Security for Costs – Additional Facility Arbitration (2022 Rules)

A party defending a claim or a counterclaim may wish to seek security for the estimated costs that it will incur in the proceeding (Additional Facility Arbitration Rule 63). The Tribunal has authority to order the other party to provide security for costs in certain circumstances.

Security for costs may be sought at any time during the proceeding. The party requesting security for costs must specify the relevant circumstances and present the evidence that it relies on (Additional Facility Arbitration Rule 63(2)(a)). The Tribunal determines the briefing schedule in consultation with the parties and must issue its decision within 30 days after the constitution of the Tribunal (if all submissions have been filed prior to constitution) or after the last submission on the request (if that submission is filed after Tribunal constitution).

The Tribunal must consider all relevant circumstances when deciding whether to order security for costs. In particular, the Tribunal must consider:

  • a party’s ability and willingness to comply with an adverse decision on costs
  • the effect that an order of security for costs may have on that party’s ability to pursue its claim or counterclaim
  • the conduct of the parties (Additional Facility Arbitration Rule 63(3)).

The Tribunal must take into account all evidence concerning the circumstances that require security for costs, including the existence of third-party funding (Additional Facility Arbitration Rule 63(4)). However, the existence of third-party funding is not by itself sufficient to justify an order for security for costs.

If the Tribunal decides to order security for costs, it must specify the relevant terms in the order and fix a time limit for compliance with the order. Non-compliance with the order may lead to the suspension and discontinuance of the proceeding (Additional Facility Arbitration Rule 63(5) and (6)).

The parties must disclose any material change in the circumstances upon which security for costs was ordered (Additional Facility Arbitration Rule 63(7)).

The Tribunal may modify or revoke an order for security for costs on its own initiative or at the request of a party after giving each party an opportunity to present its observations (Additional Facility Arbitration Rule 63(8)).