AA 1996—security for costs—the tribunal
Produced in partnership with Stephenson Harwood
AA 1996—security for costs—the tribunal

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

  • AA 1996—security for costs—the tribunal
  • Security for costs in arbitration proceedings
  • Security for costs—the position under the AA 1996
  • The limitations on the tribunal’s power to order security for costs
  • Features of the order
  • Considerations
  • Approach of tribunals to ordering security for costs
  • Challenging an order for security of costs
  • The position in ad hoc arbitration

Security for costs in arbitration proceedings

This Practice Note considers the arbitral tribunal’s power to order security for costs under the Arbitration Act 1996 (AA 1996), which principally applies to arbitrations seated in England, Wales or Norther Ireland (England and English are used as a convenient shorthand).

The notion of ‘security for costs’ will be familiar to common lawyers but perhaps less so to civil lawyers, as it is closely related to the common law rule that, in general, the costs of bringing proceedings should ‘follow the event’ or, put more simply, the losing party should pay. In English litigation, the general rule, if a court decides to make an order on costs, is that the unsuccessful party will be ordered to pay the recoverable costs of the successful party, although the court retains a wide discretion in this regard—see Practice Note: Cost orders—the general rule and the court's discretion. To bolster this principle, the mechanism of security  for costs exists and allows a defendant (whether to the main claim or a counterclaim) to apply for an order that the claimant provides security for the likely recoverable costs the defendant will incur in defending the claim—see Practice Note: Security for costs—what is it, its use and the court's discretion. In Progas Energy v Pakistan, Picken J succinctly set out the specific purpose for a security for costs, referring too, with approval, by the statements of Popplewell J in Monde

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