TFL Vsebine / Revija Slovenska arbitražna praksa

The article provides an in-depth analysis of the recent decisions made in the Essar v Norscot case, in which the arbitrator decided to order a non-funded party to recover the third party funder’s uplift in its entirety. The follow-up discussion focused on the question of whether the arbitrator had a power to do so in the first place and was the funder’s uplift properly characterized as costs under applicable rules. This article follows this discussion and it embeds it within the international arbitration theory and practice to establish whether there are any novelties that are brought to the table by the Essar v Norscot decisions when it comes to the recoverability of outcome-based fees in international arbitration. The article, besides addressing the arbitrator’s mandate to decide on outcome-based fees and their characterization as costs, develops the discussion further and addresses the application of indemnity basis under the prevailing transnational standard of allocation in international arbitration. Finally, the last part of the article takes a step further from the Essar v Norscot case by posing a question of whether in the next similar case outcome-based fees can be recovered, if not as costs, then as damages under national substantive law.