June 16, 2021



| Your comment matters, please click here to rate article!

Managing an arbitration means managing a client’s expectations, including the client’s costs in pursuing its case in arbitration. Parties in arbitration may incur different types of costs; wherein the three main costs involved are the Tribunal Fees; Administration Fees; Legal fees for experts and for legal representations. Legal cost is the main expense incurred by the party and the fees of its legal representatives in arbitration.

Allowing the recovery of legal costs in a dispute is not universal, so one of the benefits of arbitration in UAE is that some of the arbitration institutes award legal costs should you win which is not the case in local courts. The arbitral institutions have to explicitly allow the tribunal to order the losing party to pay the legal costs incurred by the winning party. Nevertheless, it requires a bright mind to present the legal costs before the arbitral tribunal and to seek a refund for the same. Arbitration Lawyers of Dubai will help you understand the ideology behind claiming legal costs and what shall you keep in mind while claiming legal costs.

How it works?

Before the final award gets issued in an arbitral proceeding, both the parties submit a document including a post-hearing cost wherein they’ll seek an award against the losing party recovering the legal expenses made in the initiation or defense of arbitrary proceedings. There are several procedures by which institutions award legal costs.

The most frequently approached arbitration institutes in the UAE are the DIAC and ADCCAC, these, however, do not explicitly empower the arbitrators to award legal costs. On the other hand, the less frequently approached, DIFC-LCIA does authorize the tribunal to award and allocate legal costs to the parties to the dispute. Article 28.3 (DIFC-LCIA Rules of Arbitration) confers upon the arbitral tribunal the power to determine a party’s legal and other costs incurred in the arbitration.

The ADCCAC rules provide a few Articles regarding costs (Art 282, 373, 384, and 39). However, only Article 39 expressly authorizes and defines which costs the arbitrator is allowed to reallocate- arbitrator’s fees and ADCCAC fees.

The DIAC Rules

The power of tribunals to award legal costs in DIAC arbitrations is an issue which has often been hotly contested before the UAE Courts. Revised DIAC 2007 rules vaguely interpret the tribunal‘s final award as ‘expenses incurred by the tribunal’ which leads to confusion as to whether legal fees can be claimed under the DIAC Rules. Article 4.2 of the Appendix to the DIAC Rules permits tribunals to fix the costs of the arbitration and to apportion these between the parties however the arbitration cost does not include legal cost.

Court's Stance

The Dubai Courts have given contradictory judgements on the issue of legal cost. In one case, the Dubai Court of Appeal (and subsequently the Dubai Court of Cassation) held that in DIAC arbitrations, the tribunal is empowered to award the costs associated with the arbitration but not legal costs unless this power is explicitly provided for. Since the parties’ had expressly signed the terms of reference, the tribunal was therefore entitled to determine and apportion legal costs. In another case the court held, that the contractual relationship between a lawyer and a client is different than the arbitration dispute and both need to be separated. The former can’t become a premise for legal cost to be awarded.

What should you be doing?

Accordingly, where the chosen institutional rules do not contain a power for the tribunal to award legal costs (e.g. the DIAC Rules), parties will be best advised either to: include the right for tribunals to award legal costs in the initial arbitration agreement; or include the required powers in the terms of reference. An express agreement between parties indicates healthy and unbiased proceedings and let the tribunal decide the case on merits. In either case (and to protect the parties positions to the fullest extent possible), the signatories used should have special powers of attorney permitting them to agree to the tribunal awarding legal costs.

In order to avoid discouragement for parties with small value claims, it is important to carefully consider the reallocation of arbitration costs before executing an arbitration deed with the help of arbitration lawyers in Dubai.

Related Links

Copyright © of this article is retained by the author and/or other copyright owners. We explicitly grant you permission to download a copy, without any alteration, of this article for personal non-commercial research or study, without prior permission or any charge. This article can be utilized on your website or for marketing, however, we grant you permission to host this article on your website and no other rights. This content should not be altered in any way or sold commercially in any format without prior permission of the copyright holder. During reference of this article, full biographic details entailing the name of the author, his designation, the institute and the publishing date of the article shall be provided.


No comments found.

Leave a Comment

Your email address will not be published. Required fields are marked *

Want to know more?
Then talk to us.

Client Testimonials

I owe the success of my case to Dr. Hassan's diligent approach. He remained focused, put me at ease and always went the extra mile. Dr. Hassan tirelessly put my case in the best possible light and I cannot thank him enough. I would highly recommend Dr. Hassan - I am grateful to him from the bottom of my heart.

Raphael Lauria
Manager, FME General Trading

Dr. Hassan Elhais is among the best legal consultants I have ever worked with. He has an amazing ability to reduce complex issues into a simple concept that non-legal people can understand. He consistently develops innovative litigation strategies that help us to achieve our ultimate legal goals.

Zhuo Liu

...the extraordinary effort that has been exerted by the staff, and we specially thank Dr. Hassan Mohsen Alhais. Wishing your continues success & excellence...

H.H. Sheikh Saeed Bin
Mohammed Hashir Al Maktoum

I believe everyone should recognize what a difference Dr. Hassan Elhais work has made to people's lives; and especially to our family's life, because we will remain forever grateful to each and every one of his team.

Luis Pozueco

Dr. Hassan Elhais never fears cases that involve exposure and he always gives me his honest assessment of our chances of success, which is invaluable to me.

Bassam Yamout
Director, JM Metal Trading LCC

He aided us not only in providing legal advice but also in all legal issues that required a long term strategic approach to achieve most favorable and optimum outcomes he provided us with high level of professional service.

Philippe Delbecq

Dr. Hassan Elhais is a responsible, reputable counsel who operates to high levels of service.

British Client

Dr Hassan Elhais is responsive, thorough and creative with his advice, and is a valued advisor and legal consultant.

Asma Mattar
Manager, Italian Style

Regardless of the complexity of the matter I know Dr. Hassan Elhais will consider not only legal strategy but also business practicalities in providing advice and litigation options.

Dr. Massimo Hakim
Chairman, Italian Style

I recommend Dr. Hassan Elhais to anyone who says 'I'm in legal trouble'. I was extremely satisfied with the high standard of his work. He has always been there when I have needed him and I refer all my clients, family and friends to him/his firm.

Manish Gupta
Marketing Manager, Express Digital System

Dr. Hassan Elhais was very professional and he listened to my needs. He was very prompt, efficient and always kept me informed. Dr. Hassan Elhais's service was excellent and I would definitely recommend him to friends and colleagues.

James Horsley
British Client

Select your Language:


Main Menu