A few thoughts.
Many insurance policies contain an ouster clause. This clause ousts the jurisdiction of the courts by compelling the contracting parties to submit the dispute to arbitration. Referral to the FSOB does not constitute submission to arbitration in the strict sense envisaged under an insurance contract.
Not every matter is actually suitable for arbitration.
If the policy has for any reason been voided ab initio because of some issue like non-disclosure or misrepresentation there is an argument to say that no contract exists and that no compulsory arbitration clause therefore applies.
Parties to a dispute like this are perfectly free to agree between themselves to submit an issue to arbitration. There are advantages and disadvantages to the process.
The FSOB option has merit and demerit. As pointed out by Brendan no legal costs [
on a party and party basis] are incurred by a complaining party. However, for a claim of this size the complainant here will have to incur fees for expert evidence and legal advice anyway in formulating the complaint. To proceed otherwise would be very unwise.
What happens when the FSOB rules on a complaint ? Their finding is legally binding on the parties to the dispute. There is a right of appeal to the High Court by way of a motion. How does that work ? One of the disputing parties will commence the proceedings. Who will be the respondents ? The FSOB will be one party. However, you would also need to join the other party to the proceedings as a notice party. This now turns the matter in to a High Court action between the party appealing the FSOB decision on one side versus the FSOB and the other party on the other side. This exposes the loser to a potential liability for legal costs i.e. their own costs and those of the other parties.
I get the impression that the FSOB findings seem to enjoy a good level of success in appeals. Even if there are small imperfections in any FSOB ruling I suspect that they are unlikely to be overturned unless there is something manifestly wrong. Here is a link to the FSOB's link page of High Court judgements in relation to their cases.
https://www.fspo.ie/archives/FSO.asp#highcourtjudgments.
In relation to legal costs in litigation the general rule is that costs follow the event. However, that is not a rigid racing certainty. It is for the trial judge to make the final orders on costs according to how they see fit on the merits something which could include deciding to make no order on costs.
Finally, I hope that the client in this case got a written agreement with the solicitors in relation to fees. Generally, there is a requirement on solicitors to give a client a Section 68 letter which sets outs an estimate of the likely costs involved.
P.S. I do not like no foal no fee arrangements for a host of reasons. I would rather be advised by a competent solicitor and counsel that my prospects of success in a particular matter are poor rather than being given false encouragement on a dodgy speculative adventure which could end up costing me a lot of money if I am saddled with the other side's costs.