Q&As

What is the current position on the recoverability of success fees in arbitration?

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Published on LexisPSL on 27/04/2015

The following Arbitration Q&A provides comprehensive and up to date legal information covering:

  • What is the current position on the recoverability of success fees in arbitration?
  • The tribunal’s powers as to the award of costs under institutional rules
  • UNCITRAL Rules
  • LCIA Rules
  • ICC Rules

Conditional fee agreements (CFAs) that incorporate success fees are a familiar funding mechanism. In a typical scenario, a claimant’s lawyer will agree to forego its fees if the claim in question fails, and will charge its base costs plus an uplift or success fee if the claim is successful.

In arbitration proceedings, the recoverability of a success fee is a costs issue, which will generally be decided in accordance with the applicable arbitral rules, if any, and the law of the arbitral seat. Of course, the parties may have entered into an express agreement on the recoverability of costs (including success fees) and in that situation the agreement would be taken into account first, but in practice such agreements are rare.

Under English and Welsh law, the position before the introduction of the Jackson reforms was that a successful party could recover the uplift or success fee on a CFA as part of its costs from the losing party. However, since the introduction of the Jackson reforms on 1 April 2013, success fees are no longer recoverable in litigation, save in a number of limited circumstances. If the CFA was entered into on or after 1 April 2013, success fees are no longer recoverable from the other party as inter partes costs (section 44(4) of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, amending

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