Does the unsuccessful party have to pay the successful party’s costs in English Law?
Allocation of costs
Arbitrators may (but are not obligated to) make an award allocating arbitration costs between the parties, subject to any agreement between them (Article 61(1), Act Referee). To be valid, any agreement between the parties must be concluded after a dispute arises (Article 60, Arbitration Law). "Arbitration costs" include the fees and expenses of the arbitrators, the fees and expenses of any relevant arbitration institution, and the costs (including court fees) of the parties (Article 59, Arbitration Law).
Costs are “subject to the facts”, which means that the costs will go to the unsuccessful party unless:
- The parties agree otherwise.
- The Court ruled that this was not appropriate in the cases (Article 61 (2), Arbitration Law).
Calculation of costs; How does a tribunal usually calculate costs and what factors should it take into account?
Any agreement or award extends only to “recoverable costs” (Article 62, Arbitration Law). The parties may agree on recoverable arbitration costs (Article 63 (1), Arbitration Law). Failing agreement, the arbitrator may decide the question. In these cases, the arbitrator must specify the basis on which he is acting and specify the elements of recoverable costs and the amounts accessible for each (Article 63 (3), Arbitration Law). In principle, the costs of third-party funding (including success and improvement costs) are “recoverable costs” in arbitration (Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd  EWHC 2361 (Comm )). Fees and expenses of arbitrators are also recoverable to the extent reasonable (Section 64 (1), Arbitration Act).
If the arbitrator refuses to determine what costs are recoverable, any party to the arbitration may apply to the tribunal for an award (Section 63 (4), Arbitration Act).
Factors to Consider
In deciding questions of costs, arbitrators often take into account many factors, for example, whether a party is successful in whole or in part and whether the conduct of a party is unreasonable or not. If the court decides to deviate from the general rule of distribution, it must state the reasons (Lewis v Haverfordwest District Council  1 WLR 1486).
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