Keegan left Newcastle United in September 2008
Newcastle United have been ordered to pay all of Kevin Keegan's costs in his successful claim for constructive dismissal, which could reach £1.5m.
Keegan left the club last September after the Uruguayan player Ignacio Gonzalez was signed against his wishes.
Earlier this month an arbitration tribunal awarded him £2m, finding the club was in breach of contract.
In a statement, the tribunal panel said the club had made "entirely unfounded allegations" against Keegan.
Up-for-sale Newcastle have yet to comment on the decision.
The tribunal said it rejected Newcastle's claims that they should not be liable for costs because they had offered to settle the case before the hearing earlier this month.
A statement said: "We direct that the club should pay all of Mr Keegan's costs.
"Moreover, we reject the club's attempt to rely on the various offers which it made both prior to and during the hearing to settle the claim, since none of them involved the club's acceptance that he had been constructively dismissed and all of them involved a condition of secrecy or confidentiality.
"We direct that the club should pay Mr Keegan's costs on an indemnity basis given the manner in which it conducted this litigation.
"Its defence on the primary liability issue was, in our view, wholly without merit and it chose to make entirely unfounded allegations against Mr Keegan."
The tribunal said if the parties could not agree on costs then it would decide the figure.
It has already been agreed that Keegan will not receive any further damages.
Keegan parted company with the club, owned by businessman Mike Ashley, in September 2008.
It was Ashley who brought Keegan back to Newcastle for his second spell in charge at St James' Park in January 2008, following the termination of Sam Allardyce's contract.