CIArb workshop: Costs in Arbitration

Case scenario Onshore Engineering Inc – designs and builds oil and gas pipelines and associated systems; company incorporated in Utopia Nessus Gas Transportation Ltd – operates and maintains gas transmission infrastructure in Kamistan; established under the laws of Kamistan 18 February 2012 – Onshore Engineering and Nessus Gas entered into a contract for the construction of a 104km pipeline in Kamistan Contract contained an arbitration clause under the 2015 CIArb Arbitration Rules

Case scenario: Second Hearing Arbitration between Onshore Engineering and Nessus continues and hearing is scheduled for March 2017 Nessus makes an urgent application requesting security from costs and disclosure of third-party funder – risk that Onshore Engineering cannot pay eventual cost order Onshore Engineering admits it has some financial problems but contends that its lack of funds is due to Nessus’ activities and that its funding arrangements are irrelevant and immaterial

Case scenario: Third Hearing Onshore Engineering seeks: Compensation for unlawful termination of the contract Payment of outstanding invoices for work done Payment of all costs of the proceedings, including legal costs and expenses by Nessus Onshore Engineerings submits that a lot of time and money were wasted on jurisdictional challenge raised by Nessus which was unsuccessful

Case scenario: Third Hearing Nessus seeks: Payment of all costs of the proceedings, including legal costs and expenses by Onshore Engineering Nessus further submits that, in the event that Onshore Engineering prevails in any or all claims, its legal costs should not be covered because they are borne by a third-party funder