Issue 13, 2010 - Maritime Arbitration – is the SMA on the way back?

One of the major long-standing criticisms of SMA arbitrations has been the issue of recoverability of costs. The successful party would generally not be able to recover its costs in an arbitration. There is however now a power within the SMA rules to award costs. This change occurred in 2003 when section 30 of the SMA rules was amended to provide the arbitrators with the power to award reasonable legal fees and other costs and expenses necessarily incurred in the conduct of the arbitration. This award can be made in whatever apportionment the arbitrators consider fair under the circumstances. Usually they would award somewhere between 60% and 80% of the prevailing party’s fees and costs and this would form part of the final award.