What Are the Recoverable Costs in ICC Arbitration?

A TRW Law Firm long-form guide for corporate counsel, project leaders and finance teams who want price certainty—and the best chance of getting money back.

Quick take: Under the 2021 ICC Rules, recoverable costs fall into four big buckets: (1) arbitrators’ fees and expenses, (2) ICC administrative expenses, (3) tribunal-appointed experts’ fees and expenses, and (4) the parties’ own “reasonable legal and other costs.” Tribunals have wide discretion, but you can heavily influence outcomes with smart drafting, disciplined case management and a meticulous cost record from Day 1.

If you are planning or defending an ICC arbitration—or closing the books on one—this guide translates black-letter provisions into practical playbooks you can implement immediately. Because winning on the merits is only half the story; the cost order can turn a “win” into a net loss—or a narrow loss into a financial draw.

For end-to-end arbitration strategy (from clause to collection), see our core practice hub:

• International Arbitration & Dispute Resolution
• Investment Disputes & ICSID
• Corporate & Commercial Contracts

1) The starting point: Article 38 ICC Rules (2021)

Article 38(1) defines “costs of the arbitration” to include:

1. Fees and expenses of the arbitrators,
2. ICC administrative expenses (as per the scales in force at commencement),
3. Fees and expenses of tribunal-appointed experts, and
4. The parties’ reasonable legal and other costs.

Article 38(2) allows the ICC Court, in exceptional circumstances, to fix arbitrators’ fees above or below the scale outcome. Article 38(4) leaves allocation to the tribunal: who pays, in what proportion, and whether any set-offs apply.

Key practical translation: Two of the four buckets (arbitrator fees and ICC admin) are fixed exclusively by the ICC Court under Appendix III. The other two (tribunal experts and party costs) are set by the tribunal—and are the strategic battleground where users can meaningfully move the needle.

2) Bucket #1 and #2: Arbitrators’ fees & ICC administrative expenses (fixed by the Court)

2.1 The ICC “scale” system—predictability by design

Unlike time-based remuneration models at some institutions, the ICC uses published scales tied to the amount in dispute (Appendix III). That gives you, from Day 1, a forecast range for arbitrator fees and ICC administrative costs. The Court then calibrates within the range using factors such as:

• Diligence and efficiency of the tribunal,
• Time spent and complexity,
• Rapidity and timeliness of the draft award.

No side deals. Separate fee arrangements with arbitrators are prohibited. If the case is truly exceptional—hyper-complex, sprawling, or unusually efficient—the Court may depart from the indicative number, but that remains rare.

Strategic note: Inflating claims and counterclaims increases the scale and can backfire. Tribunals sense tactical inflation; the Court sees the quantum. Keep the amount in dispute credible and support it with a rational damages methodology from the outset.

3) Bucket #3: Fees & expenses of tribunal-appointed experts (if any)

Tribunal experts are less common in ICC practice than party experts, but when they are used (e.g., niche engineering, forensics, industry customs), their fees, travel and testimony costs are recoverable as costs of the arbitration. Typically:

• The tribunal controls scope and fees (not the Court).
• A separate advance on costs may be ordered to fund the appointment.
• Parties can contest scope and quantum if things expand beyond the mandate.

Practical tip: If a tribunal expert is foreseeable, build a budgeting covenant into Procedural Order No. 1 (PO1) (e.g., periodic fee caps, deliverables, timelines). That keeps the spend visible and the recovery later more straightforward.

4) Bucket #4: “Reasonable legal and other costs” of the parties (the decisive arena)

This is where most of your spend sits—and where the tribunal’s discretion really matters. The ICC Rules do not exhaustively define “legal and other costs.” Instead, tribunals ask two questions:

1. Are they causally connected? (directly linked to preparing and prosecuting/defending the arbitration)
2. Are they reasonable and proportionate? (relative to stakes, complexity and party conduct)

4.1 What typically qualifies as recoverable party costs

• External counsel fees and expenses (partners, associates, paralegals)
• Party-appointed experts (quantum, delay/programming, industry, valuation, accounting)
• Witness-related costs (travel, accommodation, prep time if evidenced and reasonable)
• Document management (review platforms, e-discovery vendors), translations, transcriptions
• Hearing logistics (venue, virtual platform licences where used, interpreters, equipment)
• Reasonable travel for counsel/clients (coach or business class depends on context; justify)

4.2 Items that are contentious or seat-dependent

• In-house counsel time: Some tribunals accept with detailed proof (time logs, rates reflecting actual salary cost + overhead), others reject as business overhead. If you seek it, particularise: identity, seniority, tasks, hours, cost basis.
• Third-party funder success fee/uplift: Usually non-recoverable (not an expense “incurred” to run the case), absent party agreement.
• ATE premium or similar instruments: Often non-recoverable unless the seat or parties’ agreement says otherwise.
• Pre-arbitration costs (negotiation, mediation): commonly rejected unless the contract expressly allows recovery or the tribunal is convinced of a tight causal link.
• Parallel court costs (interim measures, document subpoenas): generally pursued in those courts, not in the arbitration—tribunals often refuse duplication.
• Post-award enforcement costs: typically excluded in the arbitration award; you seek those in enforcement proceedings (though some tribunals signal views on them).

4.3 The “reasonableness” audit—how tribunals think

Expect tribunals to scrutinise:

• Rates vs market (London, Paris, Singapore, Dubai, Hong Kong benchmarks)—explain why your rates are standard for the dispute’s complexity and stakes.
• Team composition (leverage and seniority mix)—avoid obvious duplication (five seniors on routine tasks).
• Hours vs complexity—tie effort to issue lists and milestones (jurisdiction, liability, quantum).
• Proportionality—if you spend USD 300k to fight over USD 30k, anticipate trims unless you justify systemic implications (precedent risk, regulatory overlay, reputational stakes).
• Comparative spend—gaps between the parties’ bills are not fatal, but a big chasm invites questions. Have a narrative (leaner team, more experts for a reason, etc.).
• Conduct—efficiency and cooperation get rewarded; obstruction and gamesmanship get punished.

5) Who ultimately pays? Allocation frameworks under Article 38(4)

ICC tribunals generally adopt one of three allocation logics:

1. Costs follow the event (winner recovers most): The default instinct in international practice, then adjusted for relative success and behaviour.
2. Apportionment by issues/outcomes: A civil-law-flavoured approach—if you win the case but lose major issues (e.g., jurisdiction or a substantial quantum head), expect split recovery.
3. Each side bears own, plus shared costs: Used where both sides litigated responsibly on genuine points, results are mixed, or parties so agreed in the clause/ToR.

Behavioural overlay: Tribunals increasingly weight process conduct (discipline in timetables, focused disclosure, sensible interim applications) as a multiplier or discount on recovery—even overriding the strict “who won” narrative.

6) VAT/GST and interest on costs—don’t leave cash on the table

6.1 Indirect tax (VAT/GST)

• Clarify where the legal services are deemed supplied and who bears the VAT (recoverability depends on your ability to credit it).
• Ask the tribunal to award costs exclusive of VAT, plus VAT if and to the extent irrecoverable by the receiving party. Provide a short tax note explaining the position.
• For mixed jurisdictions (e.g., London counsel, Dubai hearing, parties in different tax regimes), present a simple matrix so the tribunal can craft a clean order.

6.2 Interest on costs

• If the contract or applicable law is silent, propose a commercially sensible rate (e.g., a benchmark + margin) from the date of the award until full payment.
• Seek compounding where consistent with the seat or governing law.
• Provide a worked example and a per-diem figure to make it easy to adopt.

7) Third-party funding (TPF), disclosure and security for costs—how they interact with recovery

• Disclosure: Many tribunals require disclosure of the existence of funding and the funder’s identity (for conflicts checks). Terms stay confidential unless genuinely relevant.
• Recoverability: Funded legal fees remain party costs and are recoverable (subject to reasonableness). Funder uplifts/premiums are typically not.
• Security for costs: Funding alone doesn’t justify security. But if the claimant is asset-light and has a track record of non-payment of adverse costs, expect the respondent to seek security (bank guarantee, escrow, ATE with tribunal-approved terms).
• Practical play: If you’re funded, pre-empt a security application by disclosing adverse costs cover and proposing reasonable guardrails.

8) Emergency arbitrator and interim measures—who pays those costs?

Costs incurred before the main tribunal (e.g., Emergency Arbitrator proceedings) are often addressed in the EA order itself (including allocation), but can later be revisited by the main tribunal when it fixes overall costs. If you bring or face an urgent application:

• Keep the scope tight, the evidence focused, and the hearing short—tribunals and EAs read efficiency as good faith.
• Ask explicitly for costs in the application (and propose a number with a short schedule).
• If you are the respondent and the application lacked merit or urgency, seek adverse costs immediately.

9) Offers to settle and “sealed” costs submissions—turn leverage into money

While ICC Rules don’t mirror England’s Part 36 regime, tribunals often consider settlement conduct at the costs stage. Best practice:

• Make credible, time-limited offers when you have momentum.
• Keep a sealed record of offers and responses; propose a sealed annex procedure for costs submissions so liability and quantum deliberations stay unsullied.
• At the costs phase, show you beat your own offer (or the opponent failed to beat it), and explain why that should shift costs from a given date.

10) PO1: bake cost governance into the case from Day 1

Propose the following PO1 clauses (tailor to seat and parties):

• Default rule: “Costs shall follow the event, subject to adjustments for relative success, reasonableness, proportionality and conduct.”
• Schedules cadence: short cost schedules at key milestones (post-document production; pre-hearing; post-hearing) so numbers don’t balloon in the dark.
• Funding disclosure: identity of any funder within 14 days of engagement.
• Interim costs: tribunal may award costs of applications on the spot.
• Tax & interest: parties to file a two-page VAT/GST note and an interest proposal with worked figures.

This front-loads predictability and telegraphs to the other side that cost discipline will be rewarded.

11) The documentation standard that wins cost recovery (a checklist)

For external counsel fees:

• Time entries mapped to issues (not “review memo” but “Issue 2—limitation: research & draft §IV”).
• Leverage profile (partner/associate ratios) consistent with complexity.
• No duplication in routine tasks; justify any heavy senior involvement.

For experts:

• Clear scope letters, deliverables, and versions.
• Joint statements and narrowing exercises to prove efficiency.
• Cross-references from report sections to time entries (light-touch index is enough).

For witnesses:

• Evidence of travel and accommodation at reasonable levels.
• Preparation time tied to specific procedural steps (witness statement v1, hearing prep day).

For platforms & vendors:

• Short explanation of why a review platform was necessary and how you kept it lean (custodian limits, deduping, search protocols).
• Redacted invoices (if needed) that still show the nature of services.

For VAT/GST & interest:

• A simple matrix of tax positions by jurisdiction.
• Per-diem interest figure and compounding basis.

12) Eight recurring traps (and how to avoid them)

1. Ignoring costs until the end.
   Fix: Codify in PO1; schedule mini cost updates.
2. Ambiguous claim values that bloat the ICC scale.
   Fix: Present a credible quantum case with a rational method.
3. Over-lawyering routine steps.
   Fix: Enforce a lean core team; delegate sensibly.
4. Bloated expert workstreams without tight scopes.
   Fix: Lock scope and joint agendas; log narrowing decisions.
5. Discovery sprawl without proportionality.
   Fix: Custodian caps, targeted terms, explain what you did not search and why.
6. No VAT/interest analysis.
   Fix: Include a two-page note—it pays for itself.
7. Seeking funder uplifts as costs.
   Fix: Unless your contract allows it, don’t ask—you’ll lose credibility.
8. Forgetting offers at the costs phase.
   Fix: Use sealed annexes; argue from the offer date.

13) Contract drafting that makes recoverability predictable (model language)

Costs & Recovery: “Subject to the tribunal’s discretion and any mandatory rule at the seat, costs shall follow the event. Recoverable Party Costs include reasonable external counsel fees, expert fees, witness costs, document management, transcription, interpretation, travel, and hearing logistics. Funder uplifts and public relations costs are not recoverable unless expressly agreed.”

In-House Counsel: “Reasonable time spent by in-house counsel shall be recoverable where particularised (identity, seniority, tasks, hours, cost basis) and necessary to the conduct of the arbitration.”

VAT & Interest: “Any cost award shall be exclusive of VAT/GST, plus VAT/GST to the extent irrecoverable by the receiving party. Interest on costs shall accrue from the award date at [benchmark + X%], [simple/compounded monthly], until full payment.”

Offers: “The tribunal may consider written settlement offers lodged on a sealed basis when determining costs from a specified date.”

For clause design and dealpaper integration, we can help here: Corporate & Commercial Contracts.

14) A step-by-step timeline to maximise recovery (or minimise exposure)

Day 1–30

• Align with your tribunal on PO1 costs provisions and schedules cadence.
• Build an issues map and train time-keepers to code entries by issue.
• Open a live budget with variance notes.

Month 2–5

• Keep disclosure proportional; propose agreed custodians/terms.
• Record efficiency moves (shared bundles, joint chronologies).
• If hit with a frivolous application, seek interim costs.

Month 6–9 (pre-hearing)

• Audit team and expert scopes to cut duplication; memorialise narrowing.
• Consider without-prejudice offers that you can later “beat.”

Post-hearing

• File a costs brief: (1) narrative (outcome + conduct), (2) reasonableness analysis mapped to issues, (3) worked schedule (+ VAT/interest note), and (4) sealed annex on offers.

Award & collection

• Be ready to recognise and enforce where the other side banks.
• Pre-clear banking/KYC and any licences if sanctions/AML are relevant.

15) FAQs (short, candid answers)

Q: Will the winner always recover 100% of legal costs?
A: No. 50–100% is common depending on relative success, reasonableness and conduct. Tribunals trim for duplication, over-spend, and unnecessary fights.

Q: Can we recover in-house counsel time?
A: Sometimes. Provide particularised logs and a cost basis. Many tribunals accept in principle, then cut if evidence is thin.

Q: Are funder success fees recoverable?
A: Typically no, absent explicit agreement. Focus on incurred legal and expert fees.

Q: Can we recover costs of parallel court applications?
A: Generally in those courts. Tribunals avoid double recovery.

Q: What about mediation costs before arbitration?
A: Usually not recoverable unless your contract or PO1 says otherwise and you can show necessity.

Q: How do VAT and interest work on costs?
A: Ask for costs exclusive of VAT, plus VAT if irrecoverable; seek commercial interest from award date until full payment with a worked calculation.

16) The TRW advantage: design for recovery from clause to closing

• Front-end engineering: We wire recoverability into contracts and Terms of Reference so tribunals have a roadmap.
• Case governance: We script PO1 cost and conduct provisions, plus sealed-offer mechanics.
• Cost storytelling: We turn your ledger into a necessity narrative—issue-mapped, proportionate, persuasive.
• Interim levers: We pursue interim costs and security where justified, to deter waste.
• Final package: We deliver a tax-aware, interest-grounded costs brief with numbers the tribunal can adopt—and a court can enforce.
• Collection choreography: London, DIFC and other hubs—bank-ready recognition and execution strategies.

See how it all connects:

• International Arbitration & Dispute Resolution
• Investment Disputes & ICSID
• Corporate & Commercial Contracts

17) Bottom line

In ICC arbitration, recoverable costs are not a guessing game. The Rules set the buckets; the Court fixes two of them; the tribunal calibrates the rest using reasonableness, proportionality, outcome and conduct. If you plan for this from Clause Day and run the case like a cost-conscious project, you dramatically increase your chances of walking out not just with an award—but with real recovery of the money you spent to get it.

If you want a tailored “from-contract-to-collection” plan for your dispute or portfolio, our teams in Dhaka, London and Dubai can build it with you.

Talk to TRW

Tahmidur Remura Wahid (TRW) Law Firm
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