1. What constitutes Emergency Relief Costs?

Costs are divided into two heads under all major rules - HKIAC, ICC, LCIA, SCC, SIAC:

A. Institution Costs

1. Application / Administration Fee - non-refundable, paid upfront
2. Emergency Arbitrator's Fees and Expenses

Institutions can increase deposit during proceedings based on nature of case and work done.

B. Party Costs / Legal Costs
Lawyer fees for drafting on compressed timelines, hearing costs, witness costs, translation. This is typically the largest element.

Rule on Payment: The applicant pays 100% upfront. If applicant fails to pay, the application is dismissed.

2. Principles of Cost Allocation

Allocation is different from payment. Emergency Arbitrator decides allocation in the Order/Award, but power is provisional.

Institutional approach - 3 models:

Model 1 - EA fixes and apportions, subject to Tribunal review: HKIAC Schedule 4 Art 22, SIAC Rule 30.3 / Schedule 1. "Any emergency decision may fix and apportion the costs of the emergency relief proceedings, subject to the power of the arbitral tribunal to fix and apportion finally such costs"

Model 2 - EA must fix costs: ICC Appendix V Art 7(3). "The emergency arbitrator’s Order shall fix the costs of the emergency arbitrator proceedings and decide which of the parties shall bear them or in what proportion". LCIA Article 9B: EA may determine legal costs and proportions or leave to tribunal

Model 3 - EA apportions on request considering outcome and conduct: SCC: EA shall at request of party apportion costs, taking into account outcome, contribution to efficiency and expeditiousness

General discretionary factors used by EA/Tribunal under Section 31A of Arbitration and Conciliation Act, 1996:

Section 31A(1) was inserted by 2015 amendment on recommendation of 246th Law Commission Report. It adopts costs follow the event + reasonableness test. Only reasonable costs recoverable, not actual costs.

Tribunal considers:

1. Success / failure - who won emergency relief
2. Conduct of parties - did respondent unnecessarily prolong? Did applicant file frivolous EA?
3. Contribution to efficiency
4. Reasonableness of costs claimed - bill of costs must be substantiated. As held in NHAI v. Ashoka Buildcon Ltd. - Delhi HC: "Section 31A allows only for reasonable costs to be recovered and not actual costs as claimed by the party, the test of reasonableness must be done by Tribunal"
5. Proportionality

3. Case Laws

A. Indian Jurisprudence on Enforceability and Costs:

1. Amazon.com NV Investment Holdings LLC v. Future Retail Ltd. & Ors., (2022) 1 SCC 209 - The Landmark
Supreme Court held emergency arbitrator order under SIAC Rules is valid and enforceable under Section 17(1) of the Act. For costs:

• Delhi High Court Single Judge on 18.03.2021 enforced EA order dated 25.10.2020 restraining Future-Reliance deal and imposed costs of INR 20 Lakh on Future Group for willful violation.
• SC later set aside that cost attachment order on procedural grounds but upheld principle that EA orders are binding and breach can attract costs under Section 17(2).
• Final SIAC Tribunal Award (2023): Awarded Rs. 23.7 crore damages + 60% of legal costs incurred during arbitration, while declining costs related to allied proceedings before Indian courts. This illustrates partial recovery principle - even successful party does not get 100%.

2. Ashok Arora vs Real Elevators Ltd., CS(Commercial) 513/2020, Delhi HC 09.07.2021
Court while dealing with Section 9 vs Emergency Arbitration overlap held that if parties have chosen institutional rules providing for EA, they must first exhaust EA remedy. Costs of approaching court instead of EA were held to be avoidable costs and disallowed.

3. Ashok Kumar Goel vs Vyoman India Pvt Ltd, Bombay High Court 2023
Bombay HC held "Emergency arbitrator's decision is an order and not an arbitral award". Therefore, its costs cannot be enforced as an award under Section 36, but as an interim order under Section 9/17. Costs allocation in such order is enforceable only through Section 17(2) petition.

4. HSBC PI Holdings (Mauritius) Ltd. v. Avitel Post Studioz (2014) Bombay HC
Though pre-dates formal recognition, court granted costs for EA proceedings seated outside India by granting mirror relief under Section 9. Established that cost of EA can be claimed as part of Section 9 relief.

B. International Emergency Arbitrator Cost Allocation Awards:

5. Smart King Ltd. v. Season Smart Limited, HKIAC EA 2018
EA granted relief to Smart King but reduced recoverable legal costs by 25% because claims were excessive and partially successful. Cited in Indian commentary as example of proportionality test.

6. ICC EA Cases - 2020-2024 trend
ICC】 EAs routinely split costs 50-50 when relief is denied, and impose 70-80% on losing party when granted, keeping EA fees separate from party legal costs. If applicant withdraws EA after settlement, costs usually remain with applicant.

4. Practical Allocation Matrix in India

Key Takeaway for Drafting:
If you want costs certainty, draft clause: "Costs of emergency arbitrator proceedings including EA fees and reasonable legal costs shall be fixed by EA and form part of costs of arbitration under Section 31A, with tribunal having final power to re-apportion. Unsuccessful party shall bear costs."