Costs of the Emergency Arbitrator

I have pending a couple of issues regarding costs.  In this entry I will comment on the petition to appoint an emergency arbitrator to decide on a petition of interim relief.

No Court, No Interim Relief

Sometimes it is urgent for a party that some interim measures be issued immediately before the commencement of the arbitration or when the arbitral tribunal is not appointed and functioning.  Unfortunately, an arbitration inconvenience is that the proceedings to constitute the arbitral tribunal cannot start but until the request or demand of arbitration is filed.

The remedy to such urgency may be to file a petition for interim relief before a competent court.  But not always it is possible; it appears that still remain jurisdictions in which the recourse to court is incompatible with an arbitration agreement, also it may be that the arbitration agreement expressly provides for no court intervention.  It is also possible that the law of the court does not contemplate the specific relief sought.

In jurisdictions that allow court interim measures in support of arbitration, the remedy would serve only if the place of the arbitration and the place of performance of the interim relief coincide.  Otherwise, among others, problems may arise regarding the jurisdiction of the courts, or the enforcement of decisions on interim relief issued by a court of other jurisdiction.  The subject is quite complex and, by now, I will restrict myself to the question of costs.

The Emergency Arbitrator

The remedy may be the emergency arbitrator.  Increasingly, arbitration rules are adopting that possibility.  In accordance with such rules when a party is urged of some interim relief, it can file to the administrator entity a request to appoint an emergency arbitrator.

The mandate of the emergency arbitrator would be limited to decide on the interim relief petitioned.  Once the arbitral tribunal is in charge, at the request of a party, has the power to amend or terminate the emergency arbitrator decision.

Only a few remarks are needed in this entry.  An emergency arbitrator can only be appointed when the parties have previously agreed to it; normally, this occurs when it is contemplated in the arbitration rules of an arbitral institution.  It would not be a surprise to find that some arbitration law had adopted it; until now I knew of none.

Nowadays the emergency arbitration is in vogue and I suppose that many rules have adopted it.  Among them, we have the CAM Rules (a. 30 bis), the ICC Rules (a. 29, that refers to Appendix V), the CANACO Rules (a. 50), the ICDR Rules (a. 6) and the LCIA Rules (a. 9B).

In ad hoc arbitrations it may be complicated to implement it, but not impossible.  The UAR does not contemplate it.

Costs

The institution of the emergency arbitrator is attractive, but the evaluation of its costs suggests important considerations at the moment of selecting a set of arbitration rules.  Also, before deciding whether request the appointment of an emergency arbitrator or to wait until the arbitral tribunal is formed.  I remember one case in which the emergency arbitrator refused to grant the relief, but the arbitral tribunal when requested by the same party, granted the requested measure.  In this case, the emergency arbitrator was a waste of efforts and money, and far from cheap.

In the following paragraphs I will sum up of the costs regime of emergency arbitrator's relief in CAM, CANACO, ICDR, ICC and LCIA.

CAM

Although not expressly stated, CAM Rules appear to request a previous deposit.  Indeed, a. 40.2 states that the arbitrator and administrative fees would be determined in accordance to the "Scale of the Arbitration Expenses" established in Appendix II, due to the circumstances of the case.  To do so, it shall be taken into account a 15% of the amount of claims the petitioner of the interim relief determine in its claim or answer to the claim.  Should that amount be undetermined, the Secretary General would fix the amount of the deposit at its discretion.

The final decision on the emergency arbitrator costs shall be determined by the arbitral tribunal (a. 40).

CANACO and ICDR

The CANACO Rules (aa. 45 to 49) does not condition payment of a special provision to appoint an emergency arbitrator.  Under CANACO Rules the fees of the emergency arbitrator is determined by the Commission applying the schedule.

Also the ICDR Rules (a. 6.8. and schedules) do not request special provision.  In ICDR all arbitrators are paid in accordance with the per hour or day agreed fee with each arbitrator.

Both, CANACO and ICDR Rules state that the emergency arbitrator initially determines how the parties should pay the costs, but subject to the power of the arbitral tribunal the make a final determination (CANACO a. 50.9, ICDR a 6.7).

ICC

When requesting the appointment of an emergency arbitrator, the ICC Rules (Appendix V, a. 7.1), request an advance payment of USD$40,000; USD$10,000 for administrative ICC expenses and USD$30,000 for the emergency arbitrator's fees.

Paragraph 2, of a.7 of the Appendix V, states that the sums above referred to may be increased in accordance with the case and taking in consideration the nature and amount of the labor done by the arbitrator.  Literally interpreted, it may look like the minimum fee of the emergency arbitrator would be USD$40,000.  There is no comment on this issue in 'The Secretariat's Guide to ICC Arbitration', nor in the 'Decisions on Costs in International Arbitration - ICC Arbitration and Commission Report', but I am inclined to think that the final amount of the emergency arbitrator's fee would be fixed in conformity with aa. 36 and 37 of the ICC Rules.

If the petitioner does not make the requested payments the request may be considered as withdrawn.  If the emergency arbitrator proceedings are terminated without decision, the President of the Court shall determine the amount to be reimbursed to the applicant.  But an amount of USD$5,000 for ICC administrative expenses is not refundable in all cases.

The emergency arbitrator shall fix the costs of the emergency proceedings and decide which of the parties shall bear them or in what proportion they shall be borne by the parties (Appendix V, a. 7.3).  But the arbitral tribunal may, if requested by a party, revise the emergency arbitrator decisions, including the reallocation of the costs of such proceedings (a. 29.4).

LCIA

LCIA (a. 9B and Schedule of Costs a. 7) request non-refundable payment of fees of £8,000 for the Court and £20,000, for the emergency arbitrator.  Administrative and emergency arbitrator fees may be increased in accordance to the Schedule of Costs.  Furthermore, in case a party challenges the emergency arbitrator, the petitioner of the emergency relief shall pay forthwith the sum determined by the Court to pay the fees and expenses of the person or division appointed to decide the challenge.  

If the LCIA refuses an application for the appointment of an emergency  arbitrator, the arbitrator's fee shall be treated as a deposit lodged by the applicant party on account of the Arbitration Costs.

The special fees shall form part of the arbitration costs.  Their amount shall be fixed by the Court and the proportion in which the parties shall contribute by the arbitral tribunal (aa. 9B.10, 28.2 and 28.3).

Verify and Find Out

The resume I made in this entry and the novelty of the institution show that there are many questions floating around.  Thus, prudence advice to verify, in each case, the different rules, appendixes and schedules.  I would never dare to enter into the adventure of the emergency arbitrator without previous consultation with the arbitration institution involved.

 Links to previous entries connected with this

Excuse to Deal with Cost    http://bit.ly/1FQ7Bsu

Supplementary Legislation. Court Assistance. Agreement on Costs. http://bit.ly/1KQnQpc

Cost Hour or Daily Rate http://bit.ly/1yYL2gi

Inflated Counterclaims to Raise Costs  http://bit.ly/1yeDgeg

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