Costs and Funding

Cost allocation varies by jurisdiction and rules. Many systems follow a 'costs follow the event' principle where the losing party pays, while others apply an American-style rule where each party bears its own costs. Tribunals have discretion in apportioning costs.

Third-party funding involves a funder providing capital to finance arbitration in exchange for a share of any recovery. It enables parties with strong claims to pursue them despite financial constraints, but raises disclosure and ethical considerations.

Recovery of legal costs depends on the applicable arbitration rules, the law of the seat, and tribunal discretion. Most international arbitration rules empower tribunals to award costs, but full recovery is not guaranteed even for the prevailing party.

Security for costs requires a party to provide a financial guarantee for the opposing party's costs. Tribunals may order security when there is reason to believe the requesting party would be unable to satisfy a costs award, though standards vary by institution and seat.