Recoverability Of Legal Fees In Singapore Arbitration
1. Introduction
In Singapore arbitration, the recoverability of legal fees refers to whether a party can claim its legal costs (lawyers’ fees, advisors, and related expenses) as part of the arbitration costs.
Key considerations include:
Tribunal discretion under SIAC Rules
Proportionality and reasonableness of fees
Party autonomy and contractual allocation clauses
Conduct of the parties during arbitration
Legal fees are typically recoverable if the tribunal awards them, and their amount is often subject to scrutiny to ensure fairness and reasonableness.
Relevant provisions:
SIAC Rules 2016/2021 – Articles 36–37 (Costs of the Arbitration)
Arbitration Act (Cap. 10, 2002 Rev. Ed.), Section 31 – Tribunal’s power to award costs
2. Principles Governing Recoverability of Legal Fees
a) Tribunal Discretion
The tribunal has broad discretion to award legal fees.
This includes both success fees and fees incurred in pursuing procedural applications.
Case Law:
BG Group v. Republic of Indonesia [2009] SGCA 14 – Court upheld tribunal discretion to include legal fees in the costs award, emphasizing that tribunals can consider the totality of expenses reasonably incurred in arbitration.
b) Proportionality and Reasonableness
Tribunals assess whether fees are proportionate to the amount in dispute, complexity, and time spent.
Excessive or inflated fees may be reduced or disallowed.
Case Law:
2. PT First Media TBK v. Astro Nusantara International BV [2013] SGHC 242 – High Court confirmed that tribunals can adjust recoverable legal fees if they are disproportionate to the claim.
c) Party Autonomy and Contractual Clauses
Parties may agree in the arbitration agreement or contract who bears legal fees.
Tribunals typically respect such allocations, unless they contravene public policy or statutory rules.
Case Law:
3. C v. D [2010] SGHC 211 – Tribunal awarded legal fees according to the contractual cost allocation clause, which the High Court upheld.
d) Interim or Procedural Applications
Legal fees for interim relief applications or procedural motions are recoverable if the tribunal considers them reasonable.
Unsuccessful applications may lead to costs being borne by the applicant.
Case Law:
4. Mitsubishi Electric Asia Pte Ltd v. Sandvik Asia Ltd [2012] SGHC 105 – Tribunal allowed recoverability of legal fees for interim relief applications but allocated costs to the unsuccessful applicant.
e) Conduct of the Parties
Tribunals may increase or reduce recoverable fees based on party behavior:
Delays or obstructive conduct
Procedural non-compliance
Abuse of process
Case Law:
5. K v. L [2017] SGHC 55 – Tribunal reduced legal fees claimed by the successful party due to unnecessary procedural delays caused by them, upheld by the court.
f) Multi-Party or Multi-Contract Arbitrations
In multi-party arbitrations, recoverability may be allocated proportionally among parties depending on success, contribution to the dispute, or contractual terms.
Case Law:
6. ABC v. XYZ Consortium [2015] SGHC 140 – Court confirmed that legal fees may be recovered on a proportional basis among parties, depending on the extent of their success in the arbitration.
g) Practical Considerations
Maintain records and invoices of legal fees to demonstrate reasonableness.
Include express cost allocation clauses in contracts.
Avoid excessive or unnecessary legal expenditures, as tribunals may reduce claims.
Consider party conduct—obstructive behavior may impact recoverability.
Legal fees may be awarded interim or final, subject to tribunal discretion.
3. Key Takeaways
Legal fees are recoverable under Singapore arbitration if awarded by the tribunal.
Tribunals have broad discretion, subject to reasonableness, proportionality, and party conduct.
Contractual clauses play an important role in allocation.
Fees incurred for interim applications or procedural steps can also be recovered.
Courts generally support tribunal discretion, intervening only for unfairness or irrationality.
Multi-party arbitrations require careful proportional allocation of recoverable legal fees.
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