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Fee for alternative claims in arbitration

In arbitration, as in proceedings before the state courts, it is permissible to assert alternative claims alongside the principal claim. But there are no express rules on the fees for such claims in the Act on Court Costs in Civil Cases or in the rules and fee schedules of arbitral institutions. This raises the question of how fees should be calculated for alternative claims in the two types of proceedings, and whether the rules are the same.

In civil procedure, the practice that has evolved recognises that assertion of an alternative claim does not result in stacking or adding up the claims for purposes of Civil Procedure Code Art. 21 (e.g. Supreme Court of Poland order of 20 April 1966, case no. I CZ 29/66). That provision states that when the plaintiff asserts multiple claims, the amounts sought under each claim should be added together and the resulting amount serve as the basis for calculating the court filing fee.

The rationale for not applying Art. 21 to alternative claims is that although as a rule multiple claims pursued in a single proceeding are regarded as separate causes of action, in the case of an alternative claim not all of claims asserted in the pleading will have to be decided in the proceeding, and out of two or three claims asserted in the alternative, only one of them will be decided. However, there is no uniform practice on which of the alternative claims (e.g. the main claim, or instead the one with the highest value) should serve as the basis for calculating the court filing fee.

So when does a duty to pay a court filing fee on an alternative claim arise in proceedings before the state courts?

In its order of 20 May 1987 (case no. I CZ 55/87), the Supreme Court clarified that the duty to pay a filing fee on an alternative claim arises only when the principal claim is not upheld. If a partial judgment is awarded, the duty to pay the fee on the alternative claim arises at the time the judgment becomes legally final. But if (as is the rule) the court decides on the principal claim and the alternative claim in the same judgment (denying the principal claim but granting the alternative claim), the court will also order collection of the fee due on the principal claim. If the fee charged under the order is not paid voluntarily, the order on collection of the fee will be subject to compulsory execution.

Can analogous rules be applied in arbitration?

In my view, this practice is not applicable in arbitration proceedings, and the fee on the principal claim and alternative claims should be paid upon summons by the arbitration court immediately after filing of the demand for arbitration.

This view is supported by the practice at Poland’s two leading arbitral institutions.

Under §26(1) of the Arbitration Rules of the Court of Arbitration at the Polish Chamber of Commerce (SAKIG), after the statement of claim is received, the claimant is summoned to pay the registration fee and arbitration fee. In turn, §26(3) provides that if the registration fee and arbitration fee are not paid in full within the specified period, the statement of claim shall be returned and shall not exert any legal effect. Further, §4(2) of the SAKIG Tariff of Fees provides that the court shall not consider an application or perform an action if a fee or advance against costs is not paid in full by the relevant time limit.

The Rules (§17(1)) and Tariff of Fees of the Lewiatan Court of Arbitration include comparable provisions. Thus if the fee is not paid in full, the arbitration court will take no action except ordering the return of the statement of claim.

An additional justification for the need to assess an arbitration fee on alternative claims is that the rules of both SAKIG and Lewiatan provide for a fee on a defence of setoff. The rationale for this is that, particularly when the correctness of the setoff is disputed, consideration of this defence requires separate work by the arbitrators.

The case is analogous with consideration of alternative claims.

Moreover, the rules of these institutions do not vest the arbitral tribunal with any authority to award reimbursement in favour of the arbitration court for an arbitration fee left unpaid by the claimant.

Another reason that an arbitration court, unlike a state court, cannot award to itself the reimbursement of an arbitration fee is due to the relations between the parties: there is no arbitration agreement in force between the parties and the arbitration court, which is a necessary condition for ruling in an arbitration case. Consequently, if the final award in the case required reimbursement of a fee for an alternative claim, and the party did not pay the fee voluntarily, it would be necessary to seek enforcement of this ruling by the state court, but that would not be possible in the absence of an arbitration agreement between the arbitration court and the parties. As a result, the fee on the alternative claim would go unpaid, which clearly conflicts with the rules of these arbitration institutions.

Under Art. 1206 §1(1), (3) and (4) of the Civil Procedure Code, the grounds for setting aside an arbitration award include the absence of an arbitration agreement, issuance of an award concerning a dispute not covered by the arbitration agreement or exceeding the scope of the agreement, or failure to follow fundamental rules of procedure before the arbitral tribunal (here the rules prohibit the tribunal from acting if the fee is not paid). Thus there is a great likelihood, bordering on certainty, that such an award would be set aside. Consequently, the arbitration court would not receive its fee and the award on the merits would not remain in force.

In short, a claimant filing a demand with an arbitration court including alternative claims alongside the principal claim must be prepared to pay a fee on each of the asserted claims.

In light of the efforts to hold down the costs of arbitration, it might be preferable to provide in the arbitral tribunals’ fee schedules for refund of the arbitration fee paid by the claimant on an alternative claim in a case where the alternative claim is ultimately not resolved by the arbitral tribunal because the principal claim is upheld.

Monika Hartung, attorney-at-law, Dispute Resolution & Arbitration practice, Wardyński & Partners