Author: Christopher Kee**
Published: December 2007
Costs and Damages
Orders for Security
Description: There have been two important developments concerning the issue of international arbitration and security for costs. These developments occurred almost simultaneously, although dealing with very different aspects of this broad issue. Chronologically, the first development concerns the UNCITRAL Model Law on International Commercial Arbitration (the “Model Law”) and arose during the discussions of the UNCITRAL Working Group II in September 2007. This Working Group is currently charged with the responsibility of updating the UNCITRAL Arbitration Rules. The second development can be found in the English Court of Appeal decision of Gater Assets Ltd. v. Nak Naftogaz Ukrainiy and concerns an application for security for costs in enforcement proceedings. In the words of Lord Justice Rix:
It is unsatisfactory that [it] should still be subject to any degree of controversy. One possibility, however, is that [it has] been deliberately left uncertain, because of the importance of the issue in the special context of international arbitration – or simply because, with the problematical exception of Dardana there never appears to have been any attempt to claim security for costs in enforcement proceedings.
I. SECURITY FOR COSTS AND THE MODEL LAW
Nowadays a number of modern sets of arbitration rules specifically enable an arbitral tribunal to order security for costs. A notable exception is the current
**Christopher Kee, BA (Hons) LLB (Deakin), Pro Cert Arb (Adelaide), Grad Dip Laws (UQ), Barrister and Solicitor, Supreme Court (Vic), Supreme Court (NSW), High Court of Australia; Lecturer, Deakin University Australia; Senior Assistant, Global Sales Law Project, University of Basel, Switzerland. The views expressed in this paper are his own and not those of Deakin or Basel Universities.