Costs of arbitration / Apportionment / Differentiation between costs of the preliminary and final awards / Claimant's claim for reimbursement from Defendant of the amount of ICC arbitration costs is extinguished by way of set-off

This final award concerns a second arbitration between same parties in a related case. In this second arbitration, the Arbitral Tribunal rendered a preliminary award. In the first arbitration, submitted to a different Arbitral Tribunal, positions of the parties as Claimant/Defendant were reversed.

'a) ICC arbitration costs

In its preliminary award, the Tribunal rules as follows regarding ICC arbitration costs through the preliminary award: Defendant is victorious in only part of its attempt to dismiss the Claims on the basis of legal defenses. In addition it is somewhat abusive on its part to try to bar Claimant's claim by reason of res judicata after having refused to let the Terms of Reference in the first proceeding be amended, thus allowing the Arbitral Tribunal in initial proceedings to determine those very claims. Obviously, this refusal by Defendant caused this second proceeding to be initiated by Claimant.

But, at the same time, Claimant has not won all his points either.

This Arbitral Tribunal, therefore, will split the costs of this preliminary award, as fixed by the ICC Court of Arbitration, and place two thirds of such on Defendant and one third on Claimant. This decision will be taken into account in the determination of costs in the final award and its effect is reserved until that time.

In respect of ICC costs from the preliminary award through the final award , it is now clear, from the long review of Claimant's and Defendant's claims, that Claimant had no sound ground nor clear evidence to ask the Arbitral Tribunal for any further compensation from Defendant. In fact the very tiny amount which is awarded to him (whereas Defendant's claims give ample set-off amounts and might well have resulted into much broader compensation in favour of Defendant, had they been presented as counterclaims) demonstrates that Claimant abused the arbitration process and caused Defendant, for no good reason, to spend quite a lot of money in ICC and counsel fees.

The Tribunal rules, consequently, that as to the ICC arbitration costs (arbitrator's fees and ICC administrative expenses) as fixed by the ICC Court of Arbitration, Claimant will be responsible for the entire amount of that portion of the costs allocable to these proceedings from the rendering of the Tribunal's preliminary award through the final award.

The results of these findings are as follows:

i) The total amount of ICC arbitration costs (arbitrator's fees and administrative charge) as fixed by the Court of Arbitration is US$ 150,000.

ii) The tribunal finds that 40% of these costs is allocable to the proceedings from the commencement of arbitration through the rendering of the tribunal's interim award; 60% of these costs is allocable to the proceedings from the rendering of the tribunal's preliminary award through the final award.

iii) Accordingly, Claimant will be charged 33.333% of 40% of the total amount in i) hereabove, plus 100% of 60% of that total. Therefore, Claimant will pay 73.333% of US$ 150,000 = US$ 110,000.

And Defendant will pay 66.666% of 40./o, or 26.666% of that total amount, that is to say 26.666% of US$ 150,000 = US$ 40,000.

b) Request for reimbursement of lawyers' fees

Both parties have requested reimbursement of their own legal fees and Defendant submitted a detailed summary of its legal costs. In view of the fact that Claimant has substantially failed in its claim on the merits, we might ordinarily consider that Defendant should be entitled to reimbursement of a substantial portion of its reasonably incurred legal fees. On the other hand, as indicated in the body of our interim award, we must also give some effect to the fact that it was Defendant's refusal to permit amendment of the Terms of Reference in the first proceedings . . . which had, as a consequence, the bringing of a second arbitration of Claimant's positive claims which could otherwise have been heard as counterclaims in a single arbitration. In addition, a significant part of Defendant's legal expenditures would have been allocable to its initial procedural defenses, which became the subject of our interim award in which it was only partially successful. We have also taken into account that Claimant either directly, or indirectly by way of set-off, will in effect bear the entire ICC arbitration costs. In these circumstances we think it is fair that Defendant be entitled to a contribution for the reimbursement of its reasonable legal fees which, after examination of documents submitted, we fix on a lump-sum basis in the amount of US$ 25,000.

c) Further set-off

In view of the fact that Claimant has advanced 100% of ICC arbitration costs, it would ordinarily be entitled to recuperate from Defendant the amount which Claimant has paid on Defendant's behalf. However, in view of Defendant's set-off claim recognized in the total amount of US$ 20,070, and which has been used only to the extent of US$ 11,297 to extinguish Claimant's original claim, and the fact that Claimant owes Defendant an additional US$ 25,000 in accordance with the above paragraph, Claimant's claim for reimbursement is extinguished by way of set-off and Claimant is entitled to nothing on its claim for reimbursement from Defendant of the amount of ICC arbitration costs which this Tribunal has found is Defendant's responsibility.'