Litigation and Alternative Dispute Resolution

Author: Tilbe Birengel

Cost allocation in international arbitration is a significant concern for the parties of the dispute, as well as a debated topic among the practitioners and the scholars. The costs associated with arbitration may be grouped as procedural and parties' costs1. While procedural costs may be illustrated as fees and expenses of the arbitrators, in addition to the administrative expenses of the arbitration institution, the party costs consist of fees and expenses incurred due to a party's presentation of its case before the arbitral tribunal2.
The Methods for Allocation of Costs
In terms of cost allocation, international arbitration practice has broad flexibility. There is no uniform approach towards the division of costs among the parties of the dispute; hence, the discretion of arbitral tribunals is remarkably divergent in this field. Although this variance appears to create obscurity in costs allocation at first glance, there are three approaches that are commonly used by the practitioners, which are: the Costs Follow the Event; the Apportionment of Costs and the American Rule.

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As a current practice, expedited procedure rules have been introduced as a remedy against the rising time and costs of arbitration proceedings, in principle, to be applied if the amount in dispute does not exceed a certain threshold. International arbitration aims to resolve disputes in a timely and cost-efficient manner, which would be achieved through a special procedure to be applied in order to ensure this efficiency.

Current issues in expedited procedures, which are found under various institutional arbitration rules, shall be analyzed in this newsletter article.

Read more: Current Issues in Expedited Procedures in Arbitration

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The effect of the principle of separability on determination of the law applicable to arbitration agreements was examined, and the doctrine and court opinions were summarized in the July, 2017, issue of the Newsletter1. As mentioned in the said article, the arbitration agreement may be governed by the law applicable to the underlying contract, or by a different law. In such case, the arbitration agreement can often be governed by the law of the seat of arbitration or some national laws and international principles. In this article, certain court decisions and arbitral awards supporting the aforesaid opinions have been compiled.

Read more: The Effect of the Principle of Separability on Determination of the Law Applicable to Arbitration...

United Parcel Service Inc. (UPS) is suing the European Commission before the General Court of the European Union for €1.7 billion in compensation for damage it claims to have suffered when the Commission wrongly vetoed its attempted takeover of parcel delivery rival, TNT Express NV (TNT).

The above follows the General Court's decision to uphold the appeal by UPS in March 2017 and agreeing that the Commission had been wrong in blocking the deal.

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Federal Rule of Civil Procedure 41(d) authorizes a district court to award a defendant “costs” where a plaintiff who “previously dismissed an action in any court [subsequently] files an action based on or including the same claim against the same defendant.”

On February 2, 2018, the Third Circuit held as a matter of first impression that a district court may award attorneys’ fees as the “costs” provided for under Rule 41(d) when the substantive statute under which the lawsuit was filed defines costs to include attorneys’ fees.

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