Alternative Dispute Resolution in Kenya: Remuneration of the arbitrator

The fees of arbitration should be proportionate to the substance of the case.

The parties, tribunals or institutions should look for and encourage the use of fee structures that encourage speed and efficiency.

THE EXPRESS CONTRACT FOR REMUNERATION

It is highly desirable in an ad hoc arbitration that an arbitrator who regards remuneration as important should make an express agreement in writing with the parties as to his remuneration.  Ideally, this should be done before he accepts the appointment.  But in many cases he knows very little about either the sums in issue or the magnitude of the task involved.  So in practice he often accepts the appointment and leaves the subject of fees to be dealt with at or shortly after the preliminary meeting.  In doing so, he takes a risk.  Having accepted the appointment he is not entitled to insist on specific arrangements and can only ask for them.  If one of the parties is difficult, then his only option is to go on without more or to resign forthwith.  Of course in that event, he may have to repay any fees that he has managed to secure.

In many cases, the fee or basis of remuneration is expressly agreed before or immediately upon appointment so that the question of what right of remuneration is implied does not arise. Many arbitrators now include for interim payments in their terms, which is likely to bring unhappiness on the part of the parties about the costs of the tribunal to the surface at an early stage.

PAYMENT THROUGH AN INSTITUTION

In arbitrations administered by some institutions, the tribunal’s fees are channelled through the institution, thus to a considerable degree insulating the tribunal from the concerns of the parties about the tribunal costs.  And the institutions are usually safe from much in the way of complaint, since they will have established some basis for paying the tribunal in advance.

THE LIEN

The practice of requiring payment before issue of the award may reduce the enthusiasm of a party for a dispute about fees, which are anyway likely to be one of the smaller bills that the arbitration will generate.  While there is a mechanism for dealing with this problem, it involves a trip to court and thus yet further fees.

The 1996 Act has now addressed Under S. 28, the express contractual position (which is the most usual arrangement) is preserved.  Absent of an agreement, the parties are jointly and severally liable for “such reasonable fees and expenses (if any) as are appropriate in the circumstances.  The concept of such reasonable fees and expenses as are appropriate in the circumstances is picked up when it comes to payment of the costs of the arbitration.  Section 64 defines the costs(for purposes of payment as between the parties) as including only such reasonable fees and expenses of the arbitrators as are appropriate in the circumstances.  Thus what the arbitrators can recover from the parties, in a situation where there was no express agreement between the parties and the arbitrators, should match exactly what is recoverable between the parties when the final word on costs is known.

Where there is an agreement between the arbitrators and the parties, the inevitability of a match is lost.  If the difference proves to be substantial, with the contractual rates at the high end, an arbitrator may find difficulty in obtaining payment, if he has not been paid in advance.

Section 32 (5) there is power on the part of the tribunal to order as to who becomes responsible for costs.