COST AND COSTS IN LMAA ARBITRATION by Clive Aston LMAA Past President Shenzhen 25th November 2017

Putting in context: 2016 – 2750 appointments (1700 new arbitrations) 535 awards, 83 after oral hearing 70% cases settle before any award issued 15% of awards follow oral hearing 5% of arbitrations commenced go to an oral hearing

IMPOSING LIMITS ON RECOVERABLE COSTS Where the parties know in advance the limit of costs they may recover they moderate their expenditure to the limits LMAA Small Claims Procedure – claims up to US$100,000 Arbitrators fees fixed at £3,000 and recoverable costs to £4,000 (or £4,500 if there is a separate counterclaim) LMAA Intermediate Claims Procedure – claims between US$100-400,000) Recoverable costs 30% of monetary claim (50% if oral hearing) and arbitrators fees at 30% of recoverable costs LMAA Terms – may apply to cap costs (best done at an early stage)

RECOVERY OF COSTS Previously the successful party might hope to recover 70% of their costs Now costs may be apportioned to reflect how the parties have handled the case and their relative success in the arbitration

SECURITY FOR COSTS By s. 38(3) of the Arbitration Act 1996 a respondent to a claim or counterclaim may apply to the tribunal for an order for security for the costs of defending the claim or counterclaim. Availability of assets Ease of enforcement Security for costs by stages

COMMON MISUNDERSTANDINGS ABOUT COSTS We need to instruct expensive London lawyers? NO! There will have to be a hearing in London? NO! Costs will be high? NOT NECESSARILY. THEY MAY BE IN A SMALL NUMBER OF CASES BUT THERE ARE WAYS TO ENSURE THEY ARE NOT IN MOST CASES.