Court of Cassation Confirms ICC Tribunals Can Award Legal Costs i

International arbitration is full of glamorous phrases like seat of arbitration, procedural economy, and party autonomy. But let’s be honest: when the hearing dust settles, one of the least glamorous questions suddenly becomes the most important one in the roomwho pays the lawyers?

That is exactly why the recent Dubai Court of Cassation ruling has drawn serious attention across the arbitration world. In a major development for parties using ICC arbitration, the court confirmed that tribunals operating under the ICC Rules can award legal costs, including lawyers’ fees, as part of the recoverable costs of arbitration. For businesses, in-house counsel, external lawyers, and anyone who has ever winced at a multi-page invoice, this is not a small procedural footnote. It is a meaningful shift in legal certainty.

The ruling matters because cost recovery can shape litigation strategy, settlement pressure, risk assessment, and even contract drafting. It also helps answer a question that had become frustratingly murky in Dubai-seated ICC cases: if parties choose ICC arbitration, does that choice also empower the tribunal to allocate party legal costs? The Court of Cassation’s answer is now much clearer: yes.

Why This Decision Matters More Than It Looks

At first glance, a court decision about legal costs may sound like the kind of thing only arbitration nerds frame on the wall. But cost allocation sits at the center of how disputes are fought and resolved. When parties know that a tribunal may award reasonable legal costs to the successful side, they tend to behave differently. Weak claims look less attractive. Dilatory tactics become riskier. Settlement conversations get more realistic. Budgeting becomes less of a guessing game.

In ICC arbitration, cost allocation has long been treated as part of the tribunal’s toolkit. The ICC Rules do not treat costs as an awkward afterthought taped onto the final award. They address them directly. Article 38 makes clear that the costs of the arbitration include not only arbitrators’ fees and ICC administrative expenses, but also the reasonable legal and other costs incurred by the parties for the arbitration.

That wording matters. A lot. And the Court of Cassation leaned into it.

The Backstory: From Uncertainty to Clarification

Before this latest ruling, the legal landscape in Dubai was less comfortable. Earlier in 2024, the Dubai Court of Cassation had taken a narrower view in another case, creating concern that an ICC tribunal’s award of party legal fees could be vulnerable to partial annulment unless the arbitration agreement expressly said so. That was a big problem. It suggested that choosing ICC Rules might not be enough, even though the rules themselves expressly refer to reasonable legal costs.

That earlier approach created a disconnect between what many international arbitration users expected and what the local court might enforce. In practical terms, it made parties wonder whether a winning side could spend years arbitrating, prevail on the merits, and still be told, “Congratulations on winningplease also enjoy your legal bill.” Not exactly the victory parade most clients imagine.

The newer Court of Cassation judgment changed course. The court confirmed that Article 38(1) of the ICC Rules is broad enough to include legal fees paid to counsel. It treated the wording as clear, not ambiguous, and rejected the restrictive reading that had troubled practitioners earlier. This restored confidence that Dubai-seated ICC arbitrations can function more like parties expect them to function in major international arbitration centers.

What Article 38 of the ICC Rules Actually Does

Costs Are Not Limited to Institutional Charges

One of the most important takeaways from the decision is that the “costs of the arbitration” are not limited to the tribunal’s fees, ICC administrative expenses, and tribunal-appointed expert fees. Article 38(1) uses inclusive language. That means the list is not boxed in by a hard wall. The rule expressly reaches “reasonable legal and other costs incurred by the parties for the arbitration.”

That phrase gives tribunals room to look beyond the institution’s own invoices. It allows them to consider counsel fees, party-appointed expert expenses, and other litigation-style costs connected to the arbitration, provided they are reasonable.

Tribunals Still Have Discretion

This is not a magic wand that automatically turns every lawyer invoice into a reimbursable trophy. Article 38 does not require a tribunal to award all legal costs requested by a winning party. It gives the tribunal discretion. And tribunals tend to use that discretion carefully.

Reasonableness remains the key filter. Were the fees proportionate to the amount in dispute? Was the staffing lean or bloated? Did a party run the case efficiently, or turn every procedural conference into a Broadway revival? Were experts necessary? Were claims successful across the board, or only in part?

Article 38(5) adds another practical point: tribunals may consider how each party conducted the arbitration, including whether they acted in an expeditious and cost-effective manner. In other words, bad procedural behavior can get expensive.

How the Court of Cassation Read the Rule

The court’s reasoning was significant because it focused on the plain language of the ICC Rules. It emphasized that when wording is clear, it should not be twisted into something narrower than it says. The use of the word “include” suggested a non-exhaustive list. The phrase “reasonable legal and other costs” was read in its ordinary sense, which naturally covers legal fees.

That interpretive approach matters beyond this one dispute. It reinforces a broader pro-arbitration principle: when commercial parties choose a specific institutional framework, courts should respect the rules they selected unless those rules violate public policy or mandatory law. This gives real weight to party autonomy, which is one of arbitration’s core selling points.

In plain English, the message is simple. If sophisticated parties agree to arbitrate under the ICC Rules, courts should not pretend they accidentally signed up for a totally different cost regime.

Practical Impact on ICC Arbitration in Dubai

More Predictability for Businesses

For companies entering cross-border contracts, predictability is oxygen. This ruling helps by reducing uncertainty about whether legal costs can be recovered in Dubai-seated ICC cases. That, in turn, improves risk modeling at the contract stage and dispute stage.

When in-house legal teams assess exposure, costs are never a side note. They affect reserves, settlement ranges, insurance decisions, and board-level strategy. A legal framework that recognizes tribunal authority to allocate reasonable legal costs offers a more coherent picture of what a dispute may truly cost.

Better Alignment With International Arbitration Practice

The judgment also brings Dubai closer to mainstream international arbitration practice. In many major arbitral systems, tribunals regularly allocate party costs, often with a strong emphasis on reasonableness, proportionality, and case conduct. That does not mean every jurisdiction handles costs the same way. But it does mean the idea of awarding legal costs is hardly exotic. It is normal arbitration plumbing.

That alignment matters because parties choose ICC arbitration for consistency, enforceability, and procedural sophistication. A seat that respects the institution’s cost framework becomes more attractive than one that creates surprises after the award is issued.

Sharper Incentives During the Case

Cost exposure influences behavior during the arbitration itself. Parties may think twice before multiplying weak jurisdictional objections, overloading the record, or dragging out procedural steps. Tribunals, meanwhile, have stronger footing when using cost consequences to encourage efficient conduct.

That does not mean cost awards become punishment. Arbitration is not a school cafeteria, and tribunals are not handing out detention slips. But the ability to allocate legal costs creates a discipline mechanism. Efficient, proportionate conduct can matter. So can wasteful conduct.

What Parties Should Do in Response

Review Arbitration Clauses Carefully

Even with the court’s clarification, smart drafting still matters. Parties who want to avoid future arguments should consider stating expressly in their arbitration clauses that the tribunal has authority to award legal fees and other party costs. The court has made that authority easier to defend under the ICC Rules alone, but express drafting remains the belt-and-suspenders option. Lawyers love belts and suspenders almost as much as they love footnotes.

Build a Clean Costs Record

Parties seeking cost recovery should keep detailed, well-organized billing and expense records. Tribunals are more likely to award costs that are supported, proportionate, and easy to evaluate. Sloppy records invite skepticism. Precise records invite recovery.

That means separating arbitration work from unrelated advisory work, documenting expert necessity, and avoiding vague descriptions that read like “general legal brilliance, 14.2 hours.”

Use Cost Strategy Early, Not at the End

Cost arguments should not be treated as a final-hours appendix. They should shape case strategy from the beginning. If a party is aiming to recover costs, it should litigate in a way that looks reasonable from the tribunal’s perspective. Efficiency, proportionality, and discipline are not just virtues. They are future exhibits.

Specific Examples of Where This Ruling Changes the Conversation

Imagine a construction dispute in which the claimant wins most of its damages claim after years of document-heavy proceedings. Under a restrictive approach to Article 38, the claimant might recover the arbitration’s institutional and tribunal costs but not a substantial part of the legal fees spent getting there. Under the Court of Cassation’s clarified approach, the tribunal has firmer ground to award reasonable counsel fees as well.

Or take a shareholder dispute where the respondent defeats inflated claims and proves the case should never have been pursued at that scale. The ability to seek legal costs may materially change the pressure points in settlement discussions. A claimant now faces greater downside if the tribunal concludes the claims were overreached or inefficiently pursued.

In both examples, the ruling does not guarantee full reimbursement. But it restores a realistic possibility that the tribunal can allocate costs in a commercially sensible way.

The Bigger Arbitration Message

This decision is not just about invoices. It is about respect for institutional rules, commercial expectations, and the integrity of arbitration as a chosen dispute mechanism. When parties pick ICC arbitration, they expect the tribunal to have the powers the ICC Rules say it has. The Court of Cassation’s ruling supports that expectation.

It also signals that Dubai is continuing to strengthen its image as an arbitration-friendly jurisdiction. For international businesses choosing a seat, that matters. No one wants a beautiful arbitration clause that turns into a haunted house during enforcement.

By confirming that ICC tribunals can award legal costs, the court has improved predictability, reinforced party autonomy, and reduced an avoidable layer of post-award uncertainty. In arbitration, that is more than a technical win. It is a structural one.

Practical Experiences and Lessons From the Field

One of the clearest experiences surrounding cost disputes in international arbitration is that parties often underestimate how much the costs question shapes the life of the case. In many ICC matters, the real anxiety inside boardrooms is not only whether the company will win or lose on liability. It is whether the legal spend will become a second injury. That is why this Court of Cassation ruling resonates so strongly with practitioners. It speaks to the real economics of arbitration, not just the elegant theory.

Arbitration counsel regularly report that clients become sharply more focused once costs are discussed in concrete terms. A party may be willing to fight aggressively when fees are viewed as a sunk cost. That same party may suddenly become more realistic when told that unreasonable conduct, weak applications, bloated briefing, or tactical delay could influence the tribunal’s view on costs. The conversation changes. Strategy becomes tighter. Grandstanding loses some of its charm.

Another practical lesson is that tribunals usually reward disciplined lawyering. Teams that keep submissions lean, avoid repetitive arguments, and connect procedural requests to genuine necessity tend to look more credible when they later ask for costs. By contrast, parties that turn every scheduling issue into trench warfare often discover that tribunals have long memories. Cost allocation may not be emotional, but it is not blind either.

In-house lawyers also know that internal reporting improves when the cost framework is clearer. It is easier to explain dispute exposure to finance teams and leadership when counsel can say, with some confidence, that reasonable legal fees are potentially recoverable under the chosen rules and recognized by the supervising court. Clarity does not remove risk, but it makes the risk legible. In complex disputes, that is a gift.

Another recurring experience is that cost recovery arguments are won or lost through documentation. Parties that maintain clean invoices, categorize work properly, and show proportional staffing make a stronger impression. Parties that submit a giant spreadsheet the night before the costs phase, with entries that sound like “miscellaneous strategy work,” are not exactly writing a love letter to the tribunal.

There is also a settlement angle. Once both sides understand that legal costs are genuinely in play, negotiation dynamics tend to mature. A weak case becomes more expensive to continue. A strong case becomes more expensive to resist. Sometimes that does not produce settlement, but it does produce better decision-making. And better decision-making is half the battle in arbitration, the other half being PDFs.

Finally, one practical experience stands out above the rest: users value consistency. Businesses choose ICC arbitration because they want a reliable framework that travels well across borders. Court decisions that support the ordinary operation of those rules reduce friction and boost confidence in the system. That is the larger value of this ruling. It does not merely answer who can recover legal costs. It tells parties that their procedural bargain will be respected.

Conclusion

The Dubai Court of Cassation’s confirmation that ICC tribunals can award legal costs is a meaningful development for international arbitration users. It restores certainty after a period of confusion, supports the plain language of Article 38 of the ICC Rules, and strengthens the practical value of party autonomy. For businesses, counsel, and contract drafters, the lesson is clear: legal costs are not an afterthought. They are part of the architecture of dispute risk.

And now, at least in Dubai-seated ICC arbitration, that architecture looks a lot more stable.