LawFlash

LCIA Publishes Analysis of Average LCIA Arbitration Costs and Duration

November 16, 2015

LCIA’s analysis includes a comparison of its arbitration costs against corresponding amounts for ICC, SIAC, and HKIAC proceedings.

On 3 November, the London Court of International Arbitration (LCIA) published a comparative analysis of costs and duration involved in LCIA proceedings. The analysis is based on the statistics of prior LCIA cases for which final awards were issued between 1 January 2013 and 15 June 2015.

LCIA Arbitration Costs as Compared to ICC, SIAC, and HKIAC

The analysis defined LCIA “arbitration costs” as including LCIA’s administrative charges, the fees of the tribunal and tribunal secretary, any cancellation charges, and the fees of any LCIA division appointed to determine the challenge (they do not include counsel fees, expert witness fees, travel costs, etc.). LCIA arbitration costs are responsible for approximately 20% of the total costs incurred in arbitration proceedings and are exclusive of expenses and Value Added Tax (VAT). 

The analysis provides US$99,000 and US$192,000 as the median and mean amounts of LCIA arbitration costs, respectively. The report then compares the median and mean LCIA arbitration costs to those of arbitral institutions that assess costs primarily based on the amount in dispute. However, due to a lack of corresponding published information for the International Arbitration Centre (ICC), the Singapore International Arbitration Centre (SIAC), and the Hong Kong International Arbitration Centre (HKIAC), the report uses the cost estimates generated by the other institutions’ online costs calculators.

The analysis shows that for cases with not more than US$1 million in dispute, the costs of LCIA arbitration are comparable to those of ICC and SIAC, but higher than those of HKIAC. For cases with over US$1 million in dispute, the costs of LCIA are lower than those of ICC and SIAC, and comparable to those of HKIAC. Across cases of all sizes, by using median values, the conclusion is that the costs of LCIA arbitration (which uses an hourly rate system) are substantially lower than those of the ICC and SIAC (which use an ad valorem system) and comparable to those of HKIAC (which gives an option of using either of these systems).

Duration of LCIA Arbitrations

The LCIA’s analysis defines the duration of an arbitration as the period starting on the date when the LCIA receives a Request for Arbitration until the date of the final award, inclusive of any stay periods (whether formal or informal).

The publication reveals that the duration of LCIA arbitrations is between 15 and 19 months (median duration) and between 18.5 and 21 months (mean duration), with three-member tribunals typically taking 2.5–4 months longer than tribunals consisting of a sole arbitrator.

The LCIA was unable to compare these figures against corresponding data from the ICC, SIAC, and HKIAC due to the unavailability of such data.

Conclusion

The LCIA’s publication represents an important step towards creating a user-friendly system of transparent international arbitration. It will enable contractual parties to estimate and minimise the costs of potential future disputes in the early stages of contract (and dispute) negotiation.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

London
David Waldron

Houston
David J. Levy

Singapore
Justyn Jagger