Q.
Explain the Cost incurred in arbitration process. (10 marks, 2011 Q5 (b)
A.
(Correction - 06.07.2016)
From "The Kuala Lumpur Regional Centre for Arbitration" (KLRCA), under its arbitration rules, cost incurred in arbitration is treated as below:
Rule 13 – Costs
In lieu of the provisions of Article 43, the following provisions shall apply:
- The term “costs” as specified in Article 40 shall include the: (a) Expenses reasonably incurred by the KLRCA in connection with the arbitration, the administrative costs of the KLRCA as well as the cost of the facilities made available by the KLRCA under Rule 9; and (b)Expenses reasonably incurred by the arbitral tribunal in connection with the reference to relevant Council or Shariah expert under Rule 11.
- Unless otherwise agreed by the parties and the arbitral tribunal pursuant to Rule 13(4), the Director of the KLRCA shall fix the fees of the arbitral tribunal in accordance with the Schedule of Fees.
- As a general rule, Appendix A1 (USD scale) shall apply to international arbitrations [as defined in Rule 4(4)(c)] and Appendix A2 (RM scale) shall apply to domestic arbitrations.
- Notwithstanding the above, all the parties and the arbitral tribunal are at liberty to agree on the fees and expenses of the arbitral tribunal within the period of 30 days after the appointment of the arbitral tribunal and the arbitral tribunal shall inform the Director of the KLRCA.
- The administrative costs of the arbitration shall be fixed by the Director of the KLRCA in accordance with the Schedule of Fees. As a general rule, Appendix B1 (USD scale) shall apply to international arbitrations [as defined in Rule 4(4)(c)] and Appendix B2 (RM scale) shall apply to domestic arbitrations.
- The fees of the arbitral tribunal and administrative costs of the arbitration under Rule 13(3), (4) and (5) above may, in exceptional, unusual or unforeseen circumstances, be adjusted from time to time at the discretion of the Director of the KLRCA.
- The fees of the arbitral tribunal and the administrative costs of arbitration under the Schedule of Fees are determined based on the amount in dispute. For the purpose of calculating the amount in dispute, the value of any counterclaim and/or set-off will be added to the amount of the claim
- Where a claim or counterclaim does not state a monetary amount, an appropriate value for the claim or counterclaim shall be settled by the Director of the KLRCA in consultation with the arbitral tribunal and the parties for the purpose of computing the arbitrator’s fees and the administrative costs.
- Notwithstanding Rule 14, the arbitral tribunal may determine the proportion of costs to be borne by the parties.
Ref:
http://klrca.org/rules/i-arbitration/#Rule13%13Costs
http://klrca.org/rules/i-arbitration/#Rule13%13Costs
Referring to Arbitration Act, 2005,
Costs and expenses of an arbitration
44. (1) Unless otherwise agreed by the parties—
(a) the costs and expenses of an arbitration shall be in the discretion of the arbitral tribunal who may—
44. (1) Unless otherwise agreed by the parties—
(a) the costs and expenses of an arbitration shall be in the discretion of the arbitral tribunal who may—
- (i) direct to and by whom and in what manner those costs or any part thereof shall be paid;
- (ii) tax or settle the amount of such costs and expenses; and
- (iii) awardsuchcostsandexpensestobepaidasbetween solicitor and client;
(b) any party may apply to the High Court for the costs to be taxed where an arbitral tribunal has in its award directed that costs and expenses be paid by any party, but fails to specify the amount of such costs and expenses within thirty days of having being requested to do so; or
(c) each party shall be responsible for its own legal and other expenses and for an equal share of the fees and expenses of the arbitral tribunal and any other expenses relating to the arbitration in the absence of an award or additional award fixing and allocating the costs and expenses of the arbitration.
(2) Unless otherwise agreed by the parties, where a party makes an offer to the other party to settle the dispute or part of the dispute and the offer is not accepted and the award of the arbitral tribunal is no more favourable to the other party than was the offer, the arbitral tribunal, in fixing and allocating the costs and expenses of the arbitration, may take the fact of the offer into account in awarding costs and expenses in respect of the period from the making of the offer to the making of the award.
(3) An offer to settle made under subsection (2) shall not be communicated to the arbitral tribunal until it has made a final determination of all aspects of the dispute other than the fixing and allocation of costs and expenses.
(2) Unless otherwise agreed by the parties, where a party makes an offer to the other party to settle the dispute or part of the dispute and the offer is not accepted and the award of the arbitral tribunal is no more favourable to the other party than was the offer, the arbitral tribunal, in fixing and allocating the costs and expenses of the arbitration, may take the fact of the offer into account in awarding costs and expenses in respect of the period from the making of the offer to the making of the award.
(3) An offer to settle made under subsection (2) shall not be communicated to the arbitral tribunal until it has made a final determination of all aspects of the dispute other than the fixing and allocation of costs and expenses.
(4) Where an arbitral tribunal refuses to deliver its award before the payment of its fees and expenses, the High Court may order the arbitral tribunal to deliver the award on such conditions as the High Court thinks fit.
(5) A taxation of costs, fees and expenses under this section may be reviewed in the same manner as a taxation of costs.
Ref:
S.44 Arbitration Act 2005.