Security for costs — overviewSecurity for costs — tribunal

Whether a tribunal can order a claimant to provide security for the costs of an arbitration will depend on the powers provided to the tribunal. Such powers can be granted by the Arbitration Act 1996, institutional rules or by the parties under ad hoc arbitrations.

It can be difficult to obtain an order for security for costs as tribunals are often reluctant to do anything that could be perceived as making a judgment on the merits of the case. Also, tribunals will not want to preclude a party from participating in an arbitration due to cash-flow difficulties.

Security for costs — courts

The courts have no power to order security for costs during the arbitral proceedings; such power is vested exclusively in the tribunal.

The courts do have the power to grant security for costs on applications to challenge an award or an appeal on a point of law under sections 67, 68 and 69 of the Arbitration Act 1996.

Security for costs — institutional and UNCITRAL rules

Many of the institutional rules do not specifically provide for security for costs to be ordered. However, many enable a tribunal to order an interim or conservatory measure if it deems it to be appropriate. This power is generally sufficiently broad to enable a tribunal to order a party to give security for costs.

The UNCITRAL Rules deals with interim measures which may be established in the form of an interim award. The tribunal is entitled to require security for the costs of such measures. New revisions to the rules dealing with interim measures are due to be adopted in June 2010.