Construction projects are inherently complex. They often bring together multiple parties, detailed contractual frameworks, and technically challenging issues that can lead to high-value disputes.[1] In the construction industry, arbitration is frequently chosen for its neutrality, flexibility, and enforceability across jurisdictions. However, the costs of construction arbitration can be substantial and at times unpredictable, occasionally rivaling or even exceeding those of court litigation.[2]
Understanding the structure, main cost drivers, and practical methods of cost control is essential for parties, counsel, and decision-makers aiming to resolve construction disputes efficiently and economically.
This note offers a practical overview of the costs involved in construction arbitration, drawing on recent institutional reports and real-world experience to explain how these costs can be effectively anticipated, managed, and contained.
What Makes Construction Arbitration Costly?
Construction arbitration is one of the most complex and resource-intensive forms of dispute resolution. Unlike ordinary commercial cases, construction disputes often concern the sequencing of works, delay events, variations, and allegations of defective performance. Tribunals must review extensive contemporaneous records such as meeting minutes, site logs, correspondence, project schedules, design drawings, and cost data to understand the technical and factual background of the dispute.
The ICC Commission’s 2019 Report on Construction Industry Arbitrations (the “ICC’s Report on Construction Arbitrations”) notes that construction cases are “frequently more complex (both factually and technically)” than other commercial arbitrations, can generate difficult points of law and procedure relating to specialised forms of contract, and typically involve many more documents to be examined and a greater number of factual and expert witnesses.[3]
This inherent complexity gives rise to demanding procedures and extensive evidentiary requirements. Construction arbitrations often rely on expert evidence across several technical disciplines, including delay analysis, quantum, and engineering, and involve broad document disclosure due to the large volume of project records. They typically require multiple rounds of submissions, witness statements, and expert reports, followed by lengthy hearings and, occasionally, site inspections. Each of these stages adds to the duration and cost of the proceedings. The efficiency of the process, therefore, depends heavily on how the arbitration is structured and managed from the outset, since overly detailed pleadings or poorly focused submissions can significantly increase both time and expense.
Structure of Costs in Construction Arbitration
The total cost of a construction arbitration usually comprises several key components:
- Legal fees (which typically constitute the largest share of the overall costs)
- Arbitral tribunal fees
- Institutional or administrative charges
- Expert fees
- Hearing and ancillary expenses
- Other costs (such as translations, travel, or document management)
In most institutional arbitrations, including those under the ICC, SIAC, or LCIA Rules, the successful party may recover all or part of its costs from the unsuccessful party. The arbitral tribunal has broad discretion in deciding how costs are allocated and will assess whether the amounts claimed are reasonable and proportionate to the dispute.
Compared with ad hoc proceedings, institutional arbitration generally offers greater predictability and financial transparency. This is because arbitrators’ fees and administrative expenses are determined according to published schedules, usually based on the amount in dispute. For example, the ICC’s advance-on-costs system requires parties to deposit funds early in the proceedings to cover expected tribunal and administrative fees.[4] This ensures that the arbitration can proceed without interruption and provides clarity over the financial commitments involved.
The main cost categories and their usual timing of payment are discussed below.
1. Legal Fees
Party costs, which include legal fees, are almost always the largest component of construction arbitration costs. A hard-fought construction arbitration can require more than 2,000 hours of work by a party’s legal team.
Construction disputes are particularly resource-intensive, often involving extensive documentary evidence, multiple interconnected contracts, and highly technical claims. Studies of both the ICC and SCC show that legal and expert costs together usually exceed all other cost categories combined.[5]
Aceris Law has extensive experience representing clients in construction disputes worldwide, including those arising under FIDIC-based contracts. Committed to transparency and predictability in costs, Aceris Law provides an online Arbitration Legal Fee Calculator based on the amount in dispute. The firm offers reasonable, capped legal fees for representation in international construction arbitrations, allowing clients to benefit from the highest-quality legal representation with clear and upfront cost expectations.
2. Arbitral Tribunal Fees
Tribunal fees are often the second-largest cost component.[6] These fees compensate arbitrators for their time, case preparation, and administrative effort, and are usually set according to institutional schedules, whether on an ad valorem or hourly basis.
Under the ICC Rules, for example, the ICC Court determines arbitrators’ fees within a prescribed scale based on the total amount in dispute. Other institutions adopt different approaches: the LCIA calculates fees by hourly rate, while the HKIAC applies a hybrid system.
In complex construction cases, tribunals often spend substantial time reviewing technical evidence, managing procedural conferences, and conducting lengthy hearings, all of which can increase overall costs. While three-member tribunals remain standard for major construction disputes, their cost implications are considerable. For lower-value or less complex cases, appointing a sole arbitrator can greatly enhance cost efficiency. Regardless of composition, arbitrators with strong case management skills and sufficient availability often contribute more to cost control than technical expertise alone.
3. Institutional and Administrative Expenses
Administrative charges, usually accounting for 2–5% of total costs, are payable to the arbitral institution for case management and support services.[7] Institutions such as the ICC, SIAC, SCC, and HKIAC each maintain published fee scales. These fees are typically included within the advance on costs and are apportioned equally between the parties at the outset.
4. Expert Fees
Expert costs are often the most unpredictable element of construction arbitration. They include the fees of party-appointed experts in disciplines such as delay analysis, quantum, and engineering, as well as tribunal-appointed experts when required. In large-scale disputes, these costs can rival or even exceed tribunal fees, particularly where multiple expert disciplines are engaged.
To manage these expenses, arbitral institutions and tribunals increasingly promote measures that improve coordination and reduce duplication. Common techniques include limiting the number of experts per discipline, encouraging early joint meetings and agreed instructions, and using concurrent testimony (“hot tubbing”) when appropriate.[8] The ICC’s Report on Construction Arbitrations specifically recommends early consultation between experts to agree on methodology and narrow the issues in dispute, an approach that has proven effective in reducing cost and improving efficiency.[9]
5. Hearing and Other Disbursements
Hearings are a key part of most construction arbitrations, and parties should also budget for hearing-related expenses. Although these costs usually make up only a small share of the overall arbitration expenses, they can vary depending on several factors, such as:
- Whether the hearing is conducted virtually (which is less expensive) or in person;
- The choice of venue and timing of the hearing;
- The length of the hearing;
- The number of participants, including tribunal members, counsel, experts, and witnesses;
- The cost of transcription and court reporting, which may include travel and accommodation;
- Translation or interpretation services;
- Catering and hospitality expenses; and
- Travel, accommodation, and data-hosting costs for parties and their representatives.
If proceedings are bifurcated, meaning they are divided into two or more phases, parties may incur the cost of multiple hearings, one for preliminary issues and another for the merits. In most cases, these expenses are shared equally between the parties at first, although the prevailing party may recover them in the final award.
The growing use of electronic filings, online hearings, and paperless bundles, a trend accelerated by the pandemic, has significantly reduced logistical and travel costs, particularly in international construction arbitrations, which are document-intensive and where participants are often spread across multiple jurisdictions.
6. Other Costs
Parties should also be aware that smaller, incidental costs can arise at various stages of the arbitration process.
For instance, most arbitrations include a document production phase, during which one party may request the other to produce specific documents relevant to the dispute. Fulfilling such requests can require reviewing and sorting through large volumes of material, which takes time and can generate additional expenses.
Similarly, tribunals sometimes ask that submissions be provided not only electronically but also in hard-copy form or on flash drives. In such cases, parties may incur extra costs for printing, equipment, and courier services to comply with these requirements.
If any documentary evidence or witness testimony is in a language different from that used in the arbitration, translation and interpretation costs should also be anticipated.
In short, parties should be prepared for unforeseen, smaller expenses that may arise throughout the arbitration process, even when the major costs have already been accounted for.
Timing and Payment
The timing of payments in construction arbitration depends largely on the institutional rules and the stage of the proceedings. Most institutions, including the ICC, SIAC, and LCIA, require parties to make initial payments before the case can proceed, followed by further disbursements as the arbitration develops. A well-managed cost structure allows parties to anticipate these payments and plan their budgets accordingly:
| Category | Timing of Payment |
| 1. Legal Fees | Payable according to the schedule agreed between the party and its lawyers, often monthly, although a retainer fee is usually due up-front. Each party pays its own costs unless and until the tribunal orders reimbursement in the final award. |
| 2. Tribunal Fees | Payable from the initial advance on costs/deposits, which may be followed by further advances as the case progresses. These fees are shared equally between the parties. |
| 3. Institutional and Administrative Charges | Paid at the outset as part of the advance on costs/deposits, managed directly by the institution to ensure smooth case administration. |
| 4. Expert Fees | Payable according to the schedule agreed between the party and the experts. |
| 5. Hearing and Ancillary Expenses | Generally payable at the time of the hearing. |
| 6. Other Costs | Payable as they arise. |
Effective Case Management in Construction Arbitration
Effective case management is central to controlling time and costs in construction arbitration. Over the past decade, arbitral institutions and practitioners have developed detailed guidance on how to streamline complex construction disputes without compromising fairness or due process.
Experience shows that well-managed proceedings share three common features:[10]
- Party Autonomy and Procedural Flexibility: There is no single correct approach to construction arbitration. Procedures should be adapted to the specific characteristics of the dispute, the contract, and the project.
- Proactive Case Management: Tribunals should take an active role in guiding the process, identifying inefficiencies early, and proposing more practical or cost-effective alternatives.
- Expedition and Cost Efficiency: Every procedural step should help arbitrators fulfil their duties without unnecessary delay or expense.
The ICC’s Report on Construction Arbitrations provides a number of practical measures that have proven particularly effective in achieving these objectives:
- Arbitrator Selection: Appoint arbitrators with both construction expertise and strong case-management skills. Availability, impartiality, and familiarity with digital tools are also important considerations.
- Terms of Reference: Draft early and precisely (a requirement that applies specifically in ICC arbitrations).
- Case Management Conference: Hold this immediately after signing the Terms of Reference to agree on procedure, evidence, expert coordination, potential site visits, and settlement opportunities.
- Timetable: Encourage realistic, party-agreed timetables that fix hearing dates early while maintaining flexibility for settlement discussions.
- Use of Schedules and Working Documents: Employ Scott Schedules or equivalent tools to clarify and structure claims, particularly for delay and quantum.
- Expert Coordination: Require experts to confer early, prepare joint statements, and, where appropriate, use tribunal-appointed experts to reduce cost and duplication.
- Site Visits and Tests: Conduct only where justified by clear evidentiary value, ideally combining them with expert inspections.
- Translations: Address translation needs and cost allocation in the first procedural order to prevent later inefficiencies.
Adopting these practices helps tribunals and parties manage even the most complex construction disputes efficiently. Clear procedures, early coordination, and disciplined scheduling can reduce both time and cost while improving the overall quality and predictability of the arbitral process.
The ICDR Construction Arbitration Rules
The International Centre for Dispute Resolution (ICDR), the international division of the American Arbitration Association, has developed specialised Construction Arbitration Rules (effective as of 1 March 2024) tailored to the specific needs of construction disputes. These rules draw on the ICDR’s international framework and the American Arbitration Association’s long-standing experience with complex domestic construction cases.
The ICDR Construction Rules are designed to make proceedings more efficient and predictable by promoting early case management, streamlined disclosure, and targeted use of mediation and dispute boards to encourage settlement before the hearing stage. They also provide for the appointment of construction-specialised arbitrators and establish structured procedures for expert evidence, ensuring that technical issues are addressed by decision-makers with relevant industry knowledge.
The ICDR has also recently introduced its newest feature, the AI Construction Arbitrator. This system is designed to assist with preliminary case assessments, procedural scheduling, and early identification of potential evidentiary or jurisdictional issues, thereby enhancing efficiency and reducing administrative burden.
Parties can also estimate the administrative and arbitrator costs of ICDR proceedings using the ICDR Arbitration Fee Calculator, which provides an indicative cost breakdown based on the amount in dispute.
Cost Allocation and Apportionment
The final allocation of costs in arbitration is left to the discretion of the arbitrators, as institutional rules and national laws provide only a general framework, while the specific decisions depend on the circumstances of each case. The outcome depends on the applicable arbitration rules, the seat of arbitration, and the tribunal’s assessment of the circumstances. [11]
Generally, the dominant principle in international commercial arbitration is that “costs follow the event”, that is, the unsuccessful party may be ordered to bear the costs of the proceedings and reimburse the successful party’s reasonable legal and other costs. However, tribunals are often required to adapt this principle where fairness demands departure, especially in complex construction disputes.
The seat of arbitration and the governing procedural law also influence how strictly the tribunal adheres to the “costs follow the event” rule. For example, under the English Arbitration Act 1996 (as amended by the English Arbitration Act 2025), there is a statutory presumption that costs should follow the event unless the tribunal considers it “inappropriate” to apply that principle. Conversely, in other jurisdictions, more flexible approaches dominate, allowing tribunals to apportion costs more equitably.[12]
Especially in construction arbitrations – with their technical complexity, voluminous documentation, and large-value claims – cost allocation becomes a key instrument of procedural management and fairness. Effective cost management and cooperative conduct throughout the proceedings not only reduce the financial burden but also enhance a party’s prospects when the tribunal decides who pays what.
Conclusion
A clear understanding of how construction arbitration costs are structured and managed is essential for effective budgeting and case strategy. The advance-on-costs system used by leading institutions provides predictability and financial security, while tribunals should ensure that only reasonable and necessary expenses are recoverable. Maintaining detailed cost records, planning strategically, and engaging efficiently with the tribunal and the administering institution can greatly improve cost control and recovery prospects.
Parties must keep in mind that even after obtaining a final award, parties might also have to budget for potential enforcement proceedings if the losing party fails to comply.
Aceris Law has represented clients in dozens of successful construction arbitrations across industries and regions. Our lawyers offer cost-efficient, transparent, and highly effective representation in construction disputes under all major institutional frameworks. For more information or to obtain a detailed cost estimate for a construction arbitration, please contact Aceris Law.
[1] For a general overview, see Aceris Law’s Managing Construction Disputes: Understanding the Causes, 19 October 2025.
[2] ICC Commission and ADR Commission, Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations, February 2019, https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/construction-industry-arbitrations-report-icc-commission-arbitration-adr/ (last accessed 10 November 2025), p. 8.
[3] ICC Commission and ADR Commission, Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations, February 2019, https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/construction-industry-arbitrations-report-icc-commission-arbitration-adr/ (last accessed 10 November 2025).
[4] For an overview of other potential costs under different institutional rules, see Aceris Law’s notes on LCIA, HKIAC, SIAC, SCC, SCCA and costs under other major arbitration frameworks.
[5] International Chamber of Commerce (ICC), ICC Dispute Resolution 2024 Statistics, 2025, https://iccwbo.org/wp-content/uploads/sites/3/2025/06/2024-Statistics_ICC_Dispute-Resolution.pdf (last accessed 10 November 2025); SCC Arbitration Institute, Costs of Arbitration and Apportionment of Costs under the SCC Rules (October 2024); N. Petrik, A. Runestam, SCC 2023 Analytics: Ad hoc vs. Institutional Arbitration in Construction Disputes (SCC Arbitration Institute, October 2023).
[6] N. Petrik, A. Runestam, SCC 2023 Analytics: Ad hoc vs. Institutional Arbitration in Construction Disputes (SCC Arbitration Institute, October 2023); Commission on Arbitration and ADR, ICC Commission Report, Decisions on Costs in International Arbitration, ICC Dispute Resolution Bulletin 2015, Issue 2, p. 3.
[7] N. Petrik, A. Runestam, SCC 2023 Analytics: Ad hoc vs. Institutional Arbitration in Construction Disputes (SCC Arbitration Institute, October 2023); Commission on Arbitration and ADR, ICC Commission Report, Decisions on Costs in International Arbitration, ICC Dispute Resolution Bulletin 2015, Issue 2, p. 3.
[8] ICC Commission and ADR Commission, Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations, February 2019, https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/construction-industry-arbitrations-report-icc-commission-arbitration-adr/ (last accessed 10 November 2025), p. 22; N. Petrik, A. Runestam, SCC 2023 Analytics: Ad hoc vs. Institutional Arbitration in Construction Disputes (SCC Arbitration Institute, October 2023).
[9] ICC Commission and ADR Commission, Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations, February 2019, https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/construction-industry-arbitrations-report-icc-commission-arbitration-adr/ (last accessed 10 November 2025), p. 22.
[10] ICC Commission and ADR Commission, Construction Industry Arbitrations: Recommended Tools and Techniques for Effective Management of Arbitrations, February 2019, https://iccwbo.org/news-publications/arbitration-adr-rules-and-tools/construction-industry-arbitrations-report-icc-commission-arbitration-adr/ (last accessed 10 November 2025).
[11] Aceris Law: Who Pays the Costs of International Arbitration?, 18 September 2022.
[12] English Arbitration Act, Section 61(2) (Award on Costs).