Arbitration costs generally fall into three categories: arbitrator fees (often set by a schedule tied to the claim amount under institutional rules, or negotiated fee arrangements in ad hoc arbitration), institutional administration fees (registry, hearing room and case-management charges), and each party's own legal costs.
For small and mid-value commercial disputes, arbitration is often materially cheaper than protracted litigation once court delays, multiple adjournments and appeal costs are factored in — the Fourth Schedule to the Arbitration and Conciliation Act, 1996 provides a model fee scale many institutions reference for arbitrator fees.
Cost predictability is one of institutional arbitration's underrated advantages: a published fee schedule and defined hearing-room charges let parties budget for the process upfront, rather than facing open-ended hourly billing with no fixed endpoint.