Source: https://jusmundi.com/en/document/wiki/en-arbitrator-compensation
Timestamp: 2020-04-07 02:06:40
Document Index: 399887010

Matched Legal Cases: ['Art. 814', 'Art. 78', 'Art. 39', 'Art. 71', 'Art. 49', 'Art. 47', 'Art. 37', 'Art. 28', 'Art. 79', 'Art. 35', 'Art. 45', 'Art. 2', 'Art. 26', 'Art. 24', 'Art. 28', 'Art. 37', 'Art. 28', 'Art. 49', 'Art. 43', 'Art. 47', 'Art. 43']

An arbitrator has the right to be compensated for the arbitral services rendered in, and for the expenses incurred for, the arbitration. This right to compensation is rooted in the contract between the parties and the arbitrator: the arbitrator is appointed to adjudicate the dispute between the parties in exchange for financial compensation. This right is likewise in line with the customs and expectations in international arbitration.1
English Arbitration Act, 1996, para. 28.2; Singapore Arbitration Act, 2002, para. 40(1); Italian Code of Civil Procedure, Art. 814; Hong Kong Arbitration Ordinance Art. 78 (1); Swiss Rules of International Arbitration, Art. 39; Peruvian Arbitration Act 2008 (DL 1071), Art. 71; Swedish Arbitration Act 2019, Section 37; Nigerian Arbitration and Conciliation Act (ACA), Art. 49.
II. Where the Fees are Set
The calculation of the arbitrator’s fees is stipulated in the contract between the parties and the arbitrator or in the institutional rules governing the procedure. In ad hoc arbitration, the fees will be the subject of a direct negotiation between the parties and the arbitrator(s).2 By contrast, in institutional arbitration the rules set out the method for the calculation of these fees: this method is incorporated by reference into the arbitrator’s contract.3
The question has arisen as to whether the parties and the tribunal may agree to amend the fees provided for in the institutional rules. In one known instance, an OHADA award was set aside on the grounds that the parties and the tribunal had entered into a separate fee arrangement in lieu of the institutional fees.4 This remains an open question as the rules of most institutions are silent on this.
English Arbitration Act, 1996, para. 28.5; Japanese Arbitration Law, Art. 47(1) (not official translation).
UNCITRAL Rules 2013, Arts. 40-41; ICC Arbitration Rules 2017, Art. 37(1) and Appendix III; LCIA Arbitration Rules, Art. 28(1); ICSID Rules, Rule 28; CIETAC Rules 2015, Art. 79 and Schedule III (Apendix II); ICDR Rules, Art. 35; SIAC Arbitration Rules 2016, Rule 36.1 and Schedule of Fees; CRCICA Arbitration Rules 2011, Art. 45, Annex to the Rules Table (2), Annex to the Rules Table (3); SCC Arbitration Rules 2017, Arts. 49(2), 49(3) and Appendix IV, Art. 2; CCJA Arbitration Rules 2017, Arts. 24.3.a., 24.4, Décision n° 004/99/CCJA du 3 février 1999 relative aux frais d’arbitrage, Annexe II.
Getma International v. Republic of Guinea (I), CCJA Case No. 001/2011/ARB, Arrêt du 19 Novembre 2015, para. 13; Getma International v. Republic of Guinea (I), CCJA Case No. 001/2011/ARB, US Court's Memorandum Opinion (Decision on the Annulment of OHADA Arbitration Award by CCJA Court), 9 June 2016, para. 10; Getma International v. Republic of Guinea (I), CCJA Case No. 001/2011/ARB, Judgment of the US Court of Appeals Upholding the Decision to Refuse the Enforcement of Award, 7 July 2017, para. 17.
III. How to Set the Fees
While there is no universally established method to calculate the arbitrator’s fees, the two most frequently used methods are the ad valorem and “time spent” methods.5
Under the ad valorem method, the arbitrator’s fees are set by reference to the amount in dispute. In practice, this means that the fees will correspond to a percentage of the amount in dispute. Typically, a regressive scale will apply: the higher the amount in dispute, the lower the percentage to which the arbitrator shall be entitled.6
Under the “time spent” method, the arbitrator’s fees are calculated on the basis of an hourly or a daily rate at which the arbitrator will be compensated for time spent working on the case.7 The time spent must be reasonable in view of the significance and the complexity of the case.8
Arbitral institutions usually rely on one of these two methods. Whereas the ICC9, CIETAC10, the SCC11 and SIAC12 employ the ad valorem method, ICSID13, the LCIA14 and the ICDR15 apply the “time spent” method. Under the HKIAC rules, the parties may choose one of the two methods.16 17
ICC Arbitration Rules 2017, Article 3, Appendix III
CIETAC Arbitration Rules 2015, Appendix II, Schedules I to III (Arbitration Fees).
SCC Arbitration Rules 2017, Appendix IV, Schedule of Costs (Arbitrators’ Fees).
SIAC Schedule of Fees (Arbitrator’s Fees).
ICSID Schedule of Fees; ICSID Memorandum on the Fees and Expenses of ICSID Arbitrators.
LCIA Schedule of Costs for LCIA arbitrations; LCIA Schedule of Costs for ad hoc arbitrations
ICDR International Arbitration Rules, Article 35(2)
CRCICA Arbitration Rules 2011, Annex to the Rules, Table (2) Arbitrator’s Fees for sums in dispute not exceeding three million US Dollars and Table (3) Arbitrator’s Fees for sums in dispute exceeding three million US Dollars; TIAC Rules 2019, Art. 26.1 and Schedule 1; CCJA Arbitration Rules 2017, Art. 24.3 (a); DIFC-LCIA Arbitration Rules 2016, Art. 28.1.
In addition to legal fees, arbitrators also have the right to be compensated for the expenses incurred in connection with the arbitration. These expenses ordinarily include travel, board and lodging.18 Two different methods are used. First, the reimbursement method, whereby the arbitrators are reimbursed at cost, for which they must keep notes of their expenditures. Usually the sole limitation is that these expenses must be reasonable. Second, the per diem method, whereby arbitrators are paid a fixed daily rate intended to cover hotel and other subsistence expenses.19
ICSID Memorandum on the Fees and Expenses.
V. Advance on Costs
A common practice in international arbitration is for the arbitrators—or an institution on their behalf—to require an advance on costs to secure their fees and expenses. Typically, each party will be asked to pay an equal proportion of the advance on costs.20 But if one party does not pay its share of the advance, the other will be invited to pay for the missing share, as the parties are jointly and severally liable for the fees and expenses of the arbitrators.21
ICSID Cost of Proceedings
ICC Arbitration Rules 2017, Art. 37(5); LCIA Arbitration Rules 2014, Art. 28 (1); ICSID Administrative and Financial Regulations, Chapter III, Regulation 14(3)(d); SCC Arbitration Rules 2017, Art. 49(7); PCA Arbitration Rules 2012, Art. 43(4); CRCICA Arbitration Rules 2012, Art. 47(2); UNCITRAL Arbitration Rules 2013, Art. 43 (4).