ARTICLE
21 January 2025

LCIA Updates Costs And Duration Analysis

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A&O Shearman

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The LCIA's 2024 analysis reveals stable costs and durations for arbitrations since 2017, with slight increases due to COVID-19. The LCIA's cost model remains competitive, especially for high-value cases, outperforming other leading institutions in cost efficiency.
United Kingdom Litigation, Mediation & Arbitration

The London Court of International Arbitration (LCIA) published a third analysis of the costs and duration of LCIA arbitrations on December 30, 2024. This iteration of the analysis has been long awaited, as it covers cases resulting in a final award over a seven-year period between January 1, 2017 and May 12, 2024 (in contrast with three-year periods for the first and second iterations). Presumably, the COVID-19 pandemic was the cause for the wait. Empirical data is notoriously scarce in arbitration, so this analysis will no doubt be picked over. Below, we note some key points.

Costs and Durations since Previous Analysis

On a median basis, LCIA tribunal and institutional costs seem to have remained essentially static in real terms compared with the previous period of analysis between 2013 and 2016. The same is probably true of the duration of LCIA cases if the impact of COVID-19 is excluded. Page 11 of the report has an interesting analysis showing how cases which were underway when COVID-19 struck took longer to be concluded. This must be an important reason for the slight increase in the mediation duration of an LCIA case to 20 months since the 2013 - 2016 period.

However, the limits of the median value should be understood, because the analysis shows that both costs and durations are sensitive to the amount in dispute. Unsurprisingly, higher value cases take longer and cost more.

Moreover, costs and durations have gone up since the COVID-19 pandemic. This seems to be partly because claim values have gone up, but this may not be the only cause. If LCIA arbitrations are getting longer and more expensive, all other things being equal, this would supports the relevance of another LCIA initiative: the GAR-LCIA recommendations (also published in December 2024), which made various proposals for reinforcing the efficiency of international arbitrations.

One particular focus in discussions about the duration of international arbitrations has been the time that it takes for tribunals to produce their awards. The target in Article 15.10 of the LCIA Rules is for an award to be rendered within 3 months of the final submission. The LCIA's analysis shows that this target is reasonably effective, but perhaps could be more so; about half of all LCIA cases had awards rendered within a 4-month period.

Comparison to Other Leading Institutions

In our experience, the cost of an international arbitration is a key factor for users in distinguishing between different arbitral institutions. Presumably, therefore, the LCIA is most proud of the part of its analysis which suggests that, if the LCIA's 2017 - 2024 caseload had been administered by other leading institutions (the ICC, SIAC, HKIAC, and SCC), tribunal costs would have been higher in all cases. Institutional costs would have been higher at the ICC and SCC and about the same, but slightly lower, at the HKIAC and SIAC.

The competitiveness of the LCIA becomes more pronounced as the amount in dispute increases. It is often said that the LCIA's "hourly charges" model is cheaper for higher value cases than the model mainly followed by other institutions (i.e. where fees are based on the value in dispute). The LCIA's analysis supports the proposition.

Nevertheless, as the LCIA notes, its analysis is subject to a number of assumptions; whether we can expect to hear anything from the other institutions in response remains to be seen.

Report: LCIA Releases Updated Costs and Duration Analysis 2024

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