Award of arbitration costs where the tribunal declines jurisdiction

In English arbitration (and court proceedings), the successful party can usually recover their costs. However, a recurring question is whether an arbitral tribunal can award them their costs when they have successfully argued that the tribunal did not have any jurisdiction to decide the substantive dispute. Opposing parties may argue that a lack of jurisdiction over the merits necessarily means the tribunal has no authority to award costs. 

The recent case of Ravfox Ltd v Bexmoor Ltd [2025] EWHC 1313 (Ch) confirms that the tribunal does have power to award costs in this case. However, although His Honour Judge Keyser KC found that the arbitrator reached the wrong conclusion in that case, he accepted that he was not “obviously wrong”, so the appeal was unsuccessful. 

Fortunately, the Arbitration Act 2025 also addressed this question. Although the drafters of the Act felt that the tribunal had power to award these costs, they acknowledged that there were some doubts (as the Judge noted). Section 61 of the Arbitration Act 1996, which gives the tribunal power to award costs, is now clarified by the addition of subsection (1A) to the section. This states that it is “irrelevant” that the tribunal has found it has no substantive jurisdiction. 

The judgment in Ravfox 

In coming to his conclusion, HHJ Keyser KC pointed to a number of factors. 

• S. 30 of the Arbitration Act (reflecting the international Competence-Competence doctrine). This gives the tribunal power (competence) to rule on its own jurisdiction (competence). There is a valid arbitration until the tribunal rules it has no jurisdiction, and there was no logical reason why there could be no costs award in relation to those proceedings. 

• Sections 59 and 61 of the Arbitration Act 1996. S. 61 empowers tribunals to allocate the “costs of the arbitration” between the parties unless otherwise agreed. The definition of “costs of the arbitration” in s. 59 was wide enough to include cases where the tribunal has jurisdiction over the substantive dispute. 

• Review of the Arbitration Act 1996. The Law Commission considered this question in their review of the 1996 Act and came to the same view. It was also the preferable position as a matter of policy: the alternatives were that costs were irrecoverable or that costs had to be dealt with by the court. The result of this review was the Arbitration Act 2025, which, as we have noted previously, reinforces the powers of the tribunal and aims to reduce inefficient challenges to the court. Subsection 1A was therefore added to s.61 of the 1996 Act to “put the matter beyond doubt” rather than changing the law. 

• Costs follow the event. A successful challenge to jurisdiction means the arbitration was wrongly begun. However, the wrongdoing claimant would have no risk of having to pay the successful respondent’s costs if the tribunal could not award costs if it found it did not have substantive jurisdiction. In contrast the respondent would risk having to pay the claimant’s costs if it was unsuccessful, as well as its own costs whether it succeeded or not. This would be an unattractive result. 

As noted above, the successful respondent in Ravfox did not succeed in its appeal before the court, despite the finding in its favour on the jurisdiction question. Some of the reasons for this are a worthwhile reminder of the difficulties of appealing an award: 

• an appeal must be made within 28 days of the date of the award. Although the appellant can apply for an extension of time, this should be an exceptional departure from the usual timetable 

• any delay in paying for the award eats into the 28-day period for making an appeal 

• if there is doubt about a question, an award is unlikely to be “obviously wrong”. In Ravfox the doubt expressed by the Law Commission was enough to mean that the answer was not “obvious” 

• the grounds for the appeal must be set out clearly. This is particularly important as applications for leave to appeal are usually dealt with on paper. 

The Birketts view 

Although it may be widely accepted in practice that tribunals may award costs even where they or a court have ruled that the tribunal lacks jurisdiction, the arbitration in Ravfox v Bexmoor confirms that some tribunals took a different approach. This was unfair on parties considering challenging jurisdiction. 

Ravfox v Bexmoor and the 2025 amendments to s. 61 of the Arbitration Act 1996 are therefore timely confirmation that the tribunal can award costs when it determines if it has jurisdiction, whether the challenge is successful or not.