Arbitrator fees and advance on costs: reviewing an unreasonable request

A high or unclear request for arbitrator fees and an advance on costs should be reviewed immediately against its calculation basis in VIAC arbitration. Article 42 of the Vienna Rules separates administrative fees, arbitrator fees and prospective expenses. The advance is also fixed separately for claims and counterclaims. A figure that exceeds an initial expectation therefore does not by itself prove that the request is improper.

A well-founded objection must consider the amount in dispute, individual claims, the composition of the tribunal, the procedural stage and additional procedural steps together. Article 44 generally links administrative fees and arbitrator fees to the amount in dispute and the schedule of fees. A three-member tribunal is calculated differently from a sole arbitrator.

This article explains which documents clarify the request, when an additional advance may be justified and how an objection can be structured. Interim funding of the arbitration remains separate from the later costs decision under section 609 ZPO and Article 38 of the Vienna Rules.

What the VIAC advance on costs covers

Under Article 42 paragraph 1 of the Vienna Rules, the Secretary General fixes the advance for VIAC’s prospective administrative fees, prospective arbitrator fees and prospective expenses, including any applicable value added tax. Claims and counterclaims are considered separately.

Article 44 paragraph 1 describes the procedural costs in more detail. They include administrative fees, arbitrator fees and reasonable expenses such as travel and subsistence, communication costs or court reporter fees. Party costs and other arbitration-related expenses are separate categories. A request may therefore contain several items, but each item must relate to the particular arbitration.

The review of whether an amount appears reasonable begins with its breakdown. A general challenge to the total does not show which item, claim or calculation value is said to be wrong.

Which calculation factors should be reviewed

Article 44 paragraph 2 generally links administrative fees and arbitrator fees to the amount in dispute and the schedule of fees in Annex 3. The first step is therefore to record the amount used for each individual claim. Under paragraph 3, the Secretary General may depart from the parties’ valuation where only a partial claim is made or a claim is clearly undervalued.

The fees may increase where more than two parties are involved under Article 44 paragraph 4. Counterclaims are calculated separately under paragraph 5. A set-off claim may also be treated separately under paragraph 6 where it requires the tribunal to consider additional matters. A request to join a third party may lead to a separate advance under paragraph 7.

The composition of the tribunal is another calculation factor. The fees in Annex 3 apply to a sole arbitrator. Under Article 44 paragraph 8, the total fee for a panel is generally two and a half times the sole arbitrator rate. This does not establish that every request is correct, but it is an essential point of comparison.

When an additional advance may arise

The expected cost basis may change during the arbitration. Article 42 paragraph 12 applies the procedure for the original advance to an additional advance in principle. Until it is covered, the claims that caused the increase are generally not addressed. If payment is not made, the tribunal may suspend all or part of the proceedings or the Secretary General may terminate them for the affected claims.

Article 43 concerns additional procedural steps with cost implications. Examples include appointing experts, interpreters or translators, preparing a verbatim transcript, conducting a site visit or relocating a hearing. The tribunal informs the Secretary General of the need. The step may generally be taken only once its prospective costs are sufficiently covered.

An additional request should therefore be connected to the new procedural step. Review its reason, affected claims, expected costs, amounts already paid and whether earlier advances were credited. Article 42 paragraph 7 provides for crediting advances already paid against the newly determined share.

How to structure an objection to the request

A useful objection first identifies the request, its receipt and the payment period. It should then state the amount in dispute, affected claims, number of arbitrators and each challenged item. The requested response should be clear, such as an explanation, correction of the allocation or review of a changed claim basis.

If the amount in dispute was reduced, timing matters. Article 44 paragraph 10 takes a reduction into account for administrative and arbitrator fees only if it was made before transmission of the file to the tribunal. A later reduction therefore does not automatically revise every earlier calculation.

The objection should also address continuation of the arbitration. A party that withholds every payment even though part of the advance is clear and subject to a deadline may put the affected claims at risk. The article on the unpaid VIAC advance explains the consequences when a party does not pay its share.

Assess payment under reservation and funding

The Vienna Rules treat payment of the advance as an obligation of the parties. Under Article 42 paragraph 4, the advance is generally payable in equal shares within 30 days after receipt of the request. In multi-party proceedings, claimants and respondents generally pay the respective halves jointly unless the Secretary General decides otherwise.

If a party does not pay its share in full, Article 42 paragraph 9 requires the Secretary General to inform the other party or parties and request payment of the shortfall within 30 days. The defaulting party remains obliged to bear its share. Under paragraph 10, the paying party may request reimbursement if the tribunal finds that it has jurisdiction.

Payment under an express reservation can document a party’s position, but it does not replace review of the applicable rules and request. The reservation should distinguish funding of the pending arbitration from an objection to the amount or allocation.

Separate the advance from the final costs decision

The advance answers whether the arbitration is currently funded. The final costs decision comes later. Article 38 paragraphs 1 and 2 provide that, when the proceedings end, the tribunal sets out the arbitration costs and reasonable party costs and determines who bears them. Unless the parties agreed otherwise, it decides the allocation in its discretion.

Section 609 ZPO also concerns the decision on reimbursement of costs when the arbitration ends. The tribunal may consider the circumstances of the case and its outcome. Article 38 paragraph 2 also refers to the conduct of the parties and their representatives and their contribution to efficient and cost-effective proceedings.

Paying an advance is therefore neither an admission of final liability for costs nor a waiver of later reimbursement. Keep payment records, requests, objections and decisions for the later costs assessment. The page on preparing arbitration proceedings places the costs issue in the wider procedural context.

Documents needed for the review

Bring together the arbitration agreement, statement of claim, any counterclaim or set-off, the VIAC payment request and all attachments. Add arbitrator nomination or appointment notices, the current timetable and records of payments already made.

Prepare a clear calculation showing the amount in dispute for each claim, advance item, amount paid, additional request and affected procedural step. For translations, experts or other additional steps, describe the expected service separately. This shows whether the issue concerns the amount, allocation to a claim, tribunal composition or a new procedural measure.

The article on preparing a VIAC request also helps to organise the starting documents. If the tribunal composition affects the calculation, the guide to the sole arbitrator or three-member tribunal adds the relevant points.

Common questions about fees and the advance

Can I reject a high VIAC advance request?

An objection may be appropriate where the calculation basis, amount in dispute, allocation to claims or individual cost items cannot be followed. Review the complete request and challenge it specifically within the period set.

Why can an additional advance on costs be requested?

An additional advance may be needed where prospective costs increase or additional steps such as experts, interpreters or translators become necessary. Articles 42 paragraph 12 and 43 of the Vienna Rules provide the relevant procedures.

Does the advance decide the final allocation of costs?

No. The advance funds the pending arbitration. The tribunal later decides final responsibility for arbitration costs and reasonable party costs under the applicable agreement, section 609 ZPO and Article 38 of the Vienna Rules.

Next step

Contract, arbitration clause, correspondence and deadlines should be collected. It can then be assessed whether negotiation, preservation or arbitration is central.