Archive for the ‘Costs’ Category

I couldn’t find this extract by searching through the usual sources, so I thought it might be handy to put it here.  I have no idea whether or not it remains good law (the old White Book has been superseded by CPR – this is all about England and Wales) but is seems worth an airing!

Note to s.67, Solicitors Act 1974

Extract from The Supreme Court Practice 1982 at [3071] p.851.

As far as the fees of expert witnesses are concerned, in the case of Re Leighton (Solicitor), Young v Leighton, in Chambers, 1969 unreported, Mocatta J. called on the Taxing Masters for a certificate as to the practice. This was given in the following terms:

To the Hon Mr Justice Mocatta

In compliance with your Lordship’s direction the Taxing Masters of the Supreme Court Taxing Office beg respectfully to certify as follows:

  1. It is within our knowledge that solicitors who engage the services of a professional witness, or who call such a witness to give evidence on behalf of a client are personally liable as a matter of professional etiquette to discharge that witness’s fees, whether or not they have expressly or impliedly contracted to do so. It is settled practice for solicitors to pay such fees, which are treated as a professional disbursement as between solicitor and client in a solicitor and client bill of costs.
  2. Such disbursements are habitually treated upon taxation of such a bill as an item properly so introduced.

Dated November 21, 1969 Signed . . . . . . . . . .

Judgment was given in accordance with the terms of the certificate.

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I was talking, well chatting over the Internet, about the cost of arbitration when a  friend said, “And what about the cost of all that disclosure?”.  It made me think, because, before I studied Law, I had to learn a smattering of Swiss Law rather quickly, having been appointed as arbitrator on a panel in Switzerland.  Berne actually – it may be the capital but it was not easy to get scheduled flights from London or Budapest.  You might argue that both sides were equally inconvenienced.

Anyway, there was no discovery and, as I recall, no requests for disclosure.  To common lawyers, that may seem strange.  Those piles of documents are part of the fun, as is sitting in an opponents office reading his files in case there’s anything interesting there – there never is, but the Client is paying . . .

But why discovery?  To answer that, one must go back to the first meeting with the arbitrator.  One party, often the respondent, will say, “We don’t know how much time and what witnesses we need until we know their case.”  Really?  These parties have been wrangling for months, perhaps years, over every jot and tittle of the facts and the arguments that got them here.  In the Arbitration Act 1996 (England and Wales – by the way, the University of Glamorgan is now subsumed into the University of South Wales) is the proposition, “The object of arbitration is to obtain the fair resolution of disputes . . .”.   There has to be a dispute, a claim that is not accepted, for an arbitration to exist at all.  It’s no good saying, as one might in a Court, “I’m sure he’s liable for something, let me sift through his papers to see what it is.”.

I don’t say that disclosure is never necessary but it isn’t necessary for the creation of a case, for making a claim.  It may be necessary as proof but then the claim has been set out and it’s proof that is needed.

I’ve never known whether English/US style discovery is purely for fishing of if lawyers hope that the prospect of all those documents will persuade their opposite numbers to make a deal.  Whichever it is, it doesn’t often work.  The high cost of disclosure and the associated reading and copying – never selective – seems to be slipping into International Arbitration, as if it weren’t expensive enough.  It would be good to avoid it.

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If I may say so, the assumption that arbitrators have some inherent power to order security for costs is based on the false premise that arbitration is a proceeding at law and that an arbitrator is a kind of judge.  I suggest that, if an analogy is to be found at all in the courtroom, it is with the jury, as trier of fact.   

The position at English Law was clear and simple from re Unione Stearinerie Lanza and Wiener (1917) until the Arbitration Act 1996, which gave the power to arbitrators solely to take an embarrassing ‘hot potato’ from the hands of the Courts. .(See Coppee–Lavalin SA/NA & Voest–Alpine AG v Ken–Ren Chemicals & Fertilisers Ltd (in liq.)[1994] 2 All ER 449.)

I suggest that the words of Viscount Reading in Lanza and Weiner logically apply to the fundamental position regardless of the legal system so that, unless the power is either conferred by Statute or by agreement between the parties, purported orders for security are null and void. A danger could be that a tribunal that refused to proceed without security for the respondent’s costs (as opposed to its own fees and expenses) could be in breach of its duty.

Per Viscount Reading:

The arbitrator doubted whether he had the power to make the order; and we are told in fact he thought he had not the power. In my judgment he was right and there is no such power in an arbitrator. He could have been given the power by express agreement between the parties, but it is not suggested that there was any agreement to that effect.

. . . . The dispute obviously can be determined whether security for costs be given or not. The object of the application for security for costs is not to enable the proceedings to continue in order that it may be determined by the reference whether there is a valid claim by the party in the position of a plaintiff, but to put an obstacle in the way of his proceeding until he has done an act which will provide security to the party in the position of the defendant that, should he obtain an order for costs, the amount will be paid. That has nothing whatever to do with the arbitrator ascertaining the true position between the parties in order to determine the case.”

There is an interesting article entitled Can You Seek Security for Costs in International Arbitration in Australia? by Simon Greenberg, Associate in the International Arbitration Department of Dechert LLP, Paris and Christopher Kee Lecturer, Deakin University, Melbourne and Consultant, Keelins Lawyers, Melbourne.(Australian Construction Law Newsletter #109 July/August  2006),  
at http://www.austlii.edu.au/au/journals/AUConstrLawNlr/2006/57.pdfhttp://www.austlii.edu.au/au/journals/AUConstrLawNlr/2006/57.pdf  accessed on Monday 12 July 2010.  It is relevant beyond both Construction and Australia.


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