Costs—Risks and Reality

This chapter addresses ITA costs by initially exploring normative reasons for taking costs seriously and reviewing the doctrine underpinning cost assessments, including the pay-your-own-way, loser-pays, and factor-based approaches. It then tests conventional wisdom about costs by offering basic descriptive information, including when tribunals addressed costs, core fiscal exposure from parties’ legal costs (PLC) and tribunal costs, and whether fiscal costs changed over time, and offering alternative baselines to understand ITA costs. It then tests the conventional wisdom about tribunals’ “traditional” approach on cost-shifting noting, while the “pay-your-own-way” remained dominant, winning investors were reliably more likely to benefit from the “loser-pays” approach compared to winning states. The chapter then explores percentages and dollar amounts shifted by tribunals and changes in proportions shifted over time. While many cost elements were relatively stable, only when comparing the oldest cases with the most recent cases was it revealed that the amount of PLC shifted had meaningfully increased.