Security for Costs in Investor–State Arbitration (2024)

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Volume 33 Issue 3 September 2017
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Christine Sim

*LLM (Master in International Dispute Settlement, Institut de hautes études internationales et du développement and University of Geneva); LLB, (National University of Singapore), Email: christine.sim@mids.ch

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Arbitration International, Volume 33, Issue 3, September 2017, Pages 427–495, https://doi.org/10.1093/arbint/aix014

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29 May 2017

A correction has been published: Arbitration International, Volume 33, Issue 4, December 2017, Page 692, https://doi.org/10.1093/arbint/aix020

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Abstract

When the tribunal in RSM v St Lucia became the first investor–state arbitration tribunal to order the claimant to post security for costs, it paved the way for other applications to follow. Despite investor–state arbitration’s unfamiliarity with the mechanism, security for costs could be an economically effective mechanism to regulate costs, control complex proceedings, and restrict frivolous claims in investor–state disputes. Domestic jurisdictions use this mechanism effectively to tackle abuses of process, regulate extra-jurisdictional influences on proceedings, and ensure equal access to justice. Against the backdrop of anxiety over third-party funding and repeated calls for procedural efficiency, this article evaluates the potential of security for costs to improve investor–state arbitration. What is the regime currently available for security for costs? Is security for costs inherently unfair to claimants? Which policy arguments are important to the investor–state arbitration system? How should tribunals assess applications for security for costs? What sanctions can safely be imposed for a breach without threatening the enforceability of the award? This article answers key questions in order to clarify unease with the mechanism, de-bunks the myths of third-party funding, and suggests solutions for practitioners dealing with applications for security for costs.

© The Author 2017. Published by Oxford University Press on behalf of the London Court of International Arbitration. All rights reserved. For Permissions, please email: journals.permissions@oup.com

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