitrator rather than a 3-member panel.
There is generally no costs efficiency in preferring ad hoc arbitration to institutional arbitration. With ad hoc arbitration there may be additional costs such as the costs of an application for the constitution of the arbitral tribunal. Also in ad hoc arbitration arbitrators generally have greater freedom to set their fees.
Because the parties’ own legal costs make up about three quarters of the total costs of an arbitration, most significant savings can be made in relation to a party’s direct costs, i.e. costs of legal representation. This includes the costs of experts and other out of pocket expenses. Savings can also be achieved by streamlining arbitral proceedings, by narrowly defining the issues in dispute, limiting the number and scope of written submissions, shortening hearings and the use of IT to facilitate the submission of documentary evidence and conducting meetings and hearings by video conferencing rather than in person.
The ICC’s Commission on Arbitration and ADR has published a guide on “Techniques for Controlling Time and Costs in Arbitration” which can be downloaded from here. (http://www.iccwbo.org/Advocacy-Codes-and-Rules/Document-centre/2012/ICC-Arbitration-Commission-Report-on-Techniques-for-Controlling-Time-and-Costs-in-Arbitration/ )