Understanding the Rationale Behind Cost Awards in ICC Arbitration

This article explores the rationale and evolving practice of cost allocation in ICC arbitration. While the ICC Rules grant arbitral tribunals broad discretion in awarding costs, a review of recent awards reveals an emerging pattern: tribunals commonly apply the ‘costs follow the event’ principle, often adjusted through the relative success rule. The analysis also highlights the influence of party conduct, proportionality, and reasonableness in cost decisions. Drawing on thirty recent ICC awards, the article examines the practical limits of arbitral discretion and offers proposals, such as early procedural consideration of cost issues and settlement offers, designed to promote greater predictability in cost outcomes.