Commercial arbitration is praised for being fast and flexible — but no one praises it for being cheap. An international arbitration can cost hundreds of thousands, even millions of US dollars. The questions of “who pays, how much, and when” are not merely accounting matters: cost allocation directly affects litigation strategy, settlement negotiations, and the decision whether to pursue the case to the end. The cited legal framework is the Law on Commercial Arbitration 2010, as amended and supplemented by Law 81/2025/QH15, effective from 01/07/2025.
What arbitration fees cover: five categories under Article 34
Article 34 of the Law on Commercial Arbitration 2010 defines arbitration fees as the revenue from providing arbitration dispute-resolution services, comprising five categories: a) arbitrator remuneration, travel expenses, and other expenses for arbitrators; b) expert consultation fees and other assistance at the request of the arbitral tribunal; c) administrative fees of the arbitration center; d) fees for appointing ad hoc arbitrators by the arbitration center at the parties’ request; e) fees for using other utility services of the center (meeting rooms, interpretation, stenography).
Note on scope: the five categories above are “arbitration fees” in the narrow sense of Article 34. Costs each party incurs on its own — most notably lawyer fees, travel, accommodation, evidence preparation — are not included in this definition. The fate of those costs is decided by a different mechanism, analyzed below.
On the fee-setting authority (Clause 2, Article 34): for institutional arbitration, fees are set by the center based on its fee schedule and procedural rules — businesses can estimate costs in advance when considering a claim; for ad hoc arbitration, fees are set by the arbitral tribunal itself. All fee agreements should be finalized in writing early on.
The allocation principle: loser pays — and three exceptions
Clause 3, Article 34 sets the default principle: the losing party bears the arbitration fees. But there are as many as three exceptions — and it is the exceptions where cost strategy comes into play. The first exception: the parties agree otherwise (e.g., each party bears its own costs regardless of outcome). The second exception: the arbitration procedural rules provide otherwise (e.g., allocation proportional to the success of each claim).
The third exception — the most important strategically: the arbitral tribunal allocates differently. This provision gives the arbitral tribunal discretion based on actual developments: the relative degree of success, cooperative attitude during proceedings, and the reasonableness of claims. The practical message: each party’s conduct throughout the proceedings is “recorded” and can be converted into money at cost allocation.
Advancing costs: who pays, and when
The claimant advances the arbitration fees when filing the statement of claim; the center forwards the claim to the respondent only after receiving the claim, accompanying documents, and proof of advance payment (Article 32). Without the advance, the proceedings do not move.
During the proceedings, when supplementary costs arise — most commonly expert examination, valuation, or expert consultation fees — the requesting party must advance them, unless the arbitral tribunal allocates otherwise (Article 46). In practice, centers usually require advances in stages and have a “pay on behalf” mechanism: if the respondent does not pay its share, the claimant may pay on its behalf to keep the case moving — the substituted payment is accounted for in the final cost allocation. If neither party advances, the case may be suspended. Businesses should build the advance-payment obligation into cash-flow planning from the moment they decide to file a claim.
Expert and specialist costs: separate advance and allocation
Article 46 provides separately: expert examination, valuation, and expert consultation costs are advanced by the requesting party or allocated by the arbitral tribunal. In many cases, the examination is ordered by the arbitral tribunal itself because technical grounds are needed for the award — then the arbitral tribunal decides the allocation, usually requiring the parties to advance half each.
For construction, energy, and manufacturing disputes — where examination costs can reach tens of thousands of dollars — this is a budget item that cannot be overlooked. For experts hired by one party to support its own position, the cost is in principle borne by the hiring party, but it may be considered by the arbitral tribunal as part of the winning party’s “reasonable costs” in the general cost allocation, depending on the agreement and the applicable procedural rules.
Lawyer fees: are they recoverable
Lawyer fees are not among the five “arbitration fee” categories of Article 34 but are each party’s own costs; the Law on Commercial Arbitration 2010 also has no express provision on the winning party recovering these costs.
In practice, the fate of lawyer fees is decided by three sources: the parties’ agreement (the contract may provide that the breaching party reimburses reasonable legal costs), the applicable procedural rules (some international rules empower the arbitral tribunal to decide on legal costs), and the arbitral tribunal’s discretion within the framework of the agreement and applicable rules.
The trend in international arbitration is a broad reading of “costs follow the event” — the losing party must also reimburse a reasonable portion of the winning party’s lawyer fees. But “reasonable” is the key word: the arbitral tribunal considers necessity, complexity, and the proportion of costs to the value of the dispute. Practical advice: include a legal-cost reimbursement clause in the contract from the outset — that is the strongest basis for recovering lawyer fees when winning.
How the arbitral tribunal decides costs in the award
The decision on costs is part of the arbitral award — not a separate document — and is adopted under the same voting principle of the arbitral tribunal. A complete costs decision usually includes: determining the total arbitration fees of the case; determining each party’s costs; and allocating those amounts under the loser-pays principle or such other allocation as the arbitral tribunal considers fair.
Note: the decision on costs is final and binding like other parts of the award and is enforced under the same mechanism. In practice, cost disputes are rarely an independent ground for setting aside an award; nevertheless, experienced arbitral tribunals still devote special care to this part of the decision, with detailed reasoning rather than just stating the outcome.
Institutional vs. ad hoc arbitration: cost differences
With institutional arbitration, businesses enjoy predictability: a public fee schedule based on dispute value, a clear advance-payment process, and professional case administration — in exchange for a fixed administrative fee.
With ad hoc arbitration, there are no administrative fees and the parties can agree directly with arbitrators on remuneration — the savings potential is real, especially for simple, low-value cases. However: there is no standard mechanism when one party does not advance costs, no administrative apparatus when procedural difficulties arise, and all fee agreements are negotiated by the parties themselves — while they are disputing with each other. Practical experience: for cases of medium value or above, or with complex elements, the administrative fee of institutional arbitration is usually a worthwhile investment; ad hoc arbitration suits better where the parties still have a good cooperative relationship and the case is simple.
Building a realistic budget for an arbitration
Businesses should budget for arbitration like budgeting an investment project, with six categories. One, arbitration fees under Article 34: estimate based on the fee schedule of the intended center and the dispute value. Two, lawyer fees: usually the second-largest, even the largest item in complex cases — agree on a clear fee mechanism from the outset and require periodic cost reports.
Three, expert, examination, and valuation costs: provision from the start if the case has technical elements. Four, procedural logistics costs: travel, accommodation, interpretation, meeting-room rental — small items that add up significantly in prolonged cases. Five, post-award stage costs: defending against setting-aside petitions, recognition and enforcement procedures (especially for foreign awards), and judgment enforcement — many businesses forget that “winning the case” is not yet “collecting the money.” Six, a minimum contingency reserve of 15–20% of the total budget for unforeseen developments: the case dragging on, counterclaims arising, additional examination needed.
For context: in court, court fees under the state fee schedule are usually significantly lower than arbitration fees, but litigation goes through multiple levels (first instance, appeal, possibly cassation and retrial), each consuming time and lawyer fees — while arbitration is a one-level, final-and-binding procedure. For disputes where time is money, higher arbitration costs may be offset by speed of resolution and confidentiality (hearings are not public).
Frequently asked questions
Must the losing party bear all arbitration costs?
Under Clause 3, Article 34, the losing party bears the arbitration fees, subject to three exceptions: the parties agree otherwise, the procedural rules provide otherwise, or the arbitral tribunal allocates differently.
When must arbitration fees be advanced?
The claimant advances fees when filing the statement of claim — the center forwards the claim to the respondent only after receiving proof of advance payment (Article 32). During proceedings, parties may have to make supplementary advances for arising costs such as examination and experts.
Are lawyer fees counted as arbitration fees?
No. Lawyer fees are each party’s own costs, not among the five categories in Article 34. Recovery by the winning party depends on the parties’ agreement, the procedural rules, and the arbitral tribunal’s decision — include a legal-cost reimbursement clause in the contract from the outset.
If the respondent does not advance costs, is the case suspended?
Center rules usually allow the other party to pay on its behalf to keep the case moving, with the substituted payment accounted for in the final cost allocation. If neither party advances, the case may be suspended.
Contact FLAT LAW FIRM
FLAT LAW FIRM is a boutique business law firm specializing in foreign direct investment (FDI), cross-border transactions, and commercial dispute resolution. We advise businesses not only on legal aspects but also on the “economics” of disputes: estimating arbitration costs under each scenario, designing cost-allocation clauses in contracts, and building litigation strategies that optimize total cost — from negotiation and mediation to arbitration and enforcement. Before deciding to file for arbitration, contact us for an honest cost picture and a strategy aligned with your business goals.
Disclaimer
This article is for general information only on arbitration costs and cost-allocation principles under Vietnamese law and does not constitute legal advice for any specific case. Actual fees depend on the arbitration center, the applicable procedural rules, and the development of each case; businesses should consult a lawyer and the relevant arbitration center before making decisions.
Useful links
- Resolving disputes by commercial arbitration — overview of arbitration in Vietnam
- Institutional arbitration in commercial disputes — when to choose an arbitration center
- Ad hoc arbitration in Vietnam — the flexible option and its distinctive cost structure
