The claimant, a company in Chinese Taipei, undertook to provide the respondent, a Belgian company, with services for the purpose of implementing an agreement between the latter and a Taipei company not a party to the arbitration. The claimant sought the payment of monies due to it for the services it had rendered. The respondent contested this claim and requested that the claimant be ordered to pay security for costs prior to the proceedings on the merits, contending that its claim was unfounded and should be rejected.

La demanderesse, une société du Taipei chinois, s'engagea à fournir à la défenderesse, une société belge, des services destinés à faciliter l'exécution d'un contrat entre celle-ci et une société du Taipei chinois qui n'était pas partie à l'arbitrage. La demanderesse réclama le paiement des sommes dues pour les services fournis. La défenderesse, s'opposa à cette réclamation, qu'elle considérait comme non fondée et devant être rejetée, et sollicita du tribunal arbitral la condamnation de la demanderesse à lui fournir une provision pour garantir les frais de la procédure avant de statuer sur le fond.

El demandante, una sociedad de Taipei Chino, se comprometió a prestar una serie de servicios al demandado, una sociedad belga, a efectos de aplicar un acuerdo entre este último y una sociedad de Taipei que no fue parte en el arbitraje. El demandante solicitó el pago de las sumas que se le adeudan en concepto de los servicios prestados. El demandado impugnó esta demanda y solicitó que al demandante se le ordenara el pago de una caución para costas antes del procedimiento sobre el fondo afirmando que su demanda carecía de fundamento y debía ser rechazada.

'5. The claims of the parties

[Respondent]

5.1. [Respondent] claims that, prior to the proceedings on the merits being commenced, [Claimant] should put up security in an amount of . . .

5.2. [Respondent]'s claim is based on section 851 BJC or on Rules in analogy to that provision (see Chapter III of the Answer, as verbally confirmed at the hearing . . .).

5.3. Basically, it is argued by [Respondent] that, under section 851 BJC or in analogy to that provision, it is entitled to protection given the fact that, in the event the tribunal would order [Claimant] to pay [Respondent]'s costs, enforcement proceedings against [Claimant] in Taiwan may be required for the purpose of the same to be recovered.

5.4. This is said to be the underlying principle of section 851 of the BJC.

5.5. [Respondent] has further submitted that also under the procedural law of Taiwan, an order for security for costs can be applied for.

[Claimant]

5.6. According to [Claimant], [Respondent]'s claim should be denied on the following arguments:

(a) Claims for security for costs are not provided for by the ICC Rules of Arbitration of 1998 which-in [Claimant's] view-exhaustively govern the current proceedings;

(b) The granting of security would be in contradiction with the contractual nature of the arbitration clause. Under Article 28(6) of the ICC Arbitration Rules, awards shall be binding and the parties undertake to carry out such awards without delay. In addition, it is held that [Respondent] has not given any reasons to assume that [Claimant] will not comply with its obligation as per Article 28(6) of the ICC Rules, and that [Respondent] has failed to explain the difficulties that would arise in case it would attempt to enforce a (hypothetical) award in its favour;

(c) Alternatively, the applicability of section 851 BJC is to be denied. [Claimant] submits that only sections 1676 through 1723 BJC apply and that section 851 is not included in this range of sections; and

(d) Lastly, it is submitted that, to the extent a security for costs should be awarded, the amount of such security should not be . . . but . . . at most.

6. The merits; is a claim for security of costs capable of being awarded at all?

6.1. The tribunal will in the first place deal with [Claimant's] submission that [Respondent]'s claim for security for costs should be denied on the fact that the ICC Arbitration Rules do not provide for a security for costs to be awarded.

6.2. The tribunal does not share [Claimant]' above point of view. Under Article 23 of the ICC Rules, the tribunal may, at the request of a party, order any interim or conservatory measure it deems appropriate.

6.3. Although Article 23 of the ICC Rules of Arbitration does not expressly mention the possibility of security for costs to be awarded, it is commonly accepted that an order for security for costs is deemed to be included in the measures to which Article 23 refers (see: Derains, Yves, and Schwartz, Eric A., A Guide to the New ICC Rules of Arbitration, The Hague 1998, p. 274 and footnote 622 and Craig, W. L., Park, W., and Paulsson, J., International Chamber of Commerce Arbitration, third edition, 2001 (hereinafter to be referred to as "Craig Park Paulsson"), pp. 467 ff., paragraph 26.05(iv)).

6.4. Given the fact that under the ICC Rules, security for costs may be awarded upon the request of one of the parties, the tribunal will now investigate whether such security for costs is capable of being awarded.

7. [Respondent]'s claim for a security for costs based on general rules in analogy with Art. 851 BJC

7.1. [Respondent]'s claim for security for costs is based on section 851 BJC or on analogous rules.

7.2. It is the tribunal's understanding that, in [Respondent]'s view, analogous rules are to be based on the principle underlying section 851 BJC as identified in paragraph 5.3 above.

7.3. Given the fact that, so far, the tribunal has not decided whether any other sections of the BJC than sections 1676 through 1723 BJC shall apply, the tribunal will first investigate whether the principle identified in paragraph 5.3 above is applicable to the case at hand.

7.4. Although the tribunal does not exclude that, also in international arbitration proceedings such as the present proceedings, the referred to principle may lead to an order for security for costs to be granted, the tribunal wishes to emphasize that, on account of certain differences between international state court proceedings on the one hand and international arbitration proceedings on the other hand, which will be identified and discussed hereinafter (paragraphs 7.5 through 7.20), the referred to principle may at the same time lead to security for costs being awarded in court proceedings, and being denied in arbitration proceedings.

7.5. In the first place, the principle underlying the provision of section 851 BJC is based on the distinction between "non-foreign parties" and "foreign parties". If such a distinction can be made under the municipal procedural law of each single state, it is far more difficult, if not impossible, to maintain the same distinction in international arbitration proceedings. Such proceedings are to a large extent disconnected from any national jurisdiction. The most conspicuous link between such proceedings and a national jurisdiction is constituted by the concept of the "place of arbitration". But the "place of arbitration" will habitually only refer to the applicability of the arbitration law of that place and not to the full set of rules of a procedural nature existing in that place.

7.6. Another important distinction between arbitration proceedings and court proceedings is that arbitration proceedings can only be initiated on the basis of an agreement between the parties, whilst court proceedings can always be initiated in the courts of a given state against entities domiciled or established therein. Accordingly, in the latter case there is more reason to protect such entities, especially where the proceedings initiated against them are-on a prima facie basis-of a frivolous or unmeritorious nature.

7.7. Another relevant distinction between arbitration proceedings and state court proceedings is that the former are normally governed by a special set of procedural rules (i.e. in the present case the ICC Rules) containing specific provisions on the funding of the proceedings, whilst under municipal rules of procedure, the issue of funding will as a rule not be quite as important.

7.8. In the present case, each of the parties has made payment of a deposit in the amount of . . . for the purpose of the proceedings to be funded . . . Under the circumstances, it is argued by certain authors that an order for security of costs to be granted would be incompatible with the spirit of the ICC Arbitration Rules (see: Craig, Park, Paulsson, page 468 and footnote 46, and Derains, Yves and Schwartz, Eric A., A Guide to the New ICC Rules of Arbitration, The Hague, London, Boston, 1998, page 274 and footnote 622). Without completely endorsing this point of view, this tribunal finds that, under the circumstances, a party's request for security for costs to be granted should be based on arguments or circumstances of an exceptional nature. The simple statement that the party against whom the application for an order for security for costs is directed is of another nationality than the nationality of the place of arbitration should in principle not qualify as a good enough reason for an application for security of costs to be awarded.

7.9. Awarding an application for security of costs to one party against the other party may, especially given the fact that each of the parties will already have paid a substantial share in the costs of the proceedings, lead to an inequality between the parties, which would be contrary to the spirit and nature of international arbitration.

7.10. Hereinafter, each of the distinctions identified above will be applied to the case at hand, in order to identify whether or not an order for security of costs should be granted.

Arbitration is based on an agreement

7.11. As stated above, the very fact that arbitration proceedings are based on an agreement constitutes an argument in itself against the need for protection of one party in proceedings initiated by the other party.

7.12. Indeed, if by a contract the parties elect to submit certain of their disputes exclusively to arbitration, they should be considered to have appropriately evaluated the pros and contras of such an election, and to have considered the possibility of the enforceability of awards to be rendered under such an agreement. The parties are at liberty to stipulate that either of them shall be entitled to demand that security shall be granted in the event that proceedings shall be commenced by the other party.

7.13. In the present case, the issue of security for costs is not included in the contract at all. Accordingly, prima facie, the parties are supposed not to have intended to give each other the right to demand such security.

7.14. Conceivably, each of the parties may have tacitly accepted the other party's right to demand that security shall be put up if the other party starts arbitration proceedings.

7.15. However, nowhere in the documents submitted so far has either of the parties indicated that it intended to stipulate such a right for itself, or to grant it to the other party. At the hearing, neither of the parties was able to give relevant particulars about the parties' intentions on the issue of arbitration at the time of the execution of the Agreement.

7.16. Under the circumstances, there is no reason for the tribunal to assume a tacit agreement on the parties' right to demand the putting up of security for costs in the event of arbitration proceedings commenced by the other party.

7.17. Accordingly, the very fact that [Claimant's] place of establishment is outside the territory of Belgium is no sufficient ground for security for costs to be awarded.

The ICC Rules

7.18. If a claim for security for costs to be granted is not ab initio excluded by the ICC Rules, awarding security for costs would appear to be less obvious in ICC arbitration proceedings than in state court proceedings.

7.19. Indeed, the fact that in the present proceedings each of the parties has made payment of an amount of . . . for the purpose of the proceedings to be funded does appear to constitute a security to some extent for the other party (cf. Craig, Park, Paulsson, page 468).

Equality of the parties

7.20. Moreover, imposing an obligation upon [Claimant] to commit [amount] prior to the commencement of the arbitration proceedings would, given the fact that [Claimant] and [Respondent] have already paid a deposit in an amount of . . ., seriously compromise the balance of equality between the parties.

Conclusion

7.21. According to the above, the applicable rules of arbitration allow for an order for security for costs to be granted.

7.22. However, given the differences between state court proceedings and arbitration proceedings, as identified and discussed in paragraphs 7.11 through 7.20 above, a petition for security for costs in the current arbitration proceedings would only be capable of being awarded on account of circumstances of an exceptional nature.

7.23. In the current proceedings, [Respondent]'s petition is based on the ground that (i) [Claimant] is established outside the jurisdiction of the place of arbitration and (ii) [Respondent] might be compelled to initiate enforcement proceedings in [Claimant's] jurisdiction in the event of an arbitral award in [Respondent]'s favour.

7.24. The grounds submitted by [Respondent] are no evidence of exceptional circumstances justifying its petition for security and costs to be awarded, and the tribunal notes that neither in [Respondent]'s memorial, nor at the hearing the occurrence of such circumstances has been argued or evidenced.

7.25. Neither of the circumstances as per 7.23 is of an exceptional nature. In international arbitrations it is almost invariably the case that at least one of the parties is domiciled or established in another state than the state in which the place of arbitration is located. It is at least as usual that the winning party may have to commence enforcement proceedings in order to obtain payment of amounts awarded to it.

7.26. The tribunal further notes that [Respondent] has not alleged (let alone evidenced) that enforcement of a (hypothetical) award in its favour in Taiwan will be impossible. It has merely submitted that enforcement proceedings will be time consuming and expensive.

7.27. Based on the above, the tribunal finds that the circumstances of the case at hand are not so exceptional as to allow for an order for security for costs to be awarded based on rules analogous to section 851 BJC.

7.28. Based on the above, the tribunal finds that, to the extent [Respondent]'s petition for a security of costs to be awarded is based on the principle underlying section 851 BJC, [Respondent]'s petition is to be rejected. Hereinafter (8), the tribunal will discuss whether section 851 BJC itself should be applicable to the present proceedings.

7.29. The above conclusion is not altered by the fact that, allegedly, security for costs can also be applied for under Taiwan law.

7.30. In the first place, it is common ground between the parties that Taiwan law does not apply to the current proceedings and, in the second place, the provision invoked applies to proceedings in the municipal courts of Taiwan and that provision (a copy of which was-incidentally-not submitted to the tribunal) supposedly does not reflect the differences between state court proceedings and arbitration proceedings as identified and discussed in paragraphs 7.15 through 7.20 above.

8. Is section 851 BJC applicable?

8.1. It is common practice that international arbitration proceedings are governed by the procedural rules in force at the place of arbitration to the extent such rules shall directly relate to arbitration proceedings.

8.2. In accordance with the above principle, it has been decided in Procedural Order No. 2 that the Belgian Arbitration Act (sections 1676 through 1723 BJC) shall apply to the proceedings.

8.3. Section 851 BJC is not a provision included in the Belgian Arbitration Act.

8.4. In principle, all rules of the BJC other than sections 1676 through 1723 are basically intended to be exclusively used by Belgian municipal courts in Belgian municipal proceedings. Accordingly, there is no reason to automatically apply these rules (including section 851 BJC) to international arbitration proceedings taking place in Belgium, without any further justification to do so.

8.5. Above, it has already been explained that the principle underlying section 851 BJC does not in itself constitute a justification for awarding petitions for security of costs to be granted in arbitration proceedings to the same extent as in state court proceedings.

8.6. The applicability of municipal rules directly related to arbitration should be decided on a case-by-case basis.

8.7. The differences between international arbitration proceedings on the one hand and state court proceedings on the other hand, as discussed and identified in paragraphs 7.5 through 7.20 above, appear to constitute a sufficient justification for this tribunal's decision to deny the applicability of section 851 BJC in the present proceedings.

8.8. Accordingly, [Respondent]'s petition for security for costs to be awarded is also to be rejected to the extent that petition is based on section 851 BJC.

9. Interim award

9.1. For the above reasons, the tribunal holds as to issue (A) in the TOR that [Respondent]'s petition for security for costs is to be rejected.

9.2. The question of costs of this interim award is reserved until the making of the final award at the conclusion of the proceedings.'