Contract and fees

Once an arbitrator(s) has been selected and appointed, it is for the parties to ensure that a fee is negotiated (hourly or daily fee and the level of the fee) with the arbitrator before each party enters into a contract either individually with the arbitrator the party has nominated or both parties may sign where they have agreed to a jointly nominated arbitrator.

The fee level should be reasonable; for example, rule 5 of the HKIAC Code of Ethical Conduct provides that an arbitrator’s “fees and expenses must be reasonable taking into account all the circumstances of the case. An arbitrator shall disclose and explain the basis of fees and expenses to the parties”.

An arbitrator(s) may ask for a deposit on account, which is usually at least half of the fees; however, there is no hard and fast rule as some may ask for the bulk of the fees to be paid in advance.

Where an arbitrator(s) is appointed by the arbitral institution, national court or any other specified body, it is still the responsibility of the parties to agree the fee and contractual terms. Some arbitral institutions (for example, THAC) set out the fee level within the Arbitration Rules (Annex 1) depending on the sum in dispute. In Hong Kong, the HKIAC Arbitration Rules, arts 14–16, address fees, including the need to lodge a deposit once a notice has been received. If the deposit is not paid within 30 days of request, the parties are notified and art 16.4 permits the arbitral tribunal (after consultation with HKIAC) to suspend or terminate the arbitration.

Needless to say, as part of their duty of candour and transparency, arbitrators should as a matter of course disclose the basis of the fee requested and support any claims for expenses with documentary proof.