A friendship spanning more than two decades links the author of this article to Robert Briner. During those years, chiefly as Chairman of the ICC International Court of Arbitration, Robert Briner had to deal with problems concerning the financing of arbitration proceedings. It therefore seemed appropriate to write on an issue relating thereto.

I. The problem

The conduct of arbitral proceedings normally generates costs. These costs sometimes remain minimal, but at other times reach considerable amounts, even millions of euros or US dollars. They include not only the costs of the arbitral tribunal, i.e. the fees and expenses of the arbitrator(s), but also any registration and administrative fees to be paid to the arbitration institution administering the proceedings. They may even extend to expenses incurred by the parties, including the fees to be paid to their attorneys.

National arbitration statutes, international conventions, institutional arbitration rules and private arbitration agreements often contain provisions relating to the payment of advances on those costs. Such provisions normally require a claimant to advance part, if not all, of the costs when submitting its request for arbitration. And it is quite common for the respondent to be required to advance the other part. If the respondent refuses to pay its share, the claimant may choose one of two options. Either it pays the full amount of the advance itself so as to enable the arbitral tribunal to start the proceedings. In that case, the claimant will often seek reimbursement from the respondent for the share of the costs paid on the latter's behalf. Or, if the claimant is unwilling or unable to pay the respondent's share in addition to its own, it may prefer to obtain an enforceable decision compelling the respondent to pay its share before the proceedings start. [Page707:]

Whichever path the claimant chooses, two different questions will arise. The first turns on whether a party to an arbitration agreement has a claim under substantive or procedural law entitling it, inter partes, to demand from the other party the payment of an advance on the costs of the prospective proceedings. This will be considered in part II below. The second question concerns the jurisdictional power of the arbitral tribunal to decide on such claims. The question to be addressed there is whether such claims are admissible before the arbitral tribunal or whether they must be pursued in the competent State court. This will be considered in part III below.

II. Claims between parties to pay their shares of advances on costs

Whether parties dispose of claims between themselves for payment of their respective shares of the advances on costs depends on the effects attaching to arbitration agreements. It is not clear whether arbitration agreements have such an effect. This question is closely connected to the other question of whether arbitrators are able to raise claims against parties for the remuneration of their services and whether such claims may be enforced before State courts.

There are therefore two problems, which always need to be distinguished. The first concerns the contractual relations between the parties and raises the question of whether a claimant may require from a defendant advance payment of the latter's share in the future costs of the arbitration. The second concerns the contractual relations between the parties, on the one hand, and their arbitrator(s), on the other; here the question is whether the arbitrator(s) may require from the parties an advance on their fees and expenses. The two problems are related to each other, for it seems only fair that a claimant who alone has advanced (part of) the expected fees and expenses of the arbitrators should be able to recover from the respondent the portion of that amount to be borne the latter. Below, some national laws will be examined in these two respects.

1. German law

German arbitration law is set out in Book Ten (§§ 1025-1066) of the German Code of Civil Procedure. These statutory provisions contain no rules on the mutual duties of the parties to advance the money necessary to cover the anticipated costs of the arbitral proceedings.

However, it is well recognized under German law that contracts come into existence between arbitrators and parties when arbitrators take up office. These contracts oblige the arbitrators to render their services and impose upon the[Page708:] parties a duty to remunerate the arbitrators as consideration for those services. 1 Although these contracts are regarded as contracts sui generis, 2 the provisions of §§ 662-674 of the German Civil Code on the mandate are applicable mutatis mutandis. 3 Pursuant to § 669, the mandated person can claim from the principal the payment of an advance to cover the former's anticipated expenses. A similar duty is recognized for the payment of an advance covering arbitrators' fees. 4 Thus, there can be no doubt that arbitrators have claims under German law vis-à-vis the parties for the payment of deposits. However, these claims are unenforceable before the competent State courts due to the fact that arbitrators have alternative means of enforcing claims for their fees: they may refuse to start the proceedings by raising the defence of contractus non adimpleti, so as to incite the parties to make the required deposits. 5 Once the award has been rendered, on the other hand, the arbitrators are entitled to sue the parties in the competent State courts for the payment of their fees, for which the parties are jointly liable. 6

The parties are also obliged inter partes, i.e. between each other, to pay the advances for the fees and expenses of their arbitrators. That obligation results from their general duty to further the proceedings and to desist from all actions that might hamper them. The enforceability of those duties is recognized by German courts7 and commentators. 8 However, as will be shown in part III.1(a) below, enforcement cannot be sought before the arbitral tribunal, but only in the competent State courts. [Page709:]

2. Austrian law

In Austria, the law of arbitration is set out in the Chapter Four (§§ 577-599) of the Code of Civil Procedure. It contains no provisions on the advances to be paid by the parties to cover the expected costs of their future proceedings. However, according to Austrian courts and traditional thinking, as in Germany, the duty to make such deposits derives from the contract between the parties and the members of the arbitral tribunal, 9 which is considered to be a contract for work and services under §§ 1151(1), 1152 and 1165 et seq. of the Austrian General Civil Code. 10 That duty cannot, however, be enforced against the parties by an order issued by the arbitral tribunal itself. Instead, the arbitrators may invoke the defence of non adimpleti contractus and refuse to render their services until the advances have been paid. 11 Only after the proceedings have been completed can the arbitrators sue the parties for payment of their fees before the competent State courts. 12

The parties are again obliged inter partes to pay all advances necessary for initiating and furthering the proceedings.13 However, as under German law, it is not the arbitral tribunal but the competent State court that has the power to order their payment14 (see part III.1(b) below). [Page710:]

3. Swiss laws

In Switzerland, a distinction must be made between: (i) arbitrations that are purely internal, i.e. the tribunal has its seat in Switzerland and no person involved in the proceedings is domiciled or resident outside the Swiss Confederation, and (ii) arbitrations before a tribunal seated in Switzerland in which at least one of the parties has its domicile or residence outside the Confederation. The former are regulated by the Swiss Intercantonal Arbitration Convention, 15 and the latter by Chapter 12 of the Swiss Private International Law Act16and the Swiss Rules of International Arbitration passed by Six Swiss Chambers of Commerce and Industry. 17

The parties are obliged to advance to their arbitrator(s) the fees which it is presumed they will earn and the expenses which they are expected to incur in the course of the arbitral proceedings. That duty results from the contract of service which comes into existence between the parties and the members of the arbitral tribunal when the latter are appointed. 18 It is doubtful, however, whether such duty can be enforced at all, either by the arbitral tribunal or the competent State court: 19 one author2020 has described it as a mere 'Obliegenheit', i.e. a natural obligation, unable to be enforced by either an arbitral tribunal or a state court.

On the other hand, neither the Intercantonal Convention21 nor the Swiss Rules of International Arbitration22 contain unambiguous provisions obliging the parties to make advance payments-as between themselves-to cover the costs[Page711:]

of their future arbitral proceedings. It is disputed, therefore, whether the parties to an arbitration agreement may raise claims between themselves for the payment of deposits. Some Swiss authors deny the existence of such inter partes obligations, arguing that arbitration agreements are exclusively procedural arrangements incapable of creating enforceable duties of substantive law (schuldrechtliche Verpflichtungen, obligations d'effet matériel). 23

However, in common with German commentators, 24 a knowledgeable Swiss writer and practitioner25 has derived such inter partes obligation from the general duty of the parties to cooperate in good faith and not to engage in any action that might hamper the course of the arbitration. 26That writer argues that the obligation to deposit the amounts needed to cover the costs of the arbitral proceedings is implicit in the arbitration agreement. Consequently, if one party refuses to pay its share of the advance and the other party consequently pays the whole amount to enable the arbitral tribunal to start the proceedings, the party that has paid the full amount may recover from the other the latter's share of the costs. It is considered irrelevant whether the arbitration agreement contains an express provision to that effect or not. As will be shown in part III.2(a) and (b) below, and in contrast to German and present Austrian law, such a claim may even be raised before the arbitral tribunal, saving the party entitled to bring the claim from having to initiate proceedings in the competent State court.

4. French law

In France, the rules on national and international arbitration are set out in Book Four of the New Code of Civil Procedure (Articles 1442-1507). These rules do not contain any provisions on the advances to be made by the parties for financing the conduct of the proceedings. [Page712:]

French writers27 and courts28 carefully distinguish between the contract of services with the arbitrator(s) (receptum arbitrii, contrat d'arbitrage, contrat d'investiture29) and the arbitration agreement. Insofar as the former places the arbitrator(s) under an obligation to render services, it is defined as a mandat and as such is governed by Articles 1984 et seq. of the French Civil Code. From Article 1999 of the Civil Code it may be inferred that there is the duty to advance the money necessary for the performance of the services promised.

As will be shown in part III.2(b), arbitral tribunals have the power to fix in their awards the amounts to be paid to them as fees and as reimbursement of their expenses. If these amounts seem unreasonable, the parties are entitled to contest them in the competent State court, 30 which can reduce them to a fair level. 31

Very little attention has been given to the entirely different question of whether parties have an obligation towards each other to pay the deposits necessary for the conduct of the proceedings. Only a few judgments32 and commentators33 have recognized the existence of such a duty entitling one of the parties to sue the other in the competent State court for payment of its share of the advance.

5. Italian law

Since 1 January 1999, claims by arbitrators for their fees and reimbursement of their expenses have been expressly regulated in Article 814(1) of the Italian Code of Civil Procedure. That provision states that arbitrators are entitled to the reimbursement of their expenses and payment of their fees unless they have waived claims thereto either when they accepted their assignment or there[Page713:]

after. 34 According to one commentator, arbitrators are also entitled to receive corresponding advances. 35 As will be shown in part III.2(c) below, arbitral tribunals are even vested with the power to fix in their awards the amount of the fees and expenses to be paid to them. If the fees are unreasonably high, they may be reduced to a reasonable level by an order of the president of the competent court. It remains uncertain, however, whether arbitrators may sue the parties for the payment of any deposits. 36

On the other hand, no evidence has been found indicating that there is an inter partes obligation to pay deposits, which would allow one of them to claim against the other for the payment of the latter's share. 37

6. English law

The 1996 English Arbitration Act is silent on the duty of parties to make deposits. 38 There does not appear to be any case law on the matter. 39 It is common, however, for institutional rules expressly to oblige the parties to make deposits for the arbitrators' fees. For instance, Article 24 of the LCIA Arbitration Rules and Article 13.1 of the Arbitration Rules of the Chartered Institute of Arbitrators authorize these institutions to direct the parties to make such deposits.

From these general statements and the fact that under English law arbitral tribunals are recognized as having the power to fix the amounts of the fees and expenses due to their members (see part III.2(d) below), two conclusions may be drawn. First, it may be inferred from the existence of a contract between the parties and the arbitrators that the parties have a contractual duty not only to remunerate the arbitrators for their services but also to make a deposit for such amounts. Secondly, it may be assumed that each party to an arbitration agreement has an inter partes claim against its contractual partner for payment of the latter's share of the advance or for recovery of the amount it has paid on behalf of a party that failed to pay its share. [Page714:]

III. Jurisdiction to determine the amounts to be paid as advances

The question remains as to whether jurisdiction for deciding on deposits lies with the arbitral tribunal or the competent State court.40 Two contrasting approaches can be distinguished. On the one hand, national laws belonging to the Germanic family do not allow arbitral tribunals to fix the amounts of deposits relating to the fees and expenses of their members; only the competent State courts have jurisdiction to do this (part 1 below). These laws are the subject of strong criticism, however (part 2 below). On the other hand, the provisions of many other national laws and international arbitration institutions recognize the power of arbitral tribunals to fix the amounts of such deposits themselves (part 2 below).

1. National laws vesting State courts with jurisdiction over deposits

In Germany, Austria and some Swiss cantons, only the competent State courts are regarded as having the power to fix the amounts of the arbitrators' fees and expenses and, hence, to decide on claims relating to advances on these costs.

a) German law

A long series of decisions by German courts have established the principle that arbitral tribunals do not have jurisdiction over their own fees and expenses. This restrictive view is based on the principle-held to be part of public policy41 - that no one can decide as a judge on his own personal matters. 42That limitation is even extended to the determination of the amount in dispute, as the fees of the arbitrators are often dependent upon that amount. 43

This position is well illustrated by a 1985 decision of the German Supreme Court in Civil Matters: 44[Page715:]

Arbitrators themselves are neither allowed to bring a suit [against the parties to which they have promised to render their arbitral services] for the payment of an advance nor are they entitled to act as arbitrators in the pursuit of such claim. . . . Otherwise arbitrators would determine upon their own remuneration and thereby sit as judges on their own matters.

This pronouncement contains two different rulings. The first states that arbitrators cannot sue parties in State courts for payment of their fees and expenses, at least if they have not rendered their services and the arbitral proceedings have not come to an end. This ruling is justified by the defence of contractus non adimpleti available to arbitrators so long as the necessary deposit has not been paid: 45 they are entitled to withhold their services until they have received the deposits. The second ruling states that arbitrators also do not have the power to direct a respondent to pay to the claimant a deposit for the financing of the proceedings or to order a respondent to reimburse the claimant for the sums which the latter has already deposited. Instead, the enforcement of such inter partes obligations must be sought before State courts. This ruling-which is of primary interest here-reflects the fundamental principle that nobody can be both judge and party in the same case. Many German writers adhere to that principle. 46

These limitations have had an impact on the wording of statutory arbitration provisions and institutional arbitration rules in Germany, which are couched in very restrictive terms for fear of violating German public policy and hence being void from the very outset.

Germany's statutory rules on arbitration were amended with effect from 1 January 1998 so as to adapt them to the UNCITRAL Model Law on International Commercial Arbitration. While the UNCITRAL Model Law is silent on the costs of the arbitration and the parties' duty to pay an advance on those costs, a new provision-§ 1057-was inserted into Book Ten of the German

Code of Civil Procedure stating that the arbitral tribunal shall allocate the costs of the arbitration in its award, unless the parties agree otherwise. It is to be noted that this provision deals only with the allocation of the costs between the parties, but does not empower the arbitral tribunal to fix the amount of those costs. The text goes on[Page716:]

to say that the arbitral tribunal shall also decide on the amount to be borne by each party, but only to the extent that the costs of the arbitral proceedings have already been fixed. Thus, there is no provision empowering the arbitral tribunal to determine the sums to be paid to its members. 47

Similar restraint can be seen in the Arbitration Rules of the German Institution of Arbitration (DIS), as in force from 1 July 1998. Section 7.1 of these Rules clearly states that, when filing its claim, the claimant shall pay to the DIS an administrative fee and a provisional advance on the arbitrators' costs in accordance with the institution's schedule of costs. Further, Section 25 provides that the arbitral tribunal may make the continuation of the arbitral proceedings conditional upon payment of the advances on the anticipated costs. Section 35.3 refrains, however, from giving the arbitral tribunal the power to determine the individual amounts due to the arbitrators and simply authorizes it to decide on the amounts to be borne by each party 'to the extent that the costs of the arbitral proceedings have been fixed'.

This traditional German position is not persuasive, for the following reasons.

First, a distinction has to be made between institutional and ad hoc proceedings. In institutional proceedings the fees of arbitrators are normally fixed not by the arbitrators themselves but by the institution administering the arbitration. A table of tariffs serves as a guideline for determining the amount of the arbitrators' fees in each individual case. Therefore, in such cases, no objections could be raised against the power of the arbitral tribunal to incorporate in its award the precise numbers already fixed by the institutional body administering the arbitration.

In ad hoc arbitrations the situation is different. If the arbitrators have already fixed in their contractual arrangements with the parties all details about the amounts due to them, in particular the exact amount of their fees and the kinds of expenses to be reimbursed, there can be no objection to the arbitral tribunal incorporating these figures in its award. 48 If the amounts to be paid to the arbitrators have not already been fixed at the start of the proceedings, allowing[Page717:]

the arbitrators to do so could hardly give rise to objections, for there are plenty of statutory provisions limiting the discretionary power of the arbitral tribunal. Since the parties' duty to remunerate their arbitrators results from the contract of service between them, § 612(2) of the German Civil Code would apply, which provides that in contracts to render services if the amount of the remuneration has not been contractually fixed it has to be calculated on the basis of the applicable tariff. In the absence of a tariff, customary remuneration is assumed to have been agreed upon. Thus, when German attorneys sit as arbitrators, the professional tariffs regulating their fees have to be applied, and likewise when German judges, university teachers or company lawyers act as arbitrators. Similar tariffs may be found in statutes regulating the professions of engineers, auditors and others, and it would seem appropriate to apply them, mutatis mutandis, to situations where these professionals serve as arbitrators.

It cannot of course be ruled out that arbitrators who have been authorized by the parties to decide on the amounts due to them depart from those guidelines and set excessively high figures. Yet even then the parties have legal remedies at their disposal. Relying on § 315(1) of the German Civil Code, they may ask the competent State court to reduce the amounts fixed by their arbitrators to a fair level. 49

Given that there are thus sufficient statutory guidelines and remedies limiting the discretion of an arbitral tribunal, the rulings of German courts that have denied arbitral tribunals the power to fix the amounts to be paid to them are not convincing. This is also true of the allegation that giving them such power would violate German public policy. 50

Finally, if arbitral proceedings were to be held in Germany under institutional arbitration rules such as those of ICC or the LCIA, and the ICC International Court of Arbitration or the LCIA Court, pursuant to those rules, fixed the amounts to be paid to the members of the arbitral tribunals acting under their auspices, these decisions might be void, for according to traditional German thinking they would possibly violate German public policy as both Courts are composed of private persons close to international arbitration, not State judges. Clearly, this would be an aberrant result showing such thinking to be incorrect. [Page718:]

b) Austrian law and future Austrian legislation

Chapter Four of the Austrian Code of Civil Procedure contains no provisions indicating which body is vested with jurisdiction to decide on the amounts to be advanced as deposits or to be finally paid to arbitrators. Given that Austrian law is part of the Germanic family, it is no surprise that Austrian courts51 and commentators52are in alignment with their German counterparts.

This situation might change, however, in the near future. A proposal to amend Austrian arbitration law has recently been published, on the basis of work done by a task force of highly qualified experts. 53Pursuant to that proposal, § 598(2) of the Code of Civil Procedure would allow the arbitral tribunal to impose upon the parties, if they do not agree otherwise, the payment of advances covering the expected costs of the arbitration. If one party refuses to pay its share, the other shall be entitled to advance the total amount. The draft goes on:

In this case, the party [paying the total amount] can ask the arbitral tribunal to issue an award requiring the other party to reimburse its share. 54

This proposal clearly breaks with the position still espoused by German as well as Austrian courts and by traditional schools of thought in both countries.

2. National laws vesting arbitral tribunals with jurisdiction over deposits

In contrast to Germany and Austria, most other national arbitration laws and rules of domestic arbitration institutions appear to vest the arbitral tribunal with jurisdiction over advances on costs.

a) Swiss laws

In the Swiss Private International Law Act there is no mention of which body has jurisdiction to determine the amount of advances on costs, be it between the parties and their arbitrator(s), or between the parties themselves. In the Swiss Intercantonal Arbitration Convention, on the other hand, it may be[Page719:]

assumed that jurisdiction lies with the arbitral tribunal, for Article 33(11)(g) states that the award shall contain 'the decision as to the amount and burden of costs'. If the arbitral tribunal has the power to determine the amount of the costs, it is justifiable to infer that it also has the power to fix the amounts due as deposits. Article 36(i) provides further that an action to set aside the arbitral award may be brought before the competent judicial authority if it is thought that 'the fees of the arbitrators fixed by the arbitral tribunal are manifestly excessive'. Article 40(3) adds that in that case 'the judicial authority shall itself determine the amount of such fees'.

The same pattern is followed in the Rules of International Arbitration of the Swiss Chambers of Commerce and Industry, which entered into effect on 1 January 2004. Article 38 of these Rules provides that the arbitral tribunal shall determine the costs of the arbitration in its award. The term 'costs' includes not only the fees of the arbitral tribunal, to be stated separately for each arbitrator and to be determined by the tribunal itself, but also the travel and other expenses incurred by the arbitrators. Under Article 40(4), the arbitral tribunal is required to submit a draft of its award to the Chambers for consultation, including its decision as to costs. Thus, the decision on costs is subject to scrutiny by the Chambers. Also, Article 41(1) of the Rules states that when the arbitral tribunal is established, it shall request each party to deposit an equal amount as an advance on costs. Although a member the Germanic family, Swiss law therefore clearly adheres to the view that the arbitral tribunal is vested with jurisdiction to determine the amounts due to its members, including the sums to be advanced by the parties to cover the costs of the arbitration.

b) French law

A similar situation reigns under French law. Book Four of the New Code of Civil Procedure does not mention the body having jurisdiction either to determine the amounts due to the arbitrators for their services or to rule on the inter partes claim by a claimant against the respondent for reimbursement of the expenditure that the former had to make on the latter's behalf. But both questions have been answered by the French courts.

First, two eminent French arbitration lawyers55 report that arbitrators are generally regarded as having the power to direct the parties to pay them an advance on their expected fees and expenses, even when this is not expressly provided in[Page720:]

institutional rules. It may be that this power is derived from the contract between the parties and the arbitrators whereby the latter are obliged to render their services and the former to pay them for these. There would appear to be no discussion, however, on whether arbitral tribunals are also vested with the power to direct the parties to pay or to reimburse advances between themselves, where one party has failed to pay its share of the expected costs. The existence of such power to order inter partes payments therefore remains doubtful.

Second, French courts56 have repeatedly decided that arbitral tribunals are empowered to fix themselves the amounts to be paid to them as fees or in reimbursement of their expenses. However, according to one commentator, 57 the exercise of that power must not violate the principle that an arbitrator cannot be both judge and party. Hence, it is well established that the arbitral tribunal's determination of the sums to be paid to its members cannot bind the parties, 58 who remain free to challenge that determination in the competent State court. 59 The arbitral tribunal's power derives from the service contract between the parties and their arbitrators, which is governed by the provisions of the French Civil Code relating to the mandat. According to these provisions, it is possible for the principal to bring an action in the civil courts to have an unreasonable fee reduced to a fair amount. 60

c) Italian law

Article 814(2) of the Italian Code of Civil Procedure reads: 61

When the arbitrators themselves have fixed the amounts of their expenses and fees, such determination does not bind the parties if they do not accept it. In such a case the amounts of the expenses and fees are determined by a non-appealable decision of the president of the court indicated in Art. 810, para. 2, upon recourse of the arbitrators after the parties have been heard. [Page721:]

Here again the arbitral tribunal is vested with the power to determine the amounts due to its members but its determination does not bind the parties. 62 However, there is no indication of which body would possess jurisdiction to decide on the inter partes claim by a claimant against a respondent for reimbursement of the costs it had to pay on the latter's behalf if that question were to arise.

d) English law

English law has always permitted the arbitral tribunal to fix the amounts due to its members. This was the case under the 1950 Arbitration Act, section 18(1) of which stated that, unless the parties agreed otherwise, an arbitration agreement left the determination of the costs of the arbitration to the discretion of the arbitral tribunal,63 which was also authorized to decide to whom and by whom and in what manner those costs or any part of them were to be paid. 64 And similar provisions are found in the 1996 Arbitration Act, section 61(1) of which provides that, if the parties agree, the tribunal may make an award allocating the costs of the arbitration between the parties. Section 63(1) adds that the parties are free to agree what costs of the arbitration are recoverable. According to section 64(1), unless the parties have agreed otherwise, the fees and expenses of the arbitrators must be reasonable under the circumstances of the case, and the parties may appeal to the competent court to have such reasonableness scrutinized. Section 63(2) further clarifies that the arbitral tribunal has jurisdiction to determine the amounts due to the arbitrators but must specify the basis on which it has calculated those amounts (for example, by referring to a scale of fees of an arbitral institution). 65

Since the 1996 English Arbitration Act and English case law are silent on the inter partes duty to pay or reimburse advances, there is also no discussion on which body would have jurisdiction to rule on that question.

3. International institutional rules vesting arbitral tribunals with jurisdiction over deposits

Under some international institutional rules, the amounts due to the arbitrators are fixed by the institution itself. This is the case, for example, with the ICC Rules of Arbitration, Article 31 of which states that the ICC Court-and not[Page722:]

the arbitral tribunal-shall fix the arbitrators' fees in accordance with its schedule of costs. Likewise, under Article 28.1 of the LCIA Rules, the costs of the arbitration are determined by the London Court of International Arbitration in accordance with its schedule of costs. 66

Other international institutional or quasi-institutional rules confer upon arbitral tribunals themselves sitting under their auspices the power to determine these amounts. Reference may be made, for example, to Article 38 of the UNCITRAL Arbitration Rules, which provides that '[t]he arbitral tribunal shall fix the costs of the arbitration in its award' and adds that the fees of the arbitral tribunal should be stated separately for each arbitrator. Other examples are Article 31 of the International Arbitration Rules of the American Arbitration Association, 67 Article 58 of the Arbitration Rules of the China International Economic and Trade Arbitration Commission (CIETAC), 68 and Article 40.1 of the Procedural Rules on Conciliation and Arbitration of Contracts financed by the European Development Fund. 69

Again, in the absence of any provision dealing with an inter partes duty to pay or reimburse advances, it is no surprise that no rule can be found empowering a judicial body to decide on that question.

IV. Summary and conclusions

(i) In part II above we were led to observe that, in all the jurisdictions considered in this study, parties to arbitration agreements have an obligation towards their arbitrators to pay advances on their fees and expenses. This duty results from the contract between the parties and their arbitrator(s) whereby the latter promise to render their services as consideration for their fees.

However, we have also seen, in part III, that in Germany and Austria arbitrators are not empowered to fix the amounts of their fees and expenses. Consequently, in these jurisdictions, they must bring their claims for advances on their future fees and expenses in the State courts. This they can do only after the arbitration[Page723:]

proceedings have come to an end. Prior to that they may withhold their services and make them conditional upon the payment of appropriate advances. The enforceability of such claims is doubtful in Switzerland, too. The reason for denying arbitrators such power-that one cannot judge one's own affairs-is not convincing. After all, arbitrators are not free when determining such amounts, but are bound by the rules of law under which they render their contractual services. And those rules also allow parties to challenge the determinations made by the arbitrators. For these reasons, therefore, under both German and Austrian law, arbitrators should have the power to determine the amounts due to them as fees or expenses. The fact that French, Italian and English arbitration laws and some international institutional rules recognize the power of arbitral tribunals to fix the amounts of their fees and expenses confirms the need for a revision of the German and Austrian arbitration laws.

(ii) On the other hand, it also follows from part II of our discussion above that, under German and Austrian law, parties to an arbitration agreement are obliged towards each other to contribute to the deposits necessary for financing the arbitral proceedings. That inter partes obligation stems from the general duty of the parties to further the conduct of the proceedings and to abstain from any action that might hamper them. In Switzerland the existence of such an obligation is doubtful but advocated by a knowledgeable writer and practitioner. In France, Italy and England, that issue has apparently not been decided by a court, and it is also scarcely discussed by commentators. How it will be dealt with in those countries therefore remains uncertain.

But again, it has been shown above in part III that German and Austrian laws do not vest arbitral tribunals with jurisdiction to rule on such inter partes obligations to pay advances. This position is open to the same criticism as was made above under (i). Arbitral tribunals should have the power to order a party to pay its share of the arbitration costs or to direct a party to reimburse the other for the share which the latter has paid on the former's behalf. [Page724:]

1
Federal Supreme Court (BGH), 22 February 1971, BGHZ 55, 344 at 347.

2
See G. Wagner, 'Germany' in F.-B. Weigand, ed., Practitioner's Handbook on International Arbitration (Munich: Beck, 2002) 685 at 726f., no. 137.

3
See P. Schlosser in F. Stein & M. Jonas, eds., Kommentar zur Zivilprozeßordnung, vol. 9 (Tübingen: Mohr Siebeck, 2002), Annotation to § 1025, no. 13.

4
See K.H. Schwab & G. Walter, Schiedsgerichtsbarkeit, 6th ed. (Munich: Beck, 2000) at 118f., para. 16; P. Schlosser, supra note 3 at no. 14.

5
See J.-P. Lachmann, Handbuch für die Schiedsgerichtspraxis, 2d ed. (Cologne: Otto Schmidt, 2002) 235ff., nos. 656-658; P. Schlosser, supra note 3 at no. 14; BGH, 10 April 1980, BGHZ 77, 65 at 67; BGH, 7 March 1985, BGHZ 94, 92 at 94; Appeal Court (OLG) Oldenburg, 31 March 1971, NJW 1971, 1461 at 1462, right col. - Contra: OLG Hamburg, 14 May 1965, Monatsschrift für Deutsches Recht 1965, 54 at 55, which seems to recognize the enforceability of such claims before the competent State courts.

6
See J.-P. Lachmann, supra note 5 at 142, no. 378; W. Wais in R.A. Schütze et al., eds., Handbuch des Schiedsverfahrens, 2d ed. (Berlin: de Gruyter, 1990) at 130, no. 241.

7
OLG Munich, 25 April 1935, Deutsche Juristenzeitung 1935, 830. See also BGH, 7 March 1985, BGHZ 94, 92 at 95; BGH, 12 November 1987, NJW 1988, 1215; OLG Oldenburg, 31 March 1971, NJW 1971, 1461 at 1462, right col.; recently Amtsgericht Düsseldorf, 17 June 2003, SchiedsVZ 2003, 240.

8
See P. Schlosser, supra note 3, Annotation to § 1029 at para. 30; J.-P. Lachmann, supra footnote 5 at p. 141, no. 377; K.H. Schwab & G. Walter, supra note 4 at 120; E. Breetzke, 'Annotation', NJW 1971, 2080; K. Lindloh, 'Der Vorschuß für das Schiedsgericht' in Deutsche Institution für Schiedsgerichtsbarkeit, ed., Kosten in Schiedsgerichtsverfahren, DIS-Materialien X, (Cologne, 2005) 23 at 35.

9
Compare e.g. P. Reindl, 'Die Rechtsgrundlagen für die allgemeine Schiedsgerichtsbarkeit in Österreich' (distributed to participants at a conference on Austrian arbitration, Vienna, 21 May 1987) at 13. According to C. Liebscher & A. Schmid, 'Austria' in F.-B. Weigand, ed., Practitioner's Handbook on International Arbitration (Munich: Beck, 2002) 541 at 575, no. 212, this duty is based on § 1152 of the General Austrian Civil Code, which appears in the chapter on contracts to render services and provides that, failing an agreement on remuneration, reasonable remuneration has to be paid.

10
Supreme Court (OGH), 7 March 1977, Juristische Blätter 1978, 155 at 157 left col. See also OGH, 30 October 1985, Zeitschrift für Rechtsvergleichung 1986, 141 at 143, although not based on Art. 1151 and Art. 1152 of the General Civil Code. See also H. Fasching, 'Kostenvorschüsse zur Einleitung schiedsgerichtlicher Verfahren' Juristische Blätter 1993, 545 at 548; idem, Lehrbuch des österreichischen Zivilrechts (Vienna: Manzsche, 1990) 1078, no. 2198, and 1079, no. 2203; idem, Schiedsgericht und Schiedsverfahren im österreichischen und im internationalen Recht (Vienna: Manzsche, 1973) 75f.; R. Holzhammer, Österreichisches Zivilprozeßrecht (Vienna: Springer, 1976) at 365; W. Rechberger, Kommentar zur Zivilprozeßordnung (Vienna: Springer, 1994) at 1216, no. 5.

11
See H. Fasching, 'Kostenvorschüsse zur Einleitung schiedsgerichtlicher Verfahren', supra note 10 at 549.

12
OGH, 1 October 1952, Entscheidungen des österreichischen Obersten Gerichtshofes in Zivil- und Justizverwaltungssachen ('SZ') 1954, no. 252 at 642f., 644; Austrian Supreme Court, 9 November 1937, SZ 1937, no. 304. See also P. Reindl, supra note 9; H. Fasching, 'Kostenvorschüsse zur Einleitung schiedsgerichtlicher Verfahren', supra note 10 at 548; R. Holzhammer, supra note 10 at 365. This state of law is strongly criticized by A. Reiner, 'Die internationale Schiedsgerichtsbarkeit nach österreichischem und französischem Recht' Zeitschrift für Rechtsvergleichung 1986, 162 at 219ff.

13
Implicitly recognized by the Austrian Supreme Court; see OGH, 30 October 1985, supra note 10.

14
But see Art. 23 of the Vienna Arbitration Rules in force as of 1 January 2001 providing that the costs of the arbitration (including the fees of the arbitrators and their cash outlay (Art. 21(a)) shall be determined by the Secretary of the Vienna International Arbitration Centre at the end of the proceedings (Art. 23(1)), while Art. 19 provides that these costs shall be incorporated in the award.

15
See Art. 1(1) of the Convention.

16
See Art. 176 of the PILA.

17
See Art. 1(1). The parties are free, however, to designate a place outside Switzerland as the seat ofthe arbitration; see Art. 1(2).

18
F. Hoffet, Rechtliche Beziehungen zwischen Schiedsrichtern und Parteien (Zürich: Schulthess, 1991) at 260-262; T. Rüede & R. Hadenfeldt, Schweizerisches Schiedsgerichtsrecht, 2d ed. (Zurich: Schulthess, 1993) at 162, 222f.

19
See T. Rüede & R. Hadenfeldt, supra note 18 at 223, § 2(b), who, after referring to the dissenting position of the German courts (see supra note 5) conclude that no objection could be raised against the enforceability of such claims since arbitrators can also sue parties before State courts for payment of their fees.

20
F. Hoffet, supra note 18 at 262.

21
Art. 30(1) allows the arbitral tribunal to order an advance on foreseeable costs. But Art. 30(2) reads: 'If one of the parties does not advance the sums required of it, the other party may elect to make an advance of all the costs or forego the arbitration. If it chooses the latter course, the parties shall no longer be bound by the arbitration agreement in respect of the dispute in question.'

22
Art. 41(1) provides that the arbitral tribunal, upon its establishment, shall request each party to deposit an equal amount as an advance for the costs of the proceedings. But Art. 41(4) continues: 'If the required deposits are not paid in full within thirty days after the receipt of the request [by the arbitral tribunal], the arbitral tribunal shall so inform the parties in order that one or another of them may make the required payment. If such payment is not made, the arbitral tribunal may order the suspension or termination of the arbitral proceedings.'

23
See T. Rüede & R. Hadenfeldt, supra note 18 at 225, § 8(a)(bb); M. Knellwolf, 'Zur materiellrechtlichen Bedeutung der Schiedsabrede' in S. Berti et al., eds., Beiträge zu Grenzfragen des Prozeßrechts (Zürich: Schulthess, 1991) 45 at 59.

24
See supra notes 6 and 7.

25
Compare W. Wenger in S.V. Berti, ed., International Arbitration in Switzerland, An Introduction to and A Commentary on Articles 176-194 of the Private International Law Statute (Kluwer Law International, 2000), Art. 178, no. 71.

26
See Swiss Supreme Court, 10 May 1982, BGE/ATF 108 I 197 at 201; and 8 November 1985, BGE/ ATF 111 I 259 at 262. See also Swiss Supreme Court, 8 December 2003, (2005) 23 ASA Bulletin 119 at 125: An ICC arbitral tribunal seated in England had issued a partial award ordering the respondent, inter alia, to reimburse the claimant for 50 per cent share of the advance incumbent upon the respondent. The Swiss Supreme Court found that that part of the award did not to violate Art. V(2)(b) of the 1958 New York Convention (public policy).

27
Compare Ph. Fouchard, 'Le statut de l'arbitre dans la jurisprudence française' Rev. arb. 1996.325 at 343; M. de Boisséson, Le droit français de l'arbitrage (Paris: Joly 1990) 810ff.; Ch. Jarosson, Annotation of Cass. civ. 2e, 28 October 1987, Qualitas, Rev . arb. 1988.150; G. Bolard, Annotation of Paris, 25 November 1997, Rev. arb. 1998.689.

28
See, above all, the famous Bureau Qualitas case culminating in the Court of Cassation's decision of 28 October 1987, Rev. arb. 1988.149; Cass civ., 10 October 1990 and Paris, 23 September 1994, Rev. arb. 1996.393; and Paris, 25 November 1997, Rev. arb. 1998.684.

29
See Ph. Fouchard, supra note 27 at 369.

30
See also Ch. Jarosson, supra note 27 at 151ff.; G. Bolard, supra note 27 at 698; Ph. Fouchard, supra note 27 at 368ff.

31
See the judgments of French courts cited supra in note 28 as well as the French authors cited in the previous footnote.

32
See Trib. com., Beaune, 8 July 1994, Rev. arb. 1995.132; Fertalgo Euromade Alger v. Kaltenbach Touring SA, unpublished, reported by E. Gaillard & J. Edelstein, 'France' in F.-B. Weigand, ed., Practi-tioner's Handbook on International Arbitration (Munich: C. H. Beck, 2002) 643 at 674, no. 177.

33
E. Gaillard & J. Edelstein, ibid.

34
'Gli arbitri hanno diritto al rimborso delle spese e all'onorarios per l'opera prestata . . .'

35
G. Bernini, Lezioni di Diritto dell'Arbitrato (Bologna: Cooperative Libraria Universitaria Editrice Bologna, 1992) at 401: 'quali [the arbitrators] possono richiedere anche un ragionevole deposito preventive a copertura dei costi dell'arbitrato'.

36
See also M. Rubino-Sammartano, 'Italy' in F.-B. Weigand, ed., Practitioner's Handbook on International Arbitration (Munich: Beck, 2002) 831 at 872, n. 288.

37
Ibid.

38
Sections 60-65 of that Act cover only the following subjects: agreement to pay costs in any event, award of costs, effect of agreement or award about costs, recoverable costs of the arbitration, recoverable fees and expenses of arbitrators, and power to limit recoverable costs.

39
See K. Maxwell, 'England' in F.-B. Weigand, ed., Practitioner's Handbook on International Arbitration (Munich: Beck, 2002) 593 at 630ff., no. 207: 'There is no specific case law preventing an arbitrator from requiring a party to pay an advance of costs.'

40
There is even a third alternative: that such power may be entrusted to both the arbitral tribunal and the competent State court.

41
BGH, 13 March 1985 [infra note 44]; J.-P. Lachmann, supra footnote 5 at 235, no. 656.

42
OLG Munich, 25 April 1935, supra note 7; OLG Hamburg, 14 May 1965, supra note 5; BGH, 25 November 1975, Wertpapiermitteilungen 1977, 319 at 320, right col. Contra (in part): OLG Dresden, 11 December 2000, Betriebs-Berater 2001, Beilage 6 at 20.

43
BGH, 25 November 1975, supra note 42 at 321, left col.

44
13 March 1985, BGHZ 94 at 95-96: 'Schiedsrichter dürfen jedoch ihren Anspruch auf einen Vorschuß selbst gerichtlich geltend machen . . ., noch sind sie befugt, zu seiner Durchführung richterlich tätig zu werden, indem sie sich als Schiedsrichter selbst etwas zusprechen. Sonst würden Schiedsrichter die Höhe der eigenen Vergütung bestimmen und damit als Richter in eigener Sache tätig werden.'

45
BGH, 22 February 1971, supra note 1 at 347.

46
See G. Wagner, supra note 2; P. Schlosser, supra note 3; E. Breetzke, supra note 8; K. Lindloh, supranote 8.

47
When the bill was introduced into parliament, the accompanying documents were also silent on this issue.

48
Subject to the costs having already been paid as advances; see OLG Hamburg, 14 May 1965, supra note 5; BGH, 25 November 1975, supra note 42.

49
Compare BGH, 25 November 1975, supra note 42 at 321, right col.

50
This problem was discussed at a conference organized in April 2004 by the German Institution of Arbitration. The majority of the speakers were of the opinion that the rulings of the German judiciary were outmoded and that under the new § 1057 arbitral tribunals can be given jurisdiction to determine the amounts of costs to be paid to them.

51
OGH, 9 November 1937, SZ, 1937, no. 304 at 739, 741.

52
Compare e.g. P. Reindl, supra note 9 at 13.

53
See P. Oberhammer, Entwurf eines neuen Schiedsverfahrensrechts (Vienna: Manzsche, 2002) presenting the new draft with a commentary to each of its new sections. See also M. Roth, 'Tendenzen im Internationalen Kostenrecht' SchiedsVZ 2004, 65 at 66ff. The experts included Kurt Heller, Gerold Herrmann, Christoph Liebscher, Werner Melis, Kurt Neuteufel and Gerhard Walter.

54
'In diesem Fall kann die Partei beim Schiedsgericht beantragen, dass der Gegner mit Schiedsspruch zur Erstattung seines Anteils an sie verpflichtet wird.'

55
E. Gaillard & J. Edelstein, supra note 32 at 674, no. 176.

56
Cass. civ. 2e, 28 October 1987, Qualitas, Rev. arb. 1988.149; Cass. civ. 10 October 1990, Rev. arb. 1996.393; Paris, 23 September 1994, Rev. arb. 1996.394 at 395ff. See also Paris, 25 November 1997, Rev. arb. 1998, 684 at 688; Paris, 20 March 1986, Rev. arb. 1987.82.

57
Ph. Fouchard, supra note 27 at 365ff., esp. 367: 'L'essentiel . . . est qu'aucun arbitre ne saurait être à la fois juge et partie. Dès lors, en aucun cas, il ne saurait se donner un titre à lui-même.'

58
See supra note 56.

59
See also Ch. Jarosson, supra note 27 at 151ff.; G. Bolard, supra note 27 at 698; Ph Fouchard, supra note 27 at 368ff.

60
See supra notes 56 and 59.

61
'Quando gli arbitri provvedono direttamente alla liquidazione delle spese e dell'onorario, tale liquidazione non è vincolante per leparti se esse non l'accetono. In tal caso l'ammontare delle spese e dell'onorario è determinato con ordinanza non impugnabile dal presidente del tribunale indicato nell'art. 810 secondo comma, su ricorso degli arbitri e sentite le parti.'

62
See also M. Rubino-Sammartano, supra note 36 at 871ff., nos. 285-86.

63
See J. Parris, The Law and Practice of Arbitrations (London: Educational Copyrights, 1974) at 96.

64
Section 18(2) provided that any costs ordered to be paid in an award should, unless the award indicated otherwise, be taxable in the High Court. Section 19 specified that if the amount of the fees was not agreed upon with the parties but fixed by the tribunal, it was subject to scrutiny by the High Court to determine whether or not it was reasonable.

65
For further details see R. Merkin, Arbitration Act 1996 (London: LLP, 1996) at 93ff.

66
The arbitration rules of other international arbitration centres contain similar rules (e.g. Art. 69, WIPO Arbitration Rules), as do those of national arbitration institutions (e.g. Art. 39(2), Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, in effect as of 1 April, 1999; Art. 22, International Arbitration Rules of the Chamber of Commerce of Milan).

67
'The Tribunal shall fix the costs of arbitration in its award.' 68 'The arbitration tribunal has the power to determine in the arbitral award the arbitration fee and other expenses to be eventually paid by the parties to the Arbitration Commission.' 69 'The Tribunal shall fix the costs of arbitration in its award.'