Revised note on personal and arbitral tribunal expenses

  • 4 September 2013
Legal & compliance

Explanatory Note by the President of the Court on per diem allowances to all serving arbitrators and to all newly constituted tribunals

The Bureau of the Court has recently concluded a review of the ‘per diem’ allowances, which are in place at present.

It has concluded that an increase in the ‘per diem‘ is now appropriate; that any adjustment should continue to be based upon a fixed ‘per diem’ allowance of universal application, i.e. without adjustment to reflect case-specific factors, such as the amount in dispute or the venue of hearings; and that, in future, the level of the ‘per diem’ allowances should be reviewed regularly and at least every two years.The Bureau of the Court has taken account of the fact that inflation in US$ terms has been running at just under 2.5% p.a., in the period (2005-2013), such that US$ 800 at the time that rate was first introduced has the buying power of US$ 1.000 today. It has in mind, too, that the US Dollar has fallen against most major currencies (in the case of the Euro, a little more than 10%).

There is a further factor: inflation has been higher in some sectors than in others. In particular, hotel and restaurant prices have risen – in many cities dramatically, Paris being a case in point. Anecdotal evidence is indicative of recent increases of 20%, if not more.

The Bureau of the Court considered whether a scale of ‘per diem’ rates should be introduced to reflect variations in the cost of living in cities around the World, bearing in mind that government foreign services and many firms, which operate in multiple centres, apply “country factors” to take into account local cost differences.

The Bureau of the Court has decided against such a ‘city by city’ approach. While it may be appropriate in circumstances in which provision for employees embarking upon long-term permanent international postings of three years or more has to be made, that is a very different proposition from the ‘per diem’ arrangements made for arbitrators serving away from home for short periods from time to time on an ‘ad hoc’ basis.

Further, the plain fact is that the cities, which host the majority of ICC arbitrations are high cost centres.

A final factor, which weighed with the Bureau of the Court, was that the re-introduction of a system, which might be susceptible to elements of ‘special pleading’ or case by case review would inevitably involve the Secretariat in additional administrative work, as it had done in the past. The introduction of the universal flat rate ‘per diem’ allowance in 2009 was intended precisely to alleviate that administrative burden.

The Bureau of the Court is well aware of the need to keep the costs of arbitration within sensible bounds. It has approached this review with that overriding principle very much in mind.

The Bureau of the Court has sought to strike a balance. Its concern to ensure that arbitrators serving on ICC tribunals should be in a position to find accommodation appropriate to their needs and commensurate with that selected by the parties or their representatives is to be seen in the context of the Bureau of the Court’s decisions to set business class travel as the norm for long haul journeys of more than six hours’ duration, rather than first class; and to determine that administrative secretaries may no longer be the subject of ‘off balance sheet’ separate fee arrangements with the parties. (For the avoidance of doubt, no ‘per diem‘ allowance is payable to administrative secretaries in any event).

The ‘per diem’ allowances have remained unchanged for eight years. As a result of its deliberations, the Bureau of the Court has concluded that, with effect from 1 September 2013, they should be increased in line with inflation and with other factors which have impacted the US$ exchange rate.

Accordingly, the ‘per diem’ allowance applicable to an overnight stay will be increased to US$ 1.200. The rate for an attendance, which does not involve an overnight stay will be increased to US$ 400.

In accordance with its new policy, the ‘per diem’ allowances will be reviewed again prior to 1 September 2015.

John Beechey
President, ICC International Court of Arbitration

© International Chamber of Commerce (ICC) September 2013. All rights reserved. No part of this document may be reproduced or copied in any form or by any means, or translated, without the prior permission in writing of ICC.