The rise in court fees this week has removed one of the standard objections to arbitration – that it costs more than litigation – and is likely to drive the take-up of this form of ADR, a City lawyer has argued.
While claimants face paying 5% of the value of their claim as a court fee, up to a cap of £10,000, the registration fee payable to the London Court of International Arbitration for starting an arbitration is £1,750, said Eleni Polycarpou, head of arbitration at Withers.
“Of course, there are other costs associated with arbitrations, most notably the fact that arbitrators charge an hourly rate whereas judges do not. Even so, the new issue fee is a heavy burden to bear so early in the proceedings, in circumstances where only around 3% of claims issued get to trial.”
She said the rush to issue claims last week indicated that parties regarded the new fees as a significant outlay.
“Of course, that in itself may cause problems to come: although the benefit of taking advantage of the reduced issuing fees is obvious, there is a danger that, by hastily issuing in such circumstances, solicitors may find themselves liable to costs orders against them where savvy defendants successfully seek an order for strike-out due to the premature issuing of a claim form.
“In the alternative, ill-informed clients unaware of the excessive increase may also seek to bring claims for negligence against their solicitors for not issuing their claim prior to the increase in the issue fee.
“Either way, it will drive potential litigants away from the traditional route of court proceedings and lead them to look to alternative means by which to resolve their disputes,” Ms Polycarpou said.