Security for Costs in International Construction Arbitration

Empirical data on security for costs in international arbitration is absent. Anecdotal evidence suggests an increase in applications for security for costs in international arbitration, but with a very low rate of success. Authors explain that this is because (despite all major institutional rules embracing security for costs) (i) exceptional facts are needed – it is not sufficient to say only that a claimant is short of funds; and (ii) international arbitration has adopted a presumption against the award of security for costs. Authors explain that transnational soft law and jurisprudence from national courts favour a range of factors test, but Authors advocate that one factor is more important – whether there is a material change in the business risk from the time of making the arbitration agreement or contract. This single factor is easy to apply; consistent with party autonomy & freedom of contract; and consistent with contract matrixes seen in international construction arbitration. Codifying the ‘rules to be applied’ akin to the IBA Rules is worthy, but Authors consider that plurality of views and a tangible ‘common law’ ‘civil law’ split weighs against codification into soft law. Security for Costs is an exceptional remedy and exceptional facts ought to be needed.