‘COSTS FOLLOW THE EVENT’- WHAT IS THE ‘EVENT’?

ARBITRATION ‘COSTS FOLLOW THE EVENT’- WHAT IS THE ‘EVENT’?

Written by Graham Perry

Graham Perry M.A. Cantab FCIArb Experienced Arbitration Lawyer | China & Chinese Business Affairs | Public Speaker/Lecturer

16 February 2021

A very topical topic. You are a winger party-appointed arbitrator. You have decided who wins and who loses and now comes costs. These are the costs of the arbitration, not the parties’ own costs. You are just looking at the fees and expenses of the three arbitrators – could be five on some appeals – and any administrative costs eg hire of the room/s, any backup costs eg the technical support if you have zoom involvement or more.

Supposing the wingers’ fees are £14,000 each and the chair’s are £22,000 = £50,000- a tidy sum. Suppose you start with the famous dictum “Costs Follow the Event”. But what is the “Event”. Is it another way of saying “Winner Takes All”. But reflect on this – supposing Buyers’ claim fails and that is the event. No other issues. Simple and straightforward. Party A Wins. Party B Loses. Party B pays the costs of the arbitration.

Now let’s mix it up. The arbitration consists of two main issues. Does Party B, the claimant, have a right to claim? Yes or No? There is a considerable argument on this point – lots of legal cases, lots of discussion in submissions and lots for the arbitrators to do. You have to make a decision – Is Party B allowed in law to make a claim. In truth, the law is not clear and you could go either way. Eventually, the Tribunal decides that Party A is wrong in insisting that Party B has no right of claim and on this preliminary point Party B wins and Party A loses.

You proceed to the next stage – B has a claim – does B win or lose? As it happens Party A wins because Party B fails to prove his/her case on the facts. Party B has won on the legal issue but lost on the issue of the fact. Now, look at costs again. Both sides have won and lost. Party B won on his/her right to make a claim but has lost on the facts and Party A has lost the argument that Party B cannot bring a claim but has won on the facts because Party B failed to prove his/her case.

OK folks – at this stage, it is over to you – chip in with your views and let’s see where the debate takes us. This type of issue is not so unusual and raises the question – if costs follow the event – what is the event?

“Graham Perry”

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