In The Ios I, 1 Leggatt, J., reiterated well established principles as to the basis on which an order for costs should be made, following a decision on the merits in an arbitration, in the following terms:

The practice, as in cases at law, is for costs to follow the event, with the result that, in the ordinary case, a successful party recovers his costs. An important exception to that general rule is where an offer has been put before an arbitrator or a payment has been made into court which exceeds the amount awarded or in respect of which judgment is given. That is what occurred here. In such a case it is usual for the person who has made the offer to be awarded his costs after the date when the offer was made.

The usual practice mentioned above is clearly set out in Tramountana Armadora S.A. v. Atlantic Shipping Co. S.A. 2 In The Ios I, Leggatt, J., summarized the principles which apply when an arbitrator has departed from that practice. He referred to the decision in The Takamine, 3 where Robert Goff, J., had held that:

Arbitrators, like a trial judge, have a discretion as to the costs which they may award in a particular case … [Arbitrators may, in the exercise of their discretion, depart from [the] normal order. But if they do depart from that normal order then it is open to a party, who is seeking to set aside the arbitrator’s award as to costs, either by relying upon the reasons given by the arbitrator or, in the absence of such reasons, placing evidence before the court, [to] establish that the evidence or reasons do not justify a departure from the general principle, and if the party does so then the court may interfere and set aside or remit the award as to costs. But, the circumstances in which the court will do so are very limited.4