Costs of arbitration / Legitimacy of the Claimants' claim for compensation for their costs / Article 20(2) concerning normal legal costs / These costs include not only lawyers' fees but also the winning party's' reasonable costs and expenses / Considerations of reasonableness

'The general principle is that the losing party is obliged to compensate the winning party for all reasonable amounts incurred by the latter in connection with the proceedings.

In this case Claimants have succeeded totally with their claims and they have claimed compensation for all their costs with an amount of £163,890 plus the amount of ICC's fees and expenses paid by the Claimants. The amount of compensation claimed by the Claimants is divided into eight categories, viz.

A. Preparation of Claimants' submissions

B. Consideration of Respondent's submissions

C. Correspondence with Respondent, ICC and Sole Arbitrator

D. Correspondence between [law firm] and Claimants' representatives

E. Preparation of submissions concerning status of Respondent

F. Attendance at arbitration hearings

G. Preparation of Claimants' costs claims

H. Payment of ICC costs Summary

The Respondent, who has not claimed any compensation for its own costs, contends that the Claimants shall not be awarded any compensation for costs, because

(i) the arbitration proceedings have been unnecessary-the Respondent has never denied that it owed the principal amount claimed by the Claimants, and

(ii) the Claimants have not been willing to settle Claimants' claims through negotiations, although the Respondent has indicated its willingness to settle the case.

Neither argument motivates in my opinion a dismissal of the Claimants' claim for compensation for their costs. The Claimants have had a legitimate right to obtain an enforceable award even if the claims would have been wholly undisputed (although the case would then not have been as costly and time consuming as this case where part of the claims has been energetically disputed). Secondly, the Respondent has not shown that it during the negotiations and/or talks with the Claimants has offered to pay the whole or a substantial part of the Claimants' claim and it seems to be undisputed that the Respondent has not paid any interest since 1984. Under these circumstances the Claimants are in principle entitled to receive compensation for all reasonable costs.

The Respondent has not made any comments with respect to the reasonableness of the individual amounts claimed by the Claimants. In view inter alia of Respondent's standpoint that Claimants shall not be reimbursed any costs at all I shall now consider whether the compensation claimed by the Claimant is reasonable.

According to Article 20(2) of the ICC Rules the costs of the arbitration shall include, inter alia,

"the normal legal costs incurred by the parties".

This indicates possibly that the costs to be awarded should be limited to fees and costs payable to the lawyers who have assisted the winning party in the arbitration proceedings and may be also the costs of the work of the winning party's in-house legal department.

The corresponding French text of Article 20(2) runs:

"Les frais de l'arbitrage comprennent . . . les frais normaux exposés par les parties pour leur défense",

which roughly translated in English means

"The costs of the arbitration shall include . . . the normal costs incurred by the parties."

The word "legal" has thus not been included. There seems thus to be a discrepancy between the English and French version.

It would seem that in France costs awarded to the winning parties may include not only fees and costs paid or payable to lawyers or costs incurred by the winning party's legal departments but also other expenses incurred by the winning party.

In view of the above and of the great number of Claimants [60 Claimants] it is my opinion that reasonable costs and expenses of the Claimants' Steering Committee have been legitimate and necessary and therefore in principle reimbursable.

The size of the reimbursement to be awarded shall in the first place be considered on the basis of the time and efforts spent for the purpose of obtaining an award to the extent such efforts and time can be considered reasonable. The amount in dispute is considerable and before the commencement of the arbitration proceedings it was uncertain whether the Respondent would dispute the entire claim or not.

After a while it became clear to the Claimants that the only material dispute between the parties was the calculation of interest after . . . 1987. The written briefs and documentation have been quite voluminous but have to a not insignificant extent referred to matters which have been of little relevance-if any at all-to the resolution of the dispute between the parties. A reduction of the costs claimed is also called for on the basis of general considerations of reasonableness.

Thus no compensation should in my opinion be awarded with respect to the claims under C2 and E in Claimants' Schedule of Costs and Expenses and reductions should in various degrees be made in respect of the claims under A, B, C l, D, F and G. The result of my considerations is that the Claimants shall be awarded a total amount of 100,000 in compensation for their costs and expenses in connection with the proceedings and referred to under A - G in their Schedule of Costs and Expenses.'