Comparing the duration and cost of international arbitration

International arbitration as a method for resolving cross-border disputes continues to gain popularity. In choosing which arbitral institutions’ rules to include in an arbitration agreement (if any), parties will often consider: (i) the likely duration and (ii) the likely cost of any arbitration.
 

For this reason, the individual arbitral institutions regularly publish the average duration and costs of the arbitrations they administer. Here, we have summarised the statistics provided by some of the more commonly chosen institutions and, where available, we have provided general indications of the administrative costs levied by those institutions based on theoretical disputes of US$1 million, US$10 million and US$100 million in value. Cost here relates only to an institution’s administrative fees and the fees of arbitrators, not a party’s own legal costs.

Comparison of five of the more popular arbitral rules

International Chamber of Commerce Rules of Arbitration (the ICC Rules)

946 arbitrators were registered with the ICC in 2020 with the majority conducted under the 2017 ICC Rules (replaced on 1 January 2021 by the 2021 ICC Rules). 53.5% of those arbitrations were seated in North and West Europe.

Duration: The ICC Dispute Resolution 2020 Statistics show the median duration for arbitrations reaching final award in 2020 to be 22 months.

Cost: The average cost of arbitrating under the ICC Rules is not provided.
The ICC administrative expenses and the arbitrators' fees are fixed ad valorem ("according to value") and the ICC Rules contain scales for these relative to the value in dispute with the ICC website providing a costs calculator to give an indicative guide to the expenses and fees that may be fixed by the ICC, based on the sums in dispute and the number of arbitrators to be appointed.

Arbitration Rules of the Singapore International Arbitration Centre (the SIAC Rules)

Te most recent SIAC cost and duration study was prepared in October 2016 and based on arbitrations under the SIAC Arbitration Rules 2013. SIAC's caseload has increased significantly since then – from 343 in 2016 to 1,080 in 2020. The SIAC Arbitration Rules 2016 have been introduced since the latest study, however none of the changes in the new 2016 rules have impacted the likely cost or duration og an arbitration.

Duration: The median duration to a final award from commencement was 11.7 months.

Cost: Like the ICC, the SIAC applies scale costs, charging on the basis of the amount in dispute and number of arbitrators.

As to the median cost of an SIAC arbitration, the SIAC indicated in its Costs and Duration Study of October 2016 that this was US$29,567

* Figures based on exchange rate of 1 USD to 1.348 SGD

Hong Kong International Arbitration Center Administered Arbitration Rules (the HKIAC Rules)

318 arbitrations were submitted to the HKIAC in 2020 with over 99% of HKIAC arbitrations seated in Hong Kong. In June 2021, the HKIAC published its average costs and duration report which covers arbitrations administered by HKIAC under the HKIAC Rules and with a final award issued between 1 November 2013 and 31 May 2021.

Duration: The median duration to a final award was 13 months from commencement.

Cost: The median cost was US$64,606.

Parties have the option of paying arbitrators at a capped hourly rate (approximately US$840) or on an ad valorem fee scale (as is the case with the ICC).

The 2021 report notes that the majority of HKIAC arbitrations provide for remuneration on an hourly rate basis. This seems to lead to increased costs relative to the ad valorem basis.

For example, the costs of arbitrating disputes between US$10 and 100 million were reported to vary between an average of US$280,345 on and hourly basis and a lower average of US$161,800 for an ad valorem basis.

Applying the HKIAC's scale costs gives the following figures:

* Figures based on exchange rate of 1 USD to 7.777 HKD and estimated costs based on the maximum fees of one arbitrator as provided by the calculator.

London Court of International Arbitration Rules (the LCIA Rules)

The LCIA Annual Casework Report for 2020 reveals its continuing popularity in the energy and resources, transport and commodities and banking and finance sectors – 68% of LCIA arbitrations in 2020 were referred from those sectors. The most recent study of the costs and duration of LCIA arbitrations was published in 2017.

Duration: The median duration to a final award was 16 months from registration.

Costs: The median cost was US$97,000.

The LCIA does not apply scale costs, but instead are comprised of tribunal fees (arbitrators's hourly rates, cancellation fees etc.) and administrative charges (registration fee, 5% fee of total tribunal fee etc.). The analysis contained in the Report suggests that cost and duration are directly linked under the LCIA Rules.

Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (the SCC Rules)

The SCC introduced new rules in 2017 which sought to emphasise efficiency and expediency in SCC arbitrations. General statistics prepared by the SCC in 2020 provide an insight into duration, however updated cost details were not provided.

Duration: 40% of final awards were provided within 6 months from when the case was referred to the arbitrator or tribunal, while a further 42% of final awards were provided withing 12 months from the date of referral.

Cost: The average cost of arbitrating under the SCC Rules is not provided.

The fees paid to arbitrators and to the SCC are fixed ad valorem and the SCC rules contain tables to determine the minimum and maximum fees in relation to the value of claim.

As with the ICC, there is an online costs calculator which helps estimate the costs that may be fixed by the SCC (excluding VAT).

* Figures based on exchange rate of 1 USD to 0.862 EUR

Expedited arbitration

Recent years have seen the arbitral institutions introduce alternative expedited procedures to address concerns of the increasing time and costs of international arbitration. In general, expedited arbitral procedures are reserved for smaller value claims or on an opt-in basis, and will not be suitable for all types of dispute.

Proceedings may be expedited by appointing a sole arbitrator, reducing the time between procedural steps or dispensing with some steps altogether. The SCC’s 2020 statistics (which has a standalone procedure – 2017 Rules of Expedited Arbitrations) show that 50% of expedited arbitrations received an award within 3 months, while the HKIAC expedited process resulted in awards being received around 6 months from commencement.

Conclusions

Duration and cost will not be the only considerations when choosing arbitral rules – whether at contract negotiation or once a dispute has arisen. For example certain arbitral institutions are more popular in particular industries and countries. It is however helpful to know what a party might be “in for” in terms of costs of the various institutions and what the track record of various institutions is on time to final award.