Who pays for arbitration?
It is paid for by the parties, who bear the arbitrators' fees and, if the arbitration is organised by an institution, what that institution charges for administering it. Usually each party pays half in advance and the arbitral award (“laudo”), which is the arbitrator's decision, states who ultimately bears the whole cost, according to what has been agreed. If one party does not pay its advance, the other can pay it so that the arbitration can continue, because, if nobody does, the arbitrators can suspend or terminate it. In addition, each party pays its own lawyer and experts, although the award can order the other party to bear those expenses. The consumer arbitration procedure, on the other hand, is free of charge.
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What has to be paid for
Arbitration involves these costs:
- The arbitrators' fees. There is no official scale, so they depend on what is agreed or on the institution's rules. They usually rise with the amount at stake.
- What the arbitral institution charges for organising the arbitration, if it was agreed that an institution would administer it. Each institution publishes its fees.
- The fees of each party's lawyer and experts, if it has them.
- Other expenses of the procedure, such as translations or the room where the hearings are held.
As there is no official price, it is advisable to ask for an estimate before signing the clause or, at the latest, when the arbitration begins.
Who pays in advance
Unless otherwise agreed, the arbitrators can ask the parties for a payment on account (“provisión de fondos”), which is an advance to cover their fees and the costs of administering the arbitration. Institutions usually split it equally between the party bringing the claim and the party against whom it is brought.
If one party does not pay its share, the arbitrators let the other party know in case it wishes to pay it instead. If nobody pays it, they can suspend or terminate the arbitration. That is why the party that requested the arbitration sometimes also advances the other side's share so that it can go ahead and then asks for it to be repaid in the award.
Who pays in the end
The award decides on the costs of the arbitration, which include the arbitrators' fees and expenses, what the institution charges, the lawyers' fees and the other expenses of the procedure. The arbitrators decide this according to what the parties have agreed, in the clause or in the rules of the institution they chose. They can order the losing party to pay everything or divide the costs, for example if each party wins only in part.
In consumer arbitration, which resolves disputes between consumers and businesses, the procedure is free of charge for both parties. Within the procedure, only the evidence has to be paid for, such as an expert report, which is paid for by whoever requests it, or by both parties in equal shares if they request it jointly. If either party decides to use a lawyer, it will also have to pay the lawyer's fees.
This answer is provided for educational purposes and offers initial guidance on the question raised. Every matter has its own circumstances and nuances that require individual assessment. For that reason, before taking decisions with significant consequences, it is advisable to consult a professional and not to rely solely on this information. Personalised advice makes it possible to apply these explanations to the specific case and to assess the options available with greater certainty.