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Avocats, autres représentants, expert(s), secrétaire du tribunal

Final Award on Costs

Whereas by contracts numbered 1030. and 1035 the Claimant agreed to sell to the Respondent quantities of Indian Parboiled Rice FOB stowed and trimmed Kakinada.
The Respondent having failed to procure the opening of a letter of credit or to nominate a carrying vessel to lift the cargo in accordance with the terms of the contracts, the Claimant requested arbitration of their claim for breach of the two contracts in reliance on clause 17 of both contracts, which provided as follows:


(i) All disputes arising out of or in connection with this Agreement including the question regarding its existence, validity or termination) shall be referred to and finally settled by arbitration venue at London, United kingdom and in accordance with the Rules of the London Court of International Arbitration in effect on the date of invocation of this clause and which Rules are deemed to be incorporated by reference Into this clause. The Arbitration shall be conducted In English language by Arbitral Tribunal consisting of three arbitrators, one to be appointed by each party and third to be appointed by President of London Court of International Arbitration. Any decision or award shall be final and binding on both the Buyer and the Seller. Arbitration Tribunal shall state in its award the facts of the case and the reasons for its decision. The parties shall comply in good faith with the decision.

(ii) All costs of arbitration, Including without limitation, witness fees, legal fees and expenses shall always be borne by the parties incurring such costs. The costs of the arbitrators shall be borne equally by the parties unless awarded by the decision of the arbitrators."

On 26 June 2009, the LCIA Court appointed, as the Arbitral Tribunal In relation to the disputes under both contracts, Mr Bruce Harris, Mr Michael Lee and Sir Anthony Colman as third and presiding arbitrator. On 20 January 2011, the tribunal ordered that the references in respect of both contracts — References 91309 and 91310 — shall be consolidated.
The Claimant's and Respondent's solicitors having advised the LCIA that the parties had agreed that both References should proceed as sole arbitrators in place of the Tribunal already appointed, and Mr Harris and Mr Lee having tendered their resignation, on 21 January 2011, pursuant to Article 10.1 of the LCIA Rules, the LCIA formally revoked the appointment of Mr Harris, Mr Lee and Sir Anthony Colman and, pursuant to Articles 5.5 and 10.1 of the LCIA Rules, the LCIA appointed Sir Anthony Colman as sole arbitrator.
Sir Anthony Colman, having entered on the reference proceeded to determine the issues under the consolidated References on documents alone under Article 19 of the LCIA Rules, since neither party requested an oral hearing.
By two Awards dated 25 July 2011 and duly made by Sir Anthony Colman, it was determined that the Claimant's claim under both References succeeded, that the Respondent was liable to pay damages to the Claimant and that

"The Respondent shall bear all reasonable and properly incurred legal and other costs of the Claimant, to be determined by the Tribunal if not agreed between the parties".

The parties were unable to agree on the amount of the reasonable and properly incurred legal and other costs of the Claimant.
The assessment of such costs having therefore been referred to the Tribunal by operation of the Awards dated 25 July 2011, the Tribunal proceeded to determine such assessments on documents alone, neither party having requested an oral hearing.
NOW the Tribunal for the Reasons attached to and forming part of this Award in accordance with Article 26 of the LCIA Rules AWARDS AS FOLLOWS

(1) The Respondent must pay the Claimant's legal costs in an amount of GBP 77,961.60.

(2) The Respondent must pay to the Claimant simple interest on such costs from 3 April 2012 until compliance with this Award at 3.5 per cent per annum.

(3) The amount of Interest due under paragraph (2) of this Award up to the date of this Award which must now be paid by the Respondent to the Claimant Is £485.92.

(4) The costs of the arbitration as between the Tribunal’s Final Awards, dated 25 July 2011 and this Award, being the Tribunal's Final Award on Cost (other than the legal or other costs incurred by the parties themselves), have been determined by the LCIA Court, pursuant to Article 28.1 of the LCIA Rules to be as follows:

LCIA's administrative charges:£1,584.62
Tribunal's fees:£2,450.00
Total relevant costs£4,034.62

(5) Of this amount, the Claimant has lodged a deposit amounting to £2,017.31, including interest accrued. The Respondent has lodged a deposit amounting to £2,017.31, including interest accrued. Total funds lodged by the parties amount, therefore, to £4,034.62, which has been applied to the costs of the arbitration. The balance of the costs of the arbitration borne by the Claimant through the deposits that it has paid, and amounting to £2,017.31 shall be paid by the Respondent to the Claimant.


On 17 February 2012, the Claimant's solicitor, Mr Kamal Mukhi, of Hill Dickinson LLP, sent to the Tribunal and the Respondent's solicitor, Holman Fenwick & Willan LLP ("HFW") the Claimant’s bill of costs In respect of the arbitration. That totalled GPB 78,646.16. On 23 March 2012, Mr Mukhi made an additional claim for the costs of preparing the costs assessment. That claim totalled GBP 2755.00. It had already been included In the Claimant’s bill of costs previously served. The Claimant further claims the amount of such further sums by way of costs of this costs reference and any deposit as they may be ordered to pay to the LCIA.
The Respondent, by HFW's email of 14 March 2012, disputed a number of aspects of the Claimant's bill of costs.
it is submitted by the Respondent that Mr Mukhi, as a senior fee earner in Hill Dickinson, ought to have delegated "a large number of the administrative tasks" conducted by him and charged for at his charging rate to a fee earner of less than half his rate of GBP 200 per hour.
It is further said that the time spent preparing the 6 bundles of documents required for the reference, namely 33 hours, was excessive.
The Respondent further argues that the costs of preparing amendments to the Points of Claim introduced by the Claimant to reflect their own witness's statement should be borne by the Claimant.
it is further said that the costs of preparing the bills of costs at GPB 2,755 Is extremely excessive and ought to be borne by the Claimant.
Further, photocopying charges which are solicitor's own client charges should not be recoverable.
The Respondent submits that "on the basis of the above" the Claimant should not recover more than 65 per cent of the bill of costs.
in the Claimant's response to these criticisms, which is set out in an email from Hill Dickinson dated 22 March 2012, Mr Mukhi states that although he personally conducted the whole arbitration and its preparation and that he is a senior associate, the charging rate that has been used in the bill of costs (GBP 200 per hour) is no more than would be charged for a newly qualified solicitor and that this rate has been applied to both the administrative work as well as to the presentational and analytical work, thus giving rise to an overall rate which is fair and not excessive. Further, It was more cost-effective for one person to do all the necessary work rather than for a more senior solicitor to delegate chunks of it to very junior staff who would have to be instructed on and assimilate the matters in issue before they could actually do the required work and then have the work checked for accuracy.
The Claimant submits that the Respondent Is wrong to assert that 33 hours was spent in preparing bundles. The work was carried out between 14 and 22 March 2011, over a period of 17.5 hours which included work in preparing the skeleton argument. This was not excessive given the complexity and number of invoices and spreadsheet.
The incidence of costs of the Claimant's amendment had already been determined in the Final Award and could not be re-opened on an assessment reference.
The preparation of the bill of costs occupied 19 hours and the Respondent had not challenged the charging rate. The total of GBP 1,750 was therefore entirely reasonable.
As to the photocopying costs of GBP 1,369, these were entirely reasonable. Such costs were normally allowed if there was substantial necessary copying as in this case.
The Respondent had not shown how a percentage of 65 per cent of the total costs could be correct, if all their objections were accepted, they only amounted to 14 per cent of the total, not 35 per cent.

As to the Respondent's objection referred to in paragraph 3 above, although the use of a relatively low charging rate for all time spent by one experienced and senior fee earner in carrying out all necessary work, even that which could appropriately be delegated to a paralegal or trainee, is unusual, It is not wrong in principle provided that the overall result represents a reasonable aggregate cost for the work covered.

In the present case, Mr Mukhi's charging rate (GBP 200 per hour, has been substantially less than he would have been entitled to charge as a senior fee earner (In the region of GPB 300). Although, the rate greatly exceeded that for a paralegal or trainee (say GBP 150), the overall aggregate would not be greatly different from that actually billed, if such lower paid fee earners had been employed. The Respondent's argument on this point is therefore rejected.
The period of time spent on bundle preparation is not shown to have exceeded 17.5 hours, which Is not excessive.
As to the costs of Claimant's amendment, the Respondent's argument goes not to the assessment of costs of the Claimant but to the incidence of costs between the parties. That is not a matter which is open to them. The Final Award has already determined all matters of the incidence of costs. This argument is therefore rejected.
it is not established that the time taken to prepare the bill of costs was excessive.
The total photocopying costs (GBP 1,369) are not substantial for a commercial arbitration. A fair assessment in relation to such costs would be that the Claimant should be entitled to 50 per cent.
There is no discernible basis for awarding to the Claimant only 65 per cent of their bill of costs. Apart from the costs of photocopying, all their claimed costs were reasonably incurred.
By this reference the Claimant's reasonable costs are therefore assessed as GBP 78,646.16 less 50 per cent of GPB 1,369, that is GPB 77,961.60.
The Claimant is entitled to Interest on the total amount found to be due in respect of costs. The commencement date for such interest should be six weeks after receipt of the bill of costs, which Is 3 April 2012, the latest date on which the Respondent would have been expected to pay. The rate of interest should be the London rate of 3.5 per cent per annum, it is not appropriate to compute interest on a compound basis. The total amount of interest accrued up to the date of this Award is £485.92.
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