I. Introduction

1. The method of fixing deposits and the fees of the arbitral tribunal is one of the most distinctive features of arbitration pursuant to the ICC Rules of Arbitration (hereafter the 'Rules'). The Rules provide a comprehensive system for the collection of a deposit from the parties (hereafter the 'advance on costs'). 2 While the advance on costs is fixed at the beginning of the matter, 3 the amount is subject to readjustment at any time. 4 When the arbitral proceedings come to an end, either by way of a final award or if the matter is withdrawn, the ICC International Court of Arbitration (hereafter the 'ICC Court') will fix the fees and expenses of the arbitrators and the ICC administrative expenses. 5 One of the principles of ICC arbitration is that the parties pay the advance on costs in equal shares. Article 30(3) of the Rules states:

The advance on costs fixed by the Court shall be payable in equal shares by the Claimant and the Respondent. . . . However, any party shall be free to pay the whole of the advance on costs in respect of the principal claim or the counterclaim should the other party fail to pay its share. . . . 6

2. Difficulties may arise when one of the parties refuses to pay its share of the advance on costs. 7 There are a number of provisions in the Rules that deal with this situation. Primarily, Article 30(3) of the Rules provides that any party shall be free to [Page60:] pay the whole of the advance on costs should the other party fail to pay its share. The party paying in substitution may then request that the arbitral tribunal take the other party's default into account in the final award. Article 31(3) of the Rules states that the arbitral tribunal shall, in the final award, 'fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties'. In this regard, it should be noted that there is a clearly established distinction under the Rules between the payment of the advance on costs by the parties and the arbitral tribunal's decision at the end of the matter as to how the costs of the arbitration are apportioned.

3. If both claims and counterclaims have been submitted, the ICC Court may set separate advances on costs for the claims and the counterclaims. The ICC Court will generally not fix separate advances on costs unless one party has refused to pay its share of the 'global'8 advance on costs and the other party has refused to pay in substitution. If separate advances on costs are fixed by the Court and a party refuses to pay the separate advance fixed for its claims or counterclaims, the Secretary General of the ICC Court will ultimately apply Article 30(4) of the Rules, leading to the claims or counterclaims being considered withdrawn. 9

4. As we can see, the Rules have certain mechanisms to deal with defaulting parties. 10 Occasionally, however, parties have sought to use other methods to tackle the problem of a party refusing to pay its part of the advance on costs. These have included seeking an order or award from the arbitral tribunal condemning the defaulting party to pay its share of the advance on costs. 11 Such applications are the subject of this article.

5. This topic can be divided neatly into two questions. The first is theoretical: from where might an arbitral tribunal derive the power to make an award or order that relates to the advance on costs? This is dealt with in section II. The second question is practical: what factors should parties and arbitral tribunals take into account when considering an application for an order or award of this nature? This is dealt with in section III.

II. The basis of the arbitral tribunal's authority to make orders or awards dealing with the advance on costs

6. There have now been several awards and orders dealing with this topic and a small number of articles. 12 Four of the awards have been published. 13 Thus, parties and arbitrators have not had the benefit of reading some of the material that has been produced on the subject. The orders, awards and articles show that arbitrators and authors are divided as to the legal basis for such an order or award. Broadly, there are two approaches: one based on contract and the other on interim measures. The proponents of the contractual approach asset that the first sentence of Article 30(3) 14 creates a substantive legal obligation between the parties that can be enforced just like any other term of a contract. Those who reason in terms of interim measures take the view that Article 30(3) must be treated as a procedural provision and any order or award dealing with it must be treated accordingly. 15[Page61:]

7. The distinction between these two theoretical approaches has an important practical impact: it decides the legal test that a non-defaulting party must satisfy in order for the arbitral tribunal to make an award or order in its favour. As we will see below, the tests to be applied are fundamentally different, depending on the approach adopted.

8. It could be questioned whether an arbitral tribunal has any jurisdiction at all to make an order or award dealing with the advance on costs. The parties' agreement to submit their dispute to ICC arbitration could be thought to give the ICC Court exclusive authority over the financial aspect of the case, which would imply that such decisions fall outside the scope of the arbitral tribunal's jurisdiction. However, no orders or awards to date have found that the arbitral tribunal has no jurisdiction to make an order or award in respect to the advance on costs. This may seem somewhat surprising given that one of the advantages of institutional arbitration - and one of the reasons why parties opt for it - is that the institution will control the financial aspect of the case.

9. Orders and awards on this topic have not always drawn a sharp distinction between the two schools of thought. This can be seen in the first award to deal with the issue - a partial award dated 2 September 1996 rendered in case 7289. The arbitration was governed by the 1988 ICC Rules of Arbitration (hereafter the '1988 Rules'). One party paid its share of the advance on costs but the other party refused to pay its share. The ICC Court invited the non-defaulting party to pay in substitution for the defaulting party but it refused to do so. The sole arbitrator was faced with an application for provisional measures including an order that the defaulting party pay to ICC its share of the advance on costs. The award notes that the 1988 Rules do not expressly foresee the arbitral tribunal making an order or award of the nature sought. It then goes on to consider the two limbs of Article 9(2) of the 1988 Rules, 16 which are nearly identical to the provisions of Article 30(3) of the 1998 Rules. The partial award considers the nature of the ICC Court's invitation for the non-defaulting party to substitute for the defaulting party and states:

It is a remedy available to the Court and in fact merely an expedient intended to facilitate the continuation of the proceedings, if this is to the benefit of one of the parties (that is to say, any claimant for the fees relating to its own claim). It does not remove the substantive obligation that lies on each party in ICC arbitration, as a result of the contractual undertaking they make towards each other, to have to participate equally in the payment of the advance on costs. In the absence of any indication in the ICC Rules, the 'invitation' by the Court to the creditor of this obligation to substitute itself for the debtor (of half of the advance) does not deprive the contractual creditor of its right to force the other party to fulfil its obligation. 17

10. This passage suggests that the sole arbitrator was following the contractual approach. Subsequent orders and awards based on the contractual approach show that unless the defaulting party can prove that it is somehow excused from performing its contractual obligation, the non-defaulting party is automatically entitled to relief in this regard. If no such defence were raised, it would not be necessary to pursue this issue.

11. However, the partial award goes on to consider certain jurisprudence on interim measures. It notes that 'there is reason to ask oneself if ordering the respondents to pay half of the advance is urgent and enables serious and irreparable harm to be avoided'. 18 The award concludes by stating that the non-defaulting party did not satisfy its burden of proving the necessity of such an order to avoid serious and irreparable harm. Thus, the sole arbitrator declined to grant the order sought. [Page62:]

12. In the wake of that first award, which was not published but was commented upon in certain publications, 19 the distinction between the two approaches emerged. Each of these will now be considered in more detail.

A. The contractual approach

13. As noted above, according to this approach, the first sentence of Article 30(3) of the Rules - 'The advance on costs fixed by the Court shall be payable in equal shares by the Claimant and the Respondent' - creates a binding contractual obligation between the parties.

14. A number of orders and awards have followed this approach. They are based on two elements: (i) that Article 30(3) of the Rules constitutes a contractual obligation between the parties (as opposed to either a procedural obligation or an obligation between the parties and ICC), and (ii) that a dispute with regard to that contractual term falls within the scope of the arbitration clause in the contract between the parties.

15. This was the approach taken in case 10526, where the non-defaulting party had paid in substitution for the defaulting party. In a partial award dated 2 December 2000, the arbitral tribunal states that 'the obligation to pay half of the advance, as provided by the Rules, must be regarded as a contractual obligation, and any dispute relating thereto is a "dispute arising out of the present contract" within the meaning of the arbitration clause'. The partial award states that the decision sought was not a provisional measure because it was not a provisional decision as to who would ultimately bear the costs of the arbitration but rather a definitive decision as to who should pay the advance on costs. The important thing to note is that the arbitral tribunal did not require the non-defaulting party to prove that such a decision was necessary or that it would suffer any irreparable harm because of the defaulting party's actions.

16. In orders and awards adopting the contractual approach, arbitral tribunals have considered that the ICC Rules are incorporated into the parties' agreement by reference 20 and have found no reason to treat such provisions incorporated by reference differently from any other terms of the parties' contract.

17. This approach has been endorsed by a number of learned authors. W.L. Craig, W.W. Park and J. Paulsson state in this respect that:

All of the conditions for an interim award seem fulfilled: immediate harm has been done to the non-defaulting party, the breach of the contractual obligation raises simple issues, the amount of damages are known and the claim is for a liquidated amount. 21

However, the authors go on to emphasize that even if there is such a legal right, the arbitral tribunal always retains discretion as to whether or not to render an interim or partial award. 22

18. It is also emphasized that an order or award following this approach is not an award of damages for breach of contract but rather a decision as to an existing legal obligation enjoining specific performance of that obligation. As I. Fadlallah states: [Page63:]

the purpose of the application is performance of a contractual obligation to pay, not compensation for damage or loss. Despite the pervasive nature of civil liability, here there is no need to establish a case of urgency or the irreparability of the harm. A contractual obligation simply needs to be genuine and due in order to be performed. 23

19. However, one recent ICC award highlights that, even if one follows this approach strictly, it does not necessarily follow that the arbitral tribunal will grant such an order or award. In the case in question (11330), the non-defaulting party paid its share of the advance on costs and posted a bank guarantee to cover the defaulting party's share of the advance on costs. The non-defaulting party requested the arbitral tribunal to order the defaulting party to pay its share of the advance on costs to ICC. In a partial award dated 17 June 2002, the arbitral tribunal took the contractual approach, stating:

the Arbitral Tribunal concludes that the parties in arbitrations conducted under the ICC Rules have a mutually binding obligation to pay the advance on costs as determined by the ICC Court, based on Article 30-3 ICC Rules which - by reference - forms part of the parties' agreement to arbitrate under such Rules. Accordingly, in the instant case [non-defaulting party]'s request is, in principle, well founded.

20. While stating that the obligation of the parties to pay their respective shares of the advance on costs is clear, the aforementioned award also notes that there are certain exceptions. One of them is stated to be 'the generally accepted principle authorizing a party to suspend the performance of its obligations if the other party, e.g. as a result of deterioration of its financial situation, will not be able to perform a substantial part of its obligations'. The partial award goes on to consider the financial situation of the non-defaulting party. The defaulting party had argued that it would not pay its share of the advance on costs because the non-defaulting party had engaged in certain corporate restructuring. The defaulting party argued that the only explanation for such reorganization was that the holding company of the non-defaulting party would be willing for the non-defaulting party to go into insolvency should it lose the arbitration. The arbitral tribunal decided, by a majority, that '[non-defaulting party]'s reorganization may only be explained by its deliberate attempt to deteriorate its financial situation to the extent that it will be insolvent, i.e. economically non-existent in the event that it loses the case while it will continue to exist in good standing if it wins the case'.

21. In case 10439, the non-defaulting party had paid in substitution for the defaulting party and sought an order requiring the defaulting party to reimburse it the amount it had paid. In its defence, the defaulting party stated that one of the reasons for not paying its share of the advance on cost was that it contested the jurisdiction of the arbitral tribunal. In its partial award of 8 April 2002, the arbitral tribunal dismissed the non-defaulting party's request, explaining that '[s]ince the issue of jurisdiction over [defaulting party] is still pending, the relief sought by [non-defaulting party] cannot be granted'. Interestingly, the award considers the two different approaches outlined above but states that 'the issue of whether or not Article 30(3) first sentence of the ICC Rules does impose upon the parties a material obligation to pay in equal shares the advance on costs fixed by the ICC Court, a contention which is disputed by another trend in the doctrine . . . may remain undecided'.

22. The proponents of the contractual approach stress that at the time the parties are invited to pay the advance on costs the defaulting party has an obligation to the [Page64:] other party to pay its share. They argue that this is a legal obligation at that point in time and is neither provisional nor preliminary. In this respect they differ fundamentally from the proponents of the provisional measures approach.

B. The provisional measures approach

23. This approach is based on the proposition that there is a distinction in the Rules between those financial aspects of arbitration for which the arbitral tribunal is competent and those for which the ICC Court is competent. According to this viewpoint, the first sentence of Article 30(3) is an obligation owed by the parties to ICC and, strictly speaking, not an obligation between the parties. X. Favre-Bulle puts the case as follows:

We believe that in ICC arbitration the parties' agreement seeks to distribute the powers relating to arbitration costs: while the arbitral tribunal is empowered to decide which party must in the end bear what proportion of the costs, the question of the advance is dealt with solely by ICC. . . .

If this question is raised with the arbitrators they cannot, in our opinion, render a decision in substantive law, by way of a partial award on the merits, ordering the respondent to make a contractual payment, since they have no authority to rule on a question of an administrative nature in place of ICC. 24

This distinction leads to the conclusion that the first sentence of Article 30(3) of the Rules does not, per se, create a binding contractual obligation between the parties.

24. Proponents of this approach argue that it is consistent with the nature of the relationships in ICC arbitration. D. Mitrovic, commenting on one of the very early awards to have adopted the contractual approach, states:

it must be observed that the stands taken in the decision were based on the purely contractual concept of arbitration and on the notion that all provisions of the Rules form an integral part of the contractual relationship between the two parties. However, there is an alternative view to the effect that the provisions of the Rules relating to advances on costs correspond to general conditions for the provision of the Court's arbitration services and that these define relationships between the Court and the parties - that is with each party separately - rather than reciprocal relationships between the parties. 25

25. It does not necessarily follow, however, that an arbitral tribunal cannot make a decision dealing with the advance on costs. Rather, the proponents of this approach argue that such an application must be treated as an interim measure of protection pursuant to Article 23(1) of the Rules. 26

26. A partial award dated 26 March 2002 rendered in case 11405 looks at this matter from an interesting perspective. It focuses on the fact that, pursuant to Article 30(2) of the Rules, the ICC Court may set separate advances on costs for the claims and counterclaims. It states in this regard:

The Arbitrator considers that this power of the ICC Court of Arbitration to discharge the parties from the obligation to pay each half of the global advance on costs, by fixing separate advances, implies that the parties are not contractually bound (each towards the other) to pay half of the advance on costs when a counterclaim is raised. [Page65:]

27. The partial award then extends this to the situation where there are no counterclaims and states:

The Arbitrator considers that Article 30(3) first sentence cannot have a different nature (contractual or administrative), depending on the presentation by the respondent of a counterclaim. It results that Article 30(3) first sentence of the ICC Rules does not create a contractual obligation of the parties to each pay half of the advance on costs. Such rule determines the normal way of providing the advances and regulates the relations between the ICC Court of Arbitration and the parties.

This notwithstanding, if one of the parties does not comply and if the other party pays the whole advance, this rule has to be taken into consideration by the arbitral tribunal in taking possibly an 'interim measure' based on Article 23 of the ICC Rules.

28. The partial award then goes on to consider what must be satisfied in order to grant an interim measure pursuant to Article 23 of the Rules. It considers the somewhat thorny issue of what a party must prove in order to be entitled to an interim measure of protection and concludes: 'The arbitral tribunal has to consider and balance the legitimate interests of both parties. A condition of particular urgency or of an irreparable prejudice should not be required.'

29. In a partial award in case 11392, dated 25 October 2002, the arbitral tribunal referred as follows to the test that must be satisfied in order for payment to be ordered as an interim measure:

It is only when it is convinced that the failure by [defaulting party] to pay its share of the advance on costs would cause injustice that an arbitral tribunal must, if so requested, do what it can to prevent said injustice. 27

30. The partial award goes on to hold that the non-defaulting party had proven to the arbitral tribunal's satisfaction that it lacked the financial resources to cover the defaulting party's half of the advance on costs. The partial award concludes that the conduct of the defaulting party would lead to irreparable damage that could be prevented through the measure requested by the non-defaulting party.

31. The practical outcome of this debate is where the burden lies as between the defaulting and the non-defaulting party. If one follows the contractual approach, the burden is upon the defaulting party to satisfy the arbitral tribunal that special circumstances exist such that it should not be obliged to pay its share of the advance on costs. By contrast, if one follows the interim measures approach, it is for the non-defaulting party to convince the arbitral tribunal that there are convincing reasons why the defaulting party should be ordered to pay its share of the advance on costs.

III. Practical considerations when making an order or award relating to the advance on costs

32. Having considered the theoretical approaches to our subject, we now turn to some of the practical issues it raises. We shall consider the following three points: the form and nature of the arbitral tribunal's decision, the activities of the Court and its Secretariat and the application of Article 30(4) of the Rules, and lastly the enforcement of the order or award. [Page66:]

A. The form and nature of the arbitral tribunal's decision

33. The two questions to be considered are: (1) whether the decision should take the form of a procedural order or award and (2) whether the order or award should be in favour of the non-defaulting party or ICC.

(1) Award or procedural order?

34. The use of both awards and procedural orders is foreseen in the Rules. Article 23 of the Rules specifically states that decisions on conservatory and interim measures may take the form of either an award or a procedural order. Therefore, if the arbitral tribunal were to follow the interim measures approach, it would clearly have the choice between issuing a procedural order and rendering an award.

35. However, it has also been advanced that decisions following the contractual approach concern the substantive legal rights between the parties and therefore must take the form of an award. This is the position taken in the partial award of 17 June 2002 in case 11330:

The Arbitral Tribunal further holds that it is appropriate, in view of the contractually independent and autonomous character of the parties' obligation, to render its decision in the form of a partial or interim award rather than as an order only . . .

36. I. Fadlallah argues very persuasively that a disposition of this nature must take the form of an award and not a procedural order. 28

37. In a procedural order dated 10 September 1999 in case 10169, the sole arbitrator considered much of the literature on this issue, especially where it was discussed in the context of Swiss law, as the place of arbitration was in Switzerland. Following the contractual approach, the arbitrator decided to order the defaulting party to pay its share of the advance on costs to ICC and commented as follows on the form of the decision:

The Claimant described the decision which it requested as an 'interim award' and relied on Article 23 of the ICC Rules. That article provides for 'Conservatory and Interim Measures'; decisions under that article can be made in the form of an award or as an order.

. . . . . . . . . .

However, as [Respondent] has pointed out, the decision ordering the Respondent to pay its share in the advance, is also a final decision, insofar as it concerns not the allocation of the costs of the arbitration but the payment of the advance. Consequently, my decision on the advance can take the form of an order for interim measures concerning the costs of the arbitration or an award concerning the payment of the advance.

In order to provide immediate relief to the Claimant without the formality of an ICC award, I make the present decision in the form of an order. Should the Respondent fail to comply with this order, the Claimant may apply for an interim award according to articles 2(iii) and 24 to 29 of the Rules.

38. This is an interesting compromise between the two positions. However, there is a possible criticism that could be made of this approach. As noted above, a disposition on the basis of the contractual approach is a decision with regard to the contractual rights and obligations of the parties; therefore, the decision should be in the form of an award. [Page67:]

(2) Payment to the non-defaulting party or to ICC?

39. We can see from the examples that have been outlined that there are a number of scenarios that may arise when one party refuses to pay its share of the advance on costs. The first is when the non-defaulting party has paid the entirety of the advance on costs, paying half in substitution for the defaulting party. The second is when the non-defaulting party has paid only its half of the advance on costs and the other half remains unpaid. The third is when the non-defaulting party has paid its share of the advance on costs and has posted a bank guarantee to cover the defaulting party's share of the advance on costs.

40. In the second situation, where the non-defaulting party has not paid, an interesting issue arises: can the arbitral tribunal order the defaulting party to pay directly to ICC? The ICC Court would not seek enforcement of an award, even if one of the dispositions in the award were technically in its favour.

41. In none of the orders and awards issued to date has a party specifically questioned the arbitral tribunal's ability to make an order or award in favour of ICC. However, this matter was commented on in a partial award of 2 December 2000 in case 10526, where the non-defaulting party had paid in substitution for the defaulting party. The arbitral tribunal reached the conclusion that the defaulting party should reimburse the non-defaulting party for the amount paid in its place, stating as follows:

It is beyond question, for example, that the Court fixes the amount of the advance on costs, not the arbitrators. It could be questioned whether the arbitral tribunal can order a party to pay to ICC its portion of the advance, especially as the Secretariat may direct the arbitral tribunal to suspend its work until a request for an advance has been met. But in the case in point, the request seeks to have [defaulting party] ordered to pay to [non-defaulting party] the share which the latter has paid on the other's behalf, which does not undermine the functioning of the International Court of Arbitration as an institution. 29

42. In two recent cases (11392 and 11866) defaulting parties have been ordered to make payment directly to ICC. In 11866 the non-defaulting party had posted a bank guarantee for the defaulting party's share of the advance on costs. The partial award of 20 December 2002 rendered in this case held that the defaulting party must pay its share of the advance on costs to ICC and 'do whatever is necessary to obtain the release by the ICC of the bank guarantee'.

43. The partial award rendered in case 11392, on the other hand, concluded that the non-defaulting party could suffer irreparable damage if such an order were not made. The disposition in the partial award states:

. . . resolves . . . pursuant to Article 23(1) of the Rules of Arbitration, to order [defaulting party] to advance to ICC, within three months of notification of this arbitral award, one half of the advance on costs as fixed by the ICC International Court of Arbitration. 30

44. One can see that this type of disposition might have a number of difficulties. First, if a party were to seek enforcement of such an award, the national court would have to consider what amount was owed to ICC at that time. Questions might arise as to what type of evidence would be necessary to prove the existence of such a debt. [Page68:] Second, pursuant to Article 30(2) of the Rules, the advance on costs is subject to readjustment at any time during the proceeding. If the non-defaulting party sought enforcement of such an award, the amount might be changed at any time during the process.

45. Two partial awards in case 11692 might also be mentioned in this context. The non-defaulting party had paid its share of the advance on costs but had not paid in substitution for the defaulting party. The non-defaulting party asked the arbitral tribunal to order the defaulting party to pay its share of the advance on costs to the non-defaulting party. Not surprisingly, this application was promptly rejected. The non-defaulting party subsequently paid in substitution and again applied to the arbitral tribunal. The arbitral tribunal rendered a further award ordering the defaulting party to pay the non-defaulting party its share of the advance on costs.

B. The activities of the Court and its Secretariat and the application of Article 30(4) of the Rules

46. Over the years, the ICC Court has developed a comprehensive system for handling the financial aspects of ICC arbitrations. As far as orders and awards dealing with the advance on costs are concerned, consideration should be given to (1) the relationship between the order or award and the activities of the Court and its Secretariat and (2) the application of Article 30(4) of the Rules.

(1) The relationship between the order or award and the activities of the Court and its Secretariat

47. As noted above, orders and awards have been made in favour of both the non-defaulting party and ICC. However, any order or award made will not stop or affect the normal working of the Court or its Secretariat. The Secretariat will continue to ensure that any decisions of the Court with regard to the advance on costs are fulfilled. If parties do not pay the advance on costs as fixed by the Court, ultimately the Secretary General will invoke Article 30(4) of the Rules. 31

48. The Court, aided by the Secretariat, closely monitors the financial aspects of all cases. It will be invited to reconsider the advance on costs, if the Secretariat becomes aware of circumstances that would appear to justify this. 32 If the defaulting party has been ordered by the arbitral tribunal to pay the advance on costs and the Court subsequently decides to reconsider that advance, a number of problems might be encountered. In the event of an increase, one could end up with the situation where the defaulting party had been ordered to pay a sum that is less than half the advance on costs. More worrying, if the Court decided to decrease the advance on costs, the defaulting party may have been ordered to pay more than it is obliged to pay pursuant to the Rules.

49. Equally problematic would be the unlikely situation in which an order or award of this nature was made and then the Court decided to fix separate advances on costs. The fixing of separate advances on costs will often greatly change the amount that is to be paid by one or both parties. The situation becomes even more complex if one of the claims is subsequently withdrawn pursuant to Article 30(4) of the Rules. Of [Page69:] course, this situation is unlikely to arise because, where there are both claims and counterclaims, the non-defaulting party would be more likely to request the fixing of separate advances on costs rather than seek an order or award.

(2) Article 30(4) of the Rules

50. Paragraph 30(4) of the Rules states:

When a request for an advance on costs has not been complied with, and after consultation with the Arbitral Tribunal, the Secretary General may direct the Arbitral Tribunal to suspend its work and set a time limit, which must be not less than 15 days, on the expiry of which the relevant claims, or counterclaims, shall be considered as withdrawn. Should the party in question wish to object to this measure, it must make a request within the aforementioned period for the matter to be decided by the Court. Such party shall not be prevented, on the ground of such withdrawal, from reintroducing the same claims or counterclaims at a later date in another proceeding.

51. Article 30(4) of the Rules is the ultimate enforcement mechanism for the payment of the advance on costs. Two points are worth noting in this connection. The first is that a party that has received an award in favour of ICC with regard to the advance on costs might think that it does not have to pay the balance of the advance on costs. The second is that if an order or award relating to the advance on costs is to be enforced, this may take some time. Notwithstanding an order or award of this kind, the Secretary General will invoke Article 30(4) if the full advance on costs has not been paid.

C. Enforcement of the award or order

52. While most parties voluntarily comply with orders and awards rendered in ICC arbitrations, some parties do not. One could suggest that if a party fails to comply with its obligation to pay half of the advance on costs, it might well not comply voluntarily with any order or award rendered in that regard.

53. A number of the awards and articles on this topic have pointed out that, even if the non-defaulting party is successful in obtaining an award, that award itself does not have a coercive effect. As stated in the partial award in case 7289:

as arbitrators have no power of coercion, the award would lead to enforcement problems . . . which would be disproportionate to the amount involved. Besides, the arbitrator notes that in this case efforts have been devoted chiefly to procedural difficulties, and what is most urgent now is to establish the facts of the case and decide on the merits. 33

54. It might also be noted that there could be some difficulty if enforcement proceedings are under way when the arbitral tribunal renders the final award. This will mean that the disposition in the final award relating to the costs of the arbitration will have to take into account whether or not the defaulting party has complied with the decision in the partial award (or whether that decision has been enforced).

55. It will be necessary to resort to domestic courts to enforce awards and orders, if they are not performed spontaneously, but the situation will not be identical for both. [Page70:]

(1) Awards

56. At least in theory, interim or partial awards dealing with the advance on costs should be enforceable pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereafter the 'New York Convention'). However, depending on the exact nature of the award, in some jurisdictions a partial award may not be immediately enforceable. 34

57. The difficulty of enforcing a partial award may be logistical rather than legal. Enforcement proceedings take a certain amount of time to complete. Depending on the jurisdiction and the court system within that jurisdiction, the award could take months or even years to enforce. While enforcement proceedings are taking place, if the arbitration is to continue, one party or the other will have to pay the advance on costs, failing which the Secretary General will invoke Article 30(4) of the Rules.

(2) Procedural orders

58. Unlike awards, procedural orders are not enforceable pursuant to the New York Convention or any other major bilateral instrument. 35 This means that there is generally no effective way of ensuring their enforcement. Although it may be hoped that procedural orders may be generally enforceable in the future, 36 this is factor that parties need to take into account.

IV. Conclusion

59. By way of conclusion, it may be observed first that the distinction between the contractual basis and the provisional measures basis is a theoretical debate with a key practical outcome. If the contractual approach comes to the forefront, parties will, for the most part, be able to seek orders or awards simply by requesting them. Subject to some minor exceptions, the arbitral tribunal must grant the order or award sought. By contrast, if the provisional measures approach dominates, orders and awards in this area may be contemplated in the same way as applications for interim measures: important in certain cases but, in practice, not often successful due to the relatively stringent test that must be satisfied in order for them to be granted.

60. In an institutional context, such as that of the ICC Court, there may be a third approach which has yet to be fully explored. This is to consider that the institution has exclusive authority over the financial aspect of the case. The role that institutions play in controlling financial matters is indeed one of the noteworthy advantages of institutional arbitration. Were this approach to be followed, all decisions relating to the advance on costs would be the preserve of the ICC Court.

61. Putting aside the theoretical question, awards and orders relating to the advance on costs are likely to raise a number of practical difficulties to which due consideration should be given.

1
Neither the ICC International Court of Arbitration nor its Secretariat should be considered bound by any of the opinions expressed in this article, which are those of the author alone.

2
Article 30(2) of the Rules states: 'As soon as practicable, the Court shall fix the advance on costs in an amount likely to cover the fees and expenses of the arbitrators and the ICC administrative costs for the claims and counterclaims which have been referred to it by the parties. This amount may be subject to readjustment at any time during the arbitration. Where, apart from the claims, counterclaims are submitted, the Court may fix separate advances on costs for the claims and the counterclaims.'

3
Prior to the Court fixing the advance on costs, the Secretary General may fix a provisional advance pursuant to Article 30(1) of the Rules which states: 'After receipt of the Request, the Secretary General may request the Claimant to pay a provisional advance in an amount intended to cover the costs of arbitration until the Terms of Reference have been drawn up.'

4
Article 30(2) of the Rules.

5
Article 31 of the Rules states: '1. The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitral proceedings, as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties for the arbitration. 2. The Court may fix the fees of the arbitrators at a figure higher or lower than that which would result from the application of the relevant scale should this be deemed necessary due to the exceptional circumstances of the case. Decisions on costs other than those fixed by the Court may be taken by the Arbitral Tribunal at any time during the proceedings. 3 The final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.'

6
Emphasis added.

7
It is worth noting the motives that lead parties to refuse to pay their share of the advance on costs. Some parties claim that the arbitration initiated by the claimant is abusive and that they should not support the claimant by paying their share of the advance on costs. Some parties challenge the jurisdiction of the arbitral tribunal and, thus, state that they will not pay their share of the advance on costs. The latter motive is discussed in greater detail in paragraph 21 below.

8
The term 'global' refers to the normal manner in which the advance on costs is fixed pursuant to the Rules. The term is used in contrast to the situation where separate advances on costs are fixed.

9
See paragraphs 50-51 below.

10
It should be noted that the Rules do not, for the most part, distinguish between the parties designated 'Claimant' and those designated 'Respondent'. Logically, the distinction is relevant only to the procedure for initiating arbitration pursuant to Articles 4-6 of the Rules. Otherwise, the parties are treated equally under the Rules.

11
This can be distinguished from the situation where a party seeks such an order from a national court, which has occurred on certain occasions. See Y. Derains & E.A. Schwartz, A Guide to the New ICC Rules of Arbitration (The Hague: Kluwer Law International, 1998) at 320 and W.L. Craig, W.W. Park & J. Paulsson, International Chamber of Commerce Arbitration, 3d ed. (Oceana Publications/ICC Publishing, 2000) at 269-270.

12
Some 13 awards have been rendered and at least one procedural order.

13
In cases 7289 ([2002] Rev. arb. 1001), 9667 ([2000] J.D.I. 1096 (Annot. D. Hascher)), [2002] Rev. arb. 1009), 10526 ([2001] J.D.I. 1179 (Annot. S. Jarvin)), and 10671 ([2001] ASA Bulletin 285, [2002] Rev. arb. 1035 (incorrectly referred to as case 10526)).

14
'The advance on costs fixed by the Court shall be payable in equal shares by the Claimant and the Respondent.'

15
This position is considered in greater detail below.

16
Article 9(2): 'The advance on costs shall be payable in equal shares by the Claimant or Claimants and the Defendant or Defendants. However, any one party shall be free to pay the whole of the advance on costs in respect of the claim or the counter-claim should the other party fail to pay its share.'

17
Translated from the original French.

18
Translated from the original French.

19
D Mitrovic, 'Advance to Cover Costs of Arbitration', (1996) 7:2 ICC ICArb. 88 at 89; Y. Derains & E.A. Schwartz, supra note 11 at 320.

20
See, for example, the partial award of 27 March 2001 in case 10671, supra note 13.

21
W.L. Craig, W.W. Park & J. Paulsson, supra note 11 at 268.

22
Ibid.

23
I. Fadlallah, 'Payment of the Advance to Cover Costs in ICC Arbitration: the Parties' Reciprocal Obligations' (2003) 14:1 ICC ICArb. Bull. (this issue) 53. The author had the benefit of reading a draft of Professor Fadlallah's article when preparing this article.

24
X. Favre-Bulle, 'Les conséquences du non-paiement de la provision pour frais de l'arbitrage par une partie' [2001] ASA Bulletin 227 at 238. Quotation translated from the original French.

25
D. Mitrovic, supra note 19 at 89.

26
Article 23(1) of the Rules states: 'Unless the parties have otherwise agreed, as soon as the file has been transmitted to it, the Arbitral Tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate. . . . Any such measure shall take the form of an order, giving reasons, or of an Award, as the Arbitral Tribunal considers appropriate.'

27
Translated from the original Spanish.

28
I. Fadlallah, supra note 23 at 56-57.

29
Translated from the original French.

30
Translated from the original Spanish.

31
See paragraph 51 below.

32
Such circumstances include but are not limited to: (i) a change in the amount in dispute, (ii) expenses being in excess of those foreseen or (iii) the complexity of the case or the time spent on it by the arbitral tribunal.

33
Translated from the original French.

34
E. Gaillard & J. Savage, eds., Fouchard, Gaillard, Goldman on International Commercial Arbitration (The Hague: Kluwer Law International, 1999) at 739.

35
Ibid at 737. J. D. M. Lew, 'Commentary on Interim and Conservatory Measures in ICC Arbitration Cases' (2000) 11:1 ICC ICArb. Bull. 23 at 28. See also, for example, the Australian case of Resort Condominiums International, Inc. v. Bolwell & Another (1993), 118 ALR 655.

36
UNCITRAL Working Group II (Arbitration and Conciliation) has been considering a series of proposals with regard to the enforceability of interim measures of protection.