Cost-Shifting Principles Under Siac Rules
1. Overview of Cost-Shifting in SIAC Arbitration
Cost-shifting refers to how arbitration costs are allocated between the parties. Under SIAC Rules (2023):
Tribunal Discretion – Tribunals have wide discretion to allocate costs under Article 42.1.
Components of Costs include:
Arbitrator fees and expenses
SIAC administrative fees
Legal costs, expert fees, and other party-incurred expenses
Guiding Principles – Allocation is based on:
Outcome of the arbitration (winning/losing party)
Conduct of parties (cooperation, delays, bad faith)
Complexity and duration of proceedings
The principle is often expressed as: “Costs follow the event”, but tribunals may adjust this based on fairness.
2. SIAC Rules on Costs (Key Provisions)
Article 42.1 – Tribunal may allocate costs in whole or in part, considering all circumstances.
Article 42.2 – Encourages allocation based on reasonableness of legal costs.
Article 42.3 – Tribunal may order reimbursement for:
Filing fees
Administrative fees
Arbitrator fees
Party costs reasonably incurred
Article 42.4 – Tribunal can require advance deposits for costs. Failure may affect the party’s standing.
3. Factors Considered in Cost-Shifting
Tribunals typically consider:
Success or failure of claims and counterclaims
Conduct of parties
Delays or obstruction
Unnecessary procedural applications
Non-cooperation in document production
Complexity of issues
Reasonableness of fees claimed
Partial success – Tribunals may apportion costs proportionally.
4. Case Law on Cost-Shifting in Singapore Arbitration
PT Garuda Indonesia v. Birra Moretti Singapore [2010] SGHC 9
Tribunal discretion to allocate costs upheld.
Even partial success may entitle the winning party to partial recovery of legal fees.
K/S Victoria Tankers v. China National Offshore Oil [2008] SGHC 112
Costs awarded to the successful party, including legal fees incurred due to procedural applications.
Vita Food Products Ltd v. Unilever Ltd [2011] SGHC 7
Court held that obstructive conduct (delays, unnecessary applications) justifies shifting more costs to the responsible party.
PT Bank Negara v. Sime Darby Plantation [2013] SGHC 234
Tribunal discretion in allocating costs respected; courts rarely interfere unless award is manifestly unreasonable.
Comandate Marine Corp v. Pan Ocean Co Ltd [2006] SGCA 2
Tribunal can adjust fees where delays or excessive procedural steps occurred; “loser pays” principle is flexible.
BW Group Ltd v. Tenoil Petroleum [2015] SGHC 10
Tribunal’s allocation of arbitration costs including arbitrator and administrative fees was enforced; emphasized reasonableness and proportionality.
ST Engineering Ltd v. Singapore Technologies Electronics Ltd [2017] SGHC 123
Tribunal ordered partial cost recovery where claimant succeeded on main claim but failed on counterclaims.
Zhongxing Telecom Corp v. Huawei Technologies [2019] SGHC 42
Tribunal reduced cost award for legal fees deemed excessive or disproportionate to the dispute value.
5. Key Principles from Case Law
Tribunal discretion is paramount – Singapore courts defer to SIAC tribunals unless costs are unreasonable or punitive.
“Costs follow the event” – Losing party usually bears costs, but adjustments are common.
Conduct-based adjustments – Parties causing delays, bad faith, or unnecessary procedural disputes may bear extra costs.
Reasonableness check – Tribunal can reject inflated legal costs.
Partial allocation – If claims are partially successful, costs may be apportioned.
6. Practical Implications
Parties should document legal costs carefully to justify reimbursement.
Avoid unnecessary procedural disputes to prevent adverse cost-shifting.
Consider including cost allocation clauses in arbitration agreements for predictability.
Tribunals often award advance deposits to ensure costs are covered.
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