‘A. Power to order security for costs

40. The Sole Arbitrator has the power to make orders for security for costs under the applicable rules, including Article 23 of the ICC Rules and Section 38 of the Arbitration Act of 1996. English procedural law, although not binding on the Sole Arbitrator, also provides for the granting of security for costs under Part 25 of the Civil Procedure Rules.

41. In pertinent part, Article 23(1) of the ICC Rules state:

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 ...

42. Article 38(3) of the Arbitration Act of 1996 similarly states:

The tribunal may order a claimant to provide security for costs of the arbitration.

43. Both Parties in these proceedings have agreed that it is within the Sole Arbitrator’s discretion to order security for costs.

B. Factors to consider

44. Although it is within the Sole Arbitrator’s discretion to order security for costs, he will do so sparingly and only under limited circumstances.

45. It is generally agreed that “exceptional circumstances” must be established before an order on security for costs may be rendered. See W. Laurence Craig, William W. Park & Jan Paulsson, International Commercial Arbitration: International Chamber of Commerce Arbitration §26.05 (2000) [hereinafter “Craig, Park & Paulsson”]. In ICC practice, only 20 percent of the requests for security for costs are successful. See Financial Capacity of the Parties – A Condition for the Validity of Arbitration Agreements? 177 (German Institution for Arbitration eds., 2004).

46. Various factors are considered when determining whether an order on security for costs should be rendered, however, there appears to be no “common denominator” in this determination. See Craig, Park & Paulsson at §26.05; see also Julian D.M. Lew, “Commentary on Interim and Conservatory Measures in ICC Cases” 27 (2000); Philipp Habegger (Chairman), Alexander von Ziegler, and Daniel Wehrli, Procedural Order No. 14, 27 November 2002, Ad Hoc Arbitration of the Arbitral Tribunal in Zurich, ABC AG (in prov. Nachlassstundung), Claimant, v. Mr X, Respondent,ASABull23(2005)p.112 (requirements to be considered include: no pre-judgment of the merits, there must be urgency, and there must be a risk of irreparable or substantial harm); “Security for Costs in International Arbitration – Some Comments to Procedural Order No. 14 of 27 November 2002”, ASA Bull 23 (2005) p.116 (requiring “a fundamental change of situation since the agreement to arbitrate was entered into which results in a clear and present danger that a future cost award would not be enforceable”).

47. The Sole Arbitrator analysed the circumstances and considered several factors in making a determination on Respondent’s Application under Article 23 of the ICC Rules for Security for Costs. These factors include, but are not limited to:

• the bona fides of the claim

• the prospect of success

• admissions or offers

• any oppressive features of the Application

• the effect of Respondent’s behaviour on Claimant’s want of means

• the timing of the Application, and whether there is a sense of urgency

• whether there is a risk of irreparable or substantial harm

• whether there has been a fundamental change of situation since the entering into of the arbitration agreement which has resulted in a clear and present danger that the future of any potential cost award would not be enforceable

• whether it is “just” to make such an order

48. The Sole Arbitrator weighed the factors above and the evidence presented by the Parties. The Sole Arbitrator is mindful that Claimant contends that Respondent’s Application for Security for Costs would stifle its claim. Nevertheless Claimant affirms that it “has a positive cash position and will be able to meet its short term liabilities and any award for costs made in these arbitration proceedings.”

49. It is within the Sole Arbitrator’s discretion to order security for costs. However, after reviewing the Parties’ submissions, the Sole Arbitrator finds that there is no evidence indicating that Claimant will be unable to cover costs involved in this arbitration. In fact, Respondent’s own expert report notes that Claimant’s cash position “is sufficient to cover short term liabilities and an additional costs award...”… Further, Respondent has not demonstrated urgency, a risk of irreparable harm, or that there has been a fundamental change in circumstance. Therefore, the Sole Arbitrator denies Respondent’s Application Under Article 23 of the ICC Rules for Security for Costs.’