Arbitration is a technique in which a third party called arbitrator tries to solve the dispute between two parties. Before filing a dispute to the arbitration office, parties must first discuss the matter with the business that provided the goods and services. These parties are usually traders and the consumer. If the case is not resolved between two parties, they must contact an arbitrator to resolve the matter rather than court. Consulting a lawyer can be expansive as compared to dispute resolution through arbitration. Arbitration saves both costs and time. Arbitration has become popular in recent years because of its cost-effectiveness and time-saving. When two parties plan to file their case to the arbitration office, the first question that comes to mind is Who Pays for Arbitration.

The arbitration involves different fees. The parties involved in the dispute case pay the arbitration costs. The arbitration cost differs and depends on several factors like:

The nature of your contract

Rules and regulations related to your specific case

The fees of the arbitrator

The money, goods, and services involved in your case

In how much time do you need the dispute resolution?

An arbitrator can charge in two ways; costs on a per-hourly basis and costs of the whole session. Before filing a case with the arbitrator, you must know the rules specific to your case. Refunds and cancellations are always problematic, so carefully think and decide about the representation of the case in front of an arbitrator.

Types of Costs

There are two main costs in arbitration—administrative charges and costs paid to the arbitrator. The office of the arbitration receives both costs from the disputed parties when they file the case. Later, the authorised person keeps the administrative costs in the account of the arbitration office and sends the compensation expenses and other expenses to the arbitrator directly.

Administrative costs are related to filing the case to the arbitration office. These costs include final hearing or decision charges as well. The party pays the filing fees at the time when a party files a claim against another party. For some cases, filing fees are fixed, but for other cases, it may vary depending on the nature of the dispute and the amount of money requested in the claim. Hearing or decision fees are paid for the decision of the case. The party pays the fees in advance. An arbitrator decides the case when both parties are available.

The arbitrator compensation is the charges that an arbitrator receives for the work they have to do for dispute resolution. The compensation rate depends on the complexity of the case, the rate of the compensation, and the time a case requires for the resolution.

Arbitrator expenses are those when an arbitrator has to travel from one place to other for the hearing of the case. In this case, an arbitrator has to bear the expenses related to the hotel, meal, travel ticket, and travel time. The parties must pay these expenses, and these expenses are non-refundable.

There are several other fees, but these depend on the case. Not all cases have to pay these costs. According to the room size and location, these fees are rented for the hearing room. If a party puts a case on hold for one year or more, they have to pay the fee separately.

There are other costs that each party needs to pay for the arbitration. These costs include attorney fees, discovery costs, costs for a witness, travel costs for witnesses, and the cost to conduct the case on a decided date and time.

What Happens When A Party Refuses to Pay?

As the arbitration process provides services to both parties, they both have to pay significant fees. They must deposit fees in advance to initiate the Arbitration process. Many cases end when a party does not agree to pay the fee associated with the case.  Such a party thinks that they are eligible for the arbitration provision. In such cases, the arbitrator and the administration will never proceed with the case further and will end the arbitration right away. This is the basic reason that arbitration requires advance payments.