International commercial

arbitration

RESEARCH ARTICLE REVIEW

Title;- SECURITY FOR COSTS IN INTERNATIONAL

COMMERCIAL ARBITRATION

Submitted by
Sidharth A.J
18BLA1093
RESEARCH ARTICLE REVIEW
 TITLE;- SECURITY FOR COSTS IN INTERNATIONAL
COMMERCIAL ARBITRATION
By;- Gu Weixia

INTRODUCTION
The article talks about ‘security for costs in international commercial arbitration and how it is
neglected and misunderstood forms of interim relief. The article is authored by Gu Weixia, a
faculty of law at the University of Hong Kong; he has divided the paper into different sub-topics
for easy understanding. The author also referred to various case laws to validate his points. He
explains ‘security of cost’ as an order, which conditions the right of a claimant or counter
claimant to proceed on its claim upon the putting up of a bank guarantee or other forms of surety
to guarantee, in the case of lack of success, aims to cover any eventual award of legal fees
assessed against the claimant or counter-claimant by the arbitral tribunal. The author also
mentions the legal Complexity of ‘security of cost’ in international commercial arbitration and is
critical about this fact

SUMMARY OF ARTICLE
The author feels that as international arbitration is expensive upfront, the respondent sued in
arbitration by a claimant who has no money stands to lose in any event, who is in a different
situation compared with a creditor faced with a possible impecunious debtor in such a situation it
is important that if the respondent wins the case, the cost may be recovered from an order from
the court .he believes that the main purpose of security of cost is to deter the claimant from
making a non-meritorious claim and seriously reconsider its legal situation; to protect the
respondent from suffering the unnecessary loss of arbitral costs incurred in a successful defense
against a financially irresponsible or insolvent claimant.

The challenges to the security of cost concern its legal Complexity and the jurisdiction problem
across the boundaries the reason for this is security for costs can be sought from both arbitral
tribunals and national courts. Because both municipal law and arbitration rules may govern the
merits of such request, this admittedly rare and technical provisional device illuminates some
fundamental complexities of the international arbitration system. If the tribunal passes an order
to give security of cost, then the tribunal decides to exercise its discretion and order security. It
remains important that the amount be sufficient to protect the respondent’s position.
Furthermore, the most feasible type shall be determined to serve both parties’ interests.
Following the event, the possible remedy for the respondent in the case of the claimant’s failure
to fulfill the security for costs order will be analyzed to conclude

The author also discusses the global perspective concerning the security of cost. He explains how
different countries like Hong Kong, United Kingdom, Germany view the legal aspect of the
security of cost and the jurisdictional difference .another important aspect is with the
international backing to the security of cost, the UNCITRAL Model Law this has helped in
echoing security of cost by bringing certain fundamental changes

The author concludes by saying that careful attention should also be equally paid that we must
establish an environment that is not too permissive, where tribunals can latch upon ill-defined
principles for the sake of expediency. Developments in security for costs will need to strike a
cautious balance between flexibility and the certainty which the business community expects of
the legal community.

The author primarily depended on secondary data for his study

ANALYSIS /CONCLUSION

The author have sought to present the existing legal rules surrounding security for costs in the
international arbitration arena, but it was difficult for him to find solutions and limitations for all
the problems as the scope is so wide, but he had tried his best to point out specific issues which
arise and relevant. He has explained the issues of security of cost in various jurisdictions giving
an elaborate view on this topic