10 Jul Remuneration of Arbitrators [2002] 4 MLJ cliv

Introduction

The arbitrator’s remuneration are sums due to him in respect of his fees and expenses. Such remuneration is also known as the costs of the award which must be distinguished from the costs of the reference, ie, legal costs incurred by the parties. 1
The arbitrator’s expenses
The expenses of the arbitrator or umpire will include the reasonable disbursements of the arbitral tribunal with regard to the recording of evidence and the hiring of a suitable venue. Where the arbitrator is empowered to employ a person, eg, an expert, legal advisor or assessor to assist with the reference, the expenses paid to such person will be allowed as costs of the reference. 2
The court in Appleton v Norwich Union Fire Insurance Society Ltd 3 allowed an umpire’s fees to be included in a joint award. If the umpire participates prematurely in the proceedings before being entitled, he cannot claim any remuneration. The fees of a legal assessor sitting with the arbitrator without the consent of the parties will be disallowed. 4

Fixing remuneration

The arbitrator’s fees is an important consideration when parties are contemplating arbitrating a dispute. The parties may make an agreement on the remuneration of the arbitrator or umpire with him expressly in advance. In most cases, the amount to be paid to the arbitrators, or at least the machinery in establishing the amount are usually pre-agreed or settled at the first preliminary meeting between the parties and the arbitrators.

The arbitrator’s entitlement in contract

An arbitrator’s entitlement to payment of his fees and expenses is normally a matter of contractual arrangement between the arbitrator and the parties. In practice, arbitrators invariably send out proposed terms and conditions to the parties at the outset. The terms are then either accepted or negotiated at an early stage. If agreement cannot be reached, it is necessary for the parties to make another appointment.