Sealed Offer in International Arbitration

Abstract

Final awards coming out of international arbitration proceedings traditionally end with two dispositive parts: one deals with damages, compensation or specific performance (award on merits); the other deals with costs and allocation of such costs (award on costs). Despite advanced technology and extensive use thereof in international arbitration proceedings, the costs of such proceedings continue to rise.  The principle of “Costs Follow the Event” or “Loser Pays”, requires the unsuccessful parties embroiled in international arbitration to pay not only the damages and compensation under the awards on merits, but also arbitration costs and legal costs incurred by the successful parties. Parties to international arbitration who are concerned of the potential risks of being held liable to the successful parties for exorbitant amounts of both damages and costs in case of adverse outcome have used the “Sealed Offer” as a tool to cap or minimize the costs of arbitration. The principle of “Costs Follow the Event” and the “Sealed Offer” measure originated in England and are widely recognized in both common law and civil law countries around the world. The “Sealed Offer” is relatively new to Thailand. The writer wishes to inform legal practitioners and business operators in Thailand of the law and practice on the subject matters prevalent in major arbitration hubs of the world. The writer also hopes that this article will be of help to them if they become involved in international arbitration.