This paper deals with the question whether there are limits to the competence of arbitral tribunals to decide on the arbitrators’ fees. The paper begins with an outline of the principle, that no one shall be judged in his own affairs in order to demonstrate the problematic nature of the issue. The examination of the scope of competence and its limits will follow the two phases during which its relevance becomes apparent: First, the tribunal’s right to remuneration and the scope of its competence to determine such at the stage of the arbitral proceeding. Second, restrictions and limits set by national courts during recognition and enforcement of the award will be addressed. The recent landmark decision by the German Federal Supreme Court shall be evaluated also in light of international case law.
A judge or arbitrator would automatically be disqualified from hearing a case in which he or she has a financial or non-pecuniary interest. Statements like this can be found in almost every paper addressing the requirements of an impartial arbitral tribunal or court. If an arbitrator has a financial interest in the victory of a party of the proceeding, it is undisputed that he or she is not capable to decide over the dispute.
This gives rise to the question, why courts and legal scholars are hesitant to apply this principle of impartiality to the arbitrators’ competence to decide upon its own fees and costs. Certainly, the issue has its own characteristics such as the parties’ voluntary submission to arbitration and the special contractual relationship between parties and arbitrators.
But how shall the centuries-old principle of nemo iudex in causa sua apply, when an arbitral tribunal decides upon the arbitrators’ fee? Under this doctrine no one may act as judge in his own affairs. It is a key rule of natural justice and an essential part of the right to a fair trial as set forth in Art. 6 (1) of the European Convention on Human Rights. It is this paper’s objective to analyse and discuss the limits of the arbitral tribunal’s competence to judge on its own remuneration.
Table of Contents
I. The Fee Determination as a Decision in Own Affairs
A. Limits to Party Autonomy
B. Classification of the Problem - Basic Constellation of Nemo Iudex In Causa Sua
C. Conclusion
II. Competence Arising in the Phase of the Arbitral Proceeding
A. Legal Basis for Right to Remuneration - Receptum Arbitri
B. Institutional Arbitration Proceedings
1. Ad-Valorem Method
2. Time-Based Remuneration Method
3. Conclusion
C. Ad-Hoc Arbitration Proceedings
1. Agreement between Parties and Tribunal
2. Fees Fixed with the Issuance of the Award
(a) Competence under the UNCITRAL Arbitration Rules
(i) Changes to the Determination of Costs in 2010
(ii) Evaluation
(b) Competence through Virtue of National Law
D. Conclusion
III. Limits at the Stage of Enforcement and Recognition
A. German Case Law on the Tribunal’s Competence
1. Status Quo Prior to the BGH Order
(a) Importance of an Advance on Costs
(b) Determination of Value in Dispute
2. BGH Decision, 2 March 2017
(a) Facts of the case
(b) Analysis of the Decision
(i) Violation of Respondent’s Right to Be Heard
(ii) Conflict with previous BGH Jurisprudence
(iii) Evaluation of the Order’s Consequences
3. Conclusion
B. International Jurisdiction
1. Parties’ Implied Consent through Choice of Procedural Law
(a) Advantages
(b) Disadvantages
2. Possibility of Review by State Courts
(a) Advantages
(b) Disadvantages
3. Validity of Fee Determination, Though Without Res Judicata Effect
(a) Disadvantages
(b) Advantages
4. Conclusion
C. International Reception of the BGH-Order
IV. Summary
V. Concluding Remarks
Research Objective and Core Topics
This paper examines the extent to which arbitral tribunals possess the competence to determine their own fees and costs, specifically evaluating the applicability of the principle "nemo iudex in causa sua" (no one may act as judge in his own affairs). The study explores the legal constraints placed upon tribunals by national courts and international arbitration standards, with a focal point on recent German case law.
- The intersection of party autonomy and the prohibition of self-judging in arbitration.
- Distinction between institutional and ad-hoc arbitration fee determination methods.
- Analysis of the German Federal Supreme Court (BGH) decision from 2017.
- Comparative perspectives on judicial review and international jurisdictional approaches.
Excerpt from the Book
A. Limits to Party Autonomy
If the competence to fix the amount of fees falls within the power of the tribunal, this is most certainly due to procedural rules the parties did or could have agreed upon. With party autonomy being a fundamental principle of arbitration proceedings, the question arises, why the tribunal’s competence should be limited when the parties did not limit it themselves. On the other hand, allowing the tribunal to fix its fees would amount to a party’s waiver of the right to an impartial arbitrator. This right is a fundamental pillar of natural justice and concerns the essential part of a fair trial. An arbitral award lacking impartiality of an arbitrator can set grounds for an annulment under the NYC and might violate public policy of national legal systems. In light of the above, a violation of the principle that no one shall judge in his own affairs, cannot be justified simply by the fact that the parties have not limited the tribunal’s competence with regards to the arbitrators’ fee.
Summary of Chapters
I. The Fee Determination as a Decision in Own Affairs: Introduces the core conflict between party autonomy and the "nemo iudex in causa sua" principle regarding fee determination.
II. Competence Arising in the Phase of the Arbitral Proceeding: Analyzes how institutional and ad-hoc rules influence the tribunal's authority to set its own remuneration.
III. Limits at the Stage of Enforcement and Recognition: Examines the legal limitations imposed by national courts, specifically focusing on the German BGH jurisprudence.
IV. Summary: Recaps the objective of balancing procedural efficiency with the fundamental requirement of impartial adjudication.
V. Concluding Remarks: Provides a final perspective on the necessity of extending guidelines like the IBA to ensure legitimacy in long-term arbitral proceedings.
Keywords
Arbitration, Arbitral Tribunal, Fee Determination, Nemo Iudex In Causa Sua, Party Autonomy, Remuneration, Impartiality, BGH, Enforcement, UNCITRAL, Institutional Arbitration, Ad-Hoc Arbitration, Procedural Law, Legal Competence, Public Policy
Frequently Asked Questions
What is the core problem addressed in this work?
The work addresses the inherent conflict of interest when arbitral tribunals act as both the deciding body of a dispute and the entity determining their own fees and costs.
What are the primary thematic areas covered?
The themes include the limits of party autonomy, the classification of fee determination as a self-interested act, institutional versus ad-hoc fee settings, and the enforceability of such decisions by national courts.
What is the central research question?
The research asks to what extent arbitral tribunals are legally permitted to determine their own remuneration without violating the fundamental principles of natural justice and the doctrine of "nemo iudex in causa sua."
Which scientific methodology is employed?
The paper uses a legal-analytical approach, focusing on the evaluation of case law (primarily German BGH decisions) and the comparison of international arbitration rules and jurisdictional standards.
What topics are analyzed in the main body?
The main body examines the legal basis of the "receptum arbitri," various calculation methods (ad-valorem vs. time-based), and the evolution of court scrutiny regarding fee determination in the enforcement stage.
Which keywords best describe this research?
Key terms include Arbitration, Arbitral Tribunal, Fee Determination, Nemo Iudex In Causa Sua, Party Autonomy, Impartiality, and BGH.
How did the 2010 revision of the UNCITRAL Rules impact fee determination?
The 2010 revision granted the appointing authority more power to intervene in fee disputes, moving away from the previous, more discretionary authoritative power held by the tribunal itself.
Why is the 2017 BGH decision considered a landmark case?
The 2017 BGH decision established clear limits on the tribunal’s competence, ruling that arbitral tribunals generally cannot bind parties with an authoritative fee decision unless the amount is undisputed or pre-paid.
Does the author suggest that an independent authority should always decide fees?
The author concludes that while involving an independent authority adds complexity, it helps resolve the potential bias in fee determination and strengthens the long-term legitimacy of arbitral proceedings.
- Arbeit zitieren
- Nathaniel Kellerer (Autor:in), 2017, Competence of Arbitral Tribunals. Are there Limits to Decide on the Arbitrators' Fees?, München, GRIN Verlag, https://www.grin.com/document/974004
