12 Good (Bad)-Faith Conduct and its Implications in the Allocation of Costs in International Investment Arbitration

Subject(s):

Good faith — General principles of international law — Costs and expenses

This chapter examines how good (bad) faith behaviour affects cost allocation decisions in international investment arbitration. It first describes the inconsistency in the calculation of costs and legal fees in international investment law before discussing the three methods of cost allocation that are applied in investment arbitration: the 50:50 Rule or sharing of costs; the English Rule, based on the idea that ‘costs follow the event’; and allocation of the costs on a sliding scale based on the court’s consideration of the claims. The chapter also analyses the public and private international law doctrine on cost and fee calculation; the rules used to calculate costs in investment arbitration; the methods used by tribunals in cost calculation; and the tribunal’s application of the principle of good faith to justify power granted under the respective arbitral rules, as well as determine the cost award as a means of sanctioning bad faith behaviour.