Awarding Costs and Attorneys’ Fees in International Commercial Arbitrations

This Article examines the practice of awarding costs and fees in international commercial arbitrations. Part I reviews the history of awarding costs and fees and the approaches that countries have adopted to resolve these claims. It concludes that an overwhelming number of countries permit such awards and follow the principle that the losing party should reimburse the prevailing party for expenses incurred in connection with the arbitration, including attorneys’ fees. Part II examines the approaches used by international arbitral tribunals in resolving claims for costs and fees and finds that they are inadequate. Part Ill proposes a new model for resolving these claims. The model provides that, in evaluating claims for costs and fees, arbitrators should first look to the parties’ agreement. If the parties have agreed on rules regarding the costs of the arbitration, either directly or by reference to arbitral rules, the arbitrators should resolve the claim in accord with the agreement. However, if the agreement fails to address the issue or is ambiguous on how to resolve these claims, then the model gives the tribunal the power to award costs and fees and sets forth the rules to follow. With respect to the latter, the model states that costs and fees should be awarded on the general principle that they should be borne by the unsuccessful party. It also defines which costs and fees may be awarded. This model provides a simple and straight forward approach for tribunals to use in resolving claims for costs and fees and thus can bring much needed uniformity to the area.