The High Court has held that a sole arbitrator did not exceed his powers in including the costs of third party funding within a costs award, and therefore refused a challenge to the arbitrator's award under s68(2)(b) of the Arbitration Act 1996: Essar Oilfields Services Limited v Norscot Rig Management PVT Limited [2016] EWHC 2361 (Comm).

The decision turns on the powers given to the arbitrator under the Arbitration Act 1996 and the ICC rules, in particular the power to determine the recoverable costs of the arbitration including the arbitrators' fees and expenses, the fees and expenses of any relevant arbitral institution, and the legal or other costs of the parties. The court rejected any suggestion that the expression "other costs" should be construed by reference to what a court would or could allow by way of costs in litigation under the CPR. There was no parallel provision in the CPR and the court's approach under the CPR was of little relevance.

The decision may however be of interest to those who litigate, as it highlights a further distinction between English court proceedings and English-seated arbitration; it is highly unlikely that expenses associated with litigation funding could be awarded as costs under the relevant CPR provisions. The decision does not of course mean that expenses will always be awarded as costs in the arbitration context, but in light of this decision the possibility clearly exists. This may be seen as an advantage or disadvantage of arbitration depending on a party's perspective. For more information on the Essar decision, please see this post on our Arbitration Notes blog.