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The London Court of International Arbitration (LCIA) has recently released an updated report detailing the costs and duration of arbitration proceedings under its rules. This is the third costs and duration report published by the LCIA and builds on the 2015 and 2017 versions - the report aims to provide a more transparent and predictable cost structure for parties involved in arbitration.
This 2024 analysis offers a deeper understanding of what parties involved in international arbitration can expect in terms of both financial and time-related commitments. One of the most notable aspects of the updated report is its comprehensive approach, comparing data from all cases which reached a final award between 1 January 2017 and 12 May 2024, being the longest time period studied by the LCIA. The LCIA provides a valuable benchmark for parties considering arbitration. The report highlights both the evolution of arbitration costs and the time it typically takes to resolve disputes.
About the LCIA
The LCIA is a well-regarded institution for international commercial dispute resolution, offering services such as arbitration, mediation, expert determination, and adjudication. The LCIA’s approach is characterised by its flexibility and impartiality.
Cost Analysis: Insights into Arbitration Expenses
The cost of arbitration is one of the most critical factors influencing a party’s decision to pursue arbitration as a method of dispute resolution. The LCIA’s analysis has found that the overall costs of arbitration under its rules have remained relatively stable and that increases or fluctuations are primarily due to an increase in the amount in dispute.
One key takeaway from the report is the relatively low and predictable nature of LCIA’s costs when compared to other arbitral institutions. The report also discusses the breakdown of costs, which include not just the tribunal fees but also administrative expenses - the LCIA’s tribunal fees are among the lowest compared to major institutions, and its administrative charges are also relatively low.
The median cost of an LCIA arbitration is US$ 117,653, a modest increase from the previous report’s US$ 97,000. This increase reflects the rising complexity and value of disputes handled by the LCIA. All cases with a duration of less than 6 months report arbitration costs of no more than US$ 50,000. For cases concluded within 7 to 12 months, almost 70% incurred arbitration costs below US$ 50,000; while almost 90% of those cases incurred arbitration costs of less than US$ 100,000.
Duration of Arbitration: How Long Does It Take?
The report also sheds light on the duration of arbitration proceedings. The average time for cases to reach a final award is a critical factor for parties, particularly in international disputes where businesses and individuals are often looking for timely resolutions.
The report suggests that the LCIA continues to be efficient in resolving disputes, with a median duration of 20 months between commencement of the case and issuance of the award, with tribunals typically taking about 4 months to produce an award after conclusion of the hearing. However, this duration can vary depending on the complexity of the case and the cooperation of the parties involved. Cases with claims under US$ 1 million tend to be decided expeditiously, namely within 12 months.
Conclusion
The updated analysis by the LCIA is an important resource for businesses, individuals and legal professionals considering international arbitration as their chosen means of dispute resolution. The LCIA’s findings show that with the right procedures in place, arbitration remains efficient, transparent, and cost-effective.
As businesses, individuals and legal professionals navigate the complexities of international commerce, the LCIA’s robust framework and proven track record make it a reliable partner in resolving disputes. However, parties should carefully evaluate their specific needs and circumstances to determine the most suitable arbitration institution for their cases.
Further information
If you have any questions regarding this blog, please contact James Glaysher or Leyla Maestri in our Dispute Resolution team.
About the authors
James is an experienced solicitor-advocate specialising in international commercial arbitration and commercial litigation, and leads our International Arbitration practice.
Leyla has experience acting on a broad range of disputes, including complex cross-border litigation, and international arbitration proceedings.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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