Clifford Chance

LCIA Releases Updated Costs and Duration Analysis

The London Court of International Arbitration (LCIA) has released its third report on costs and duration in respect of arbitration proceedings conducted under the LCIA Arbitration Rules, highlighting the cost-effectiveness and efficiency of LCIA arbitration as a mechanism for resolving disputes.

On 30 December 2024, the LCIA published a report 'Costs and Duration: 2017-2024' (2024 Report), detailing its analysis of costs and duration in selected LCIA arbitrations. The 2024 Report was produced as part of the LCIA's effort to provide a more transparent and predictable cost structure to assist users of arbitration to make more informed choices of institution. The 2024 Report is available here.

Background

The 2024 Report builds on previous LCIA reports on costs and duration that were released in 2015 and 2017. It was prepared in conjunction with The Brattle Group and covers all cases that reached a final award between 1 January 2017 and 12 May 2024. Cases which concluded before the substantive issues were determined by a tribunal (due to settlement or otherwise) are excluded from the analysis, as are emergency arbitrator awards. The result is that the 2024 Report is based on a dataset of 616 LCIA arbitrations.

Findings: Costs

The 2024 Report reveals that there has been a moderate increase in the median costs of LCIA arbitration since the LCIA's 2017 report, increasing from USD 97,000 in the previous report to USD 117,653 in the 2024 Report. These figures have not been corrected for inflation, which means the actual increase is even more modest. These arbitration costs comprise:

• Tribunal fees, including the tribunal's hourly rates, cancellation fees, correction fees and the tribunal secretary's hourly fees; and
• LCIA administrative charges, including registration fee, hourly charges of the LCIA secretariat and an additional fee equal to 5% of the total tribunal fees.

In comparison to costs estimates of other arbitral institutions, the LCIA reports that its arbitration costs are among the lowest overall. The 2024 Report indicates that LCIA tribunal fees tend to be lower than those applied in HKIAC, ICC, SCC or SIAC arbitrations, while the administrative charges are also among the lowest, on par with the HKIAC and SIAC.

Unlike most other arbitral institutions, the LCIA does not offer an ad valorem estimate of costs (that is, an estimate of tribunal fees and administrative costs on the basis of the value in dispute). Rather, the key driver of the LCIA costs system is the complexity of the dispute, which the LCIA Court uses to determine the number of arbitrators (if not agreed by the parties) and the maximum hourly rate for arbitrators. As the full costs of an LCIA arbitration cannot readily be estimated by the LCIA at the outset of a case, the 2024 Report aims to provide actual data about recent cases to give parties an insight into the costs of LCIA arbitration.

Findings: Duration

The median LCIA arbitration lasts 20 months according to the 2024 Report. This represents an increase of four to five months since the LCIA's previous report.
The 2024 Report indicates both the overall duration of the arbitration as well as the "time to award", representing the time between the final submissions on the merits of the dispute (written or oral) and the final merits award issued by the tribunal. The data confirms that the average time to award is four months. This follows the introduction of Article 15.10 in the LCIA Rules 2020 which states that “the Arbitral Tribunal shall seek to make its final award as soon as reasonably possible and shall endeavour to do so no later than three months following the last submission from the parties”. The time to award data in the 2024 Report indicates that arbitrators are close to this target.

The 2024 Report concludes that there is a strong correlation between the duration of the arbitration and the amount in dispute. The median duration for LCIA cases with claims under USD 1 million is 12 months, while the median duration for cases with claims above USD 100 million is almost three years. Notably, however, the time to award does not increase considerably based on the amount in dispute. This would indicate that the increasing total duration for higher-value cases is largely attributable to delays by the parties, rather than tribunal inefficiencies.

Comment

The insight provided by the 2024 Report as to costs and duration of LCIA arbitrations is very helpful both for current and potential future users of the LCIA's services. The comparison provided against other arbitral institutions is useful but is based on estimates in respect of the other institutions and therefore subject to substantial caveats. The LCIA has encouraged other leading institutions to provide transparent and comparable statistics to assist parties to make informed comparisons. This would be a welcome step and would allow fairer comparisons to be drawn.

Finally, as noted in the 2024 Report itself, costs and duration are only two factors which should be considered by parties when comparing institutions. Parties should consider all relevant circumstances when deciding whether an institution is best placed to administer their disputes.