Answer ... Swiss law does not provide rules on the estimation and allocation of costs of arbitration proceedings. The state courts in Switzerland follow the rule that ‘costs follow the event’, whereby the costs of litigation are borne by the unsuccessful party; one might expect an arbitral tribunal to allocate the costs of arbitration in the same way as the state courts.
According to Article 38 of the Swiss Rules of International Arbitration, the arbitral tribunal shall determine the costs of the arbitration proceeding, as well as their apportionment, in its award. In principle, arbitral tribunals apply the rule that costs follow the event (Article 40, paragraph 1 of the Swiss Rules). However, the arbitral tribunal may apportion the costs taking into account the circumstances of the case.
In domestic arbitration, as per Article 378 of the CPC, the arbitral tribunal may order the advancement of the presumed costs of the proceeding and make the progress of the proceeding conditional on the payment of this advance. Unless the parties have agreed otherwise, the arbitral tribunal will determine the amount to be paid by each party. If the costs and compensation fixed by the arbitral tribunal are obviously excessive, a domestic arbitral award may be contested (Article 393(f) of the CPC).
In addition, in both national and domestic arbitration, the arbitral tribunal may order a party to provide security for costs. Such orders for the provision of security for costs are considered to constitute interim measures as per Article 183, paragraph 1 of the PILA and Article 374, paragraph 1 of the CPC. In consequence thereof, such order for security of costs may also be issued by a state court (see question 33).
Answer ... Neither the PILA nor the CPC stipulates default rules regarding cost allocation in arbitration proceedings (see question 35). Thus, the parties can agree on this matter either directly or by referring to institutional rules.
In institutional arbitration under the Swiss Rules, arbitral tribunals are remunerated considering the amount in dispute, the complexity of the case, the time spent and any other relevant circumstances of the particular arbitration proceedings (Article 39, paragraph 1 of the Swiss Rules). With respect to the costs of legal representation and assistance, pursuant to Article 40, paragraph 2 of the Swiss Rules, the arbitral tribunal is free to determine which party shall bear such costs, taking into account the circumstances of the case.