AA 1996—costs
Produced in partnership with Stephenson Harwood
AA 1996—costs

The following Arbitration practice note Produced in partnership with Stephenson Harwood provides comprehensive and up to date legal information covering:

  • AA 1996—costs
  • Understanding costs
  • Costs agreements between the parties
  • Conditional fee agreements
  • Costs of the arbitration
  • Tribunal’s authority
  • Interest
  • Costs capping orders
  • The costs award
  • Appealing a costs award
  • More...

Understanding costs

The recovery of costs is an important part of most arbitrations. When considering applying to the tribunal for an award on costs, or resisting an application for costs, it is important to understand:

  1. any costs agreement between the parties

  2. what constitutes ‘the costs of the arbitration’

  3. the tribunal’s authority to award costs and the basis on which they award costs

  4. how interest will be awarded

  5. the costs award

  6. how to challenge a costs award

Costs agreements between the parties

The parties cannot enter into an agreement on the allocation of the costs of the arbitration to the effect that one party should pay the costs in any event prior to the dispute. This is the only mandatory provision of the Arbitration Act 1996 (AA 1996) relating to costs. It would appear that it is aimed at ensuring a party that agrees to pay all or part of the costs of an arbitration is aware of the scale of the dispute and potential costs before doing so.

With exception to the above, there is specific provision within AA 1996 for the parties to enter into agreements about costs, including:

  1. that the tribunal shall be able to award costs in a manner otherwise than in accordance with the general principle that costs should follow the event except where there are appropriate reasons otherwise in the circumstances of the

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