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Excessive Costs and Insufficient Recoverability of Cost Awards

Published on April 3, 2019        Author: 

Editors’ Note:  This is the first in a series of posts we are running from individual members of the Academic Forum of the UNCITRAL Working Group III on Investor-State Dispute Settlement Reform, in parallel with UNCITRAL WG III’s ongoing sessions this week in New York.  These posts at EJIL:Talk! are meant to summarize more detailed concept papers prepared by various Academic Forum members.  This first post synthesizes the concept paper prepared by Academic Forum Working Group I (members: Catharine Titi, Julien Chaisse, Marko Jovanovic, Facundo Perez Aznar, and Gabriel Bottini), with assistance from Olga Puigdemont.

The Academic Forum on ISDS proposed the preparation of a concept paper (the “Paper”) on the issue of excessive costs and insufficient recoverability of cost awards, in support of the State delegations deliberating ISDS reform issues during the UNCITRAL WGIII sessions to take place in New York City the week of April 1st, 2019.  The concept paper indicates sources considered by Working Group 1.

The Paper addresses the issue from four different angles. First, it deals with fees. On the one hand, it examines party costs (fees and expenses of counsel, experts, and witnesses) and, on the other, tribunal costs (fees and expenses of arbitrators and arbitral institutions, including secretariat services for ad hocarbitrations). Second, it addresses the issue of the length of proceedings and its impact on costs, including the impact of document production on the length/cost analysis. Third, the paper delves into the issue of insufficient resources to bring or defend against an investment claim. In so doing, it assesses the role of third-party funding (“TPF”) and contingency and conditional fee arrangements. Fourth, with respect to the issue of insufficiency of resources or unwillingness to pay a cost award, the Paper examines the availability or lack thereof of mechanisms to secure prompt payment of an award on costs. This includes a reference to the impact of TPF and security for costs.

For the purposes of this post, I summarize the issue of (i) excessive fees, and (ii) insufficient recoverability of cost awards, focusing in particular on how it is impacted by TPF.

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