Procedural Posture

This document is a Second Partial Award in Relation to Costs, issued by a Sole Arbitrator following a First Partial Award dated 14 April 2023 and a subsequent Addendum dated 31 May 2023. In the prior decisions, the Tribunal found in favor of the Claimant on liability and determined that the Claimant was entitled to recover the costs of the arbitration, reserving the quantification of those costs for a subsequent phase.

Parties' Positions on Costs

The Claimant submitted an application seeking £80,420.44 for the reasonable costs of pursuing its claim, alongside the costs of the assessment application and interest. The Respondent objected to the quantum, arguing that the proceedings lacked complexity and that the costs claimed were manifestly excessive. Specifically, the Respondent challenged the time expended on a witness statement, the involvement of a senior equity partner, alleged duplication of work among multiple fee earners, and the necessity of counsel and database fees. Furthermore, the Respondent contended that the Claimant failed to realize economies of scale despite running parallel claims against the Respondent.

In response, the Claimant maintained that the Respondent’s refusal to make admissions necessitated strict proof of every element of the claim, thereby justifying the costs incurred. The Claimant defended the strategic involvement of senior personnel, particularly concerning initial advice on the withdrawal of the vessel from service under the charterparty, and clarified that the database charges were proportionate to the documentary record.

Tribunal's Analysis and Reasoning

The Sole Arbitrator largely rejected the Respondent’s criticisms, emphasizing that a respondent cannot compel a claimant to strictly prove its case without bearing the consequential financial burden of that strategic choice. The Tribunal affirmed the Claimant’s entitlement to instruct senior partners and counsel, particularly given the initial uncertainty regarding the Respondent's defensive posture. The Tribunal also approved the limited database fees incurred.

However, the Tribunal exercised its discretion to apply targeted reductions. Acknowledging the high degree of partner involvement in drafting the witness statement and the inevitable inefficiencies arising from the utilization of multiple associates and trainees over a protracted period, the Tribunal determined that a modest discount was warranted on an inter partes basis. Additionally, the Tribunal recognized that while parallel arbitrations do not automatically generate time savings, the overlap justified a slight further reduction to ensure the final award remained strictly reasonable.

Dispositive Directions

The Tribunal ordered the Respondent to pay the Claimant £68,920.44 in respect of the legal costs of the arbitration reference, alongside £2,456.00 for the costs of the assessment process. Furthermore, the Tribunal awarded post-award interest on these sums at a rate of 5% per annum, compounded quarterly, running from the date of the Award until full payment.