AA 1996—security for costs—the courts (s 70(6))
Produced in partnership with Stephenson Harwood
AA 1996—security for costs—the courts (s 70(6))

The following Arbitration guidance note Produced in partnership with Stephenson Harwood provides comprehensive and up to date legal information covering:

  • AA 1996—security for costs—the courts (s 70(6))
  • The English court and security for costs during arbitral proceedings
  • Security for costs during a challenge to or appeal against an arbitral award to the English court
  • Security for the amount of the award (AA 1996, s 70(7))
  • Alternative orders against third parties
  • Security for costs during a challenge to enforcement of a New York Convention award

The English court and security for costs during arbitral proceedings

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

This has not always been the case. The House of Lords in Coppée-Lavalin v Ken-Ren Chemicals and Fertilizers; Voest-Alpine v Ken-Ren Chemicals and Fertilizers, looking at the court’s powers under section 12(6)(a) of the Arbitration Act 1950, confirmed that it was not to be precluded from making an order for security of costs in an international arbitration, with the House agreeing with the general approach to the operation of this discretion as set out by Lord Mustill. However, the House was split as regards the ultimate application of the court’s discretion, finding by a majority decision that an order for security for costs should be granted in an International Chamber of Commerce (ICC) arbitration taking place in London. Lords Keith, Slynn and Woolf found that there was a real risk that the applicant would not be able to recover its costs as the other party was not only insolvent but also had third-party funding from the Kenyan government.

The case attracted much criticism on the basis that the House of Lords was seen to be interfering in international arbitrations. This was addressed in the Arbitration Act 1996 (AA