ASAB 29-3 Thomas Rohner Michael Lazopoulos - Pestalozzi ...

Volume 29, No. 3, 2011 ISSN 1010-9153 

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Association Suisse de l’Arbitrage 

Schweiz. Vereinigung für Schiedsgerichtsbarkeit 

Associazione Svizzera per l’Arbitrato 

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SEPTEMBER 2011 

No 3 

Association Suisse de l’Arbitrage 

Schweizerische Vereinigung für Schiedsgerichtsbarkeit 

Associazione Svizzera per l’Arbitrato 

Swiss Arbitration Association 

Comité de l’ASA 

ASA Committee 

Président 

Chairman 

Michael E. Schneider, Avocat (Genève) 

Vice-Présidents 

Vice Presidents 

Elliott Geisinger, Avocat (Genève), Daniel Wehrli, Avocat (Zurich) 

ASA Secrétariat 

ASA Secretariat 

Secrétaire général 

General Secretary 

Dr. Rainer Füeg (Bâle) 

Membres 

Members 

Bernhard Berger, Avocat (Bern), Rocco Bonzanigo, Avocat (Lugano), 

François Dessemontet, Professeur (Lausanne), Dieter Gränicher, 

Avocat (Bâle), Claudia Kälin-Nauer, Avocate (Zurich), Bernhard F. Meyer, 

Avocat (Zurich), Paolo Michele Patocchi, Avocat (Genève), Wolfgang Peter, 

Avocat (Genève), Daniel Petitpierre (Bâle), Thomas Pletscher (Zurich), 

Klaus Michael Sachs, Avocat (Munich), Pierre Tercier, Professeur (Fribourg), 

Pierre-Yves Tschanz, Avocat (Genève) 

Présidents d’honneur 

Honorary Presidents 

Pierre Lalive, Professeur et Avocat (Genève), Marc Blessing, Avocat (Zurich), 

Pierre A. Karrer, Avocat (Zurich), Gabrielle Kaufmann-Kohler, 

Professeur et Avocate (Genève), Markus Wirth, Avocat (Zurich) 

Vice-Présidents d'honneur Honorary Vice-Presidents 

Claude Reymond †, Professeur et Avocat (Lausanne), 

Jean-François Poudret, Professeur (Lausanne), 

François Knoepfler, Professeur et Avocat (Neuchâtel) 

www.arbitration-ch.org

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Respondent’s Refusal to Pay its Share of the 

Advance on Costs 

THOMAS ROHNER * , MICHAEL LAZOPOULOS ** 

I. Advance on Costs in International Arbitration – 

Introduction 

In arbitration, unlike in most state court proceedings, the parties are 

usually requested to effect advance payments for the costs of the arbitration. 

The purpose of such advance payments is to cover the costs of the arbitration 

and to protect the arbitral tribunal against the parties’ later refusal to pay 

these costs, especially in cases of premature termination of the arbitral 

tribunal’s mandate. 1 If the parties fail to make the required advance payment, 

the arbitral tribunal generally suspends the arbitration or dismisses the case 

without prejudice. 2 

Most institutional arbitration rules provide that the claimant and the 

respondent are required to deposit an advance on costs for the arbitration in 

equal shares. 3 The advance on costs can be substantial depending on the amount 

in dispute. In practice, difficulties arise when the respondent refuses to pay its 

respective share of the advance on costs, be it to obstruct the proceedings, to 

force the claimant to finance the arbitration alone, or for other reasons. In such 

case, the claimant who wants to resort to arbitration will be invited by the 

arbitral tribunal or the arbitral institution (as the case may be) to pay the entire 

amount of the advance on costs. In this context, the question arises whether the 

claimant, who substituted the respondent’s share of the advance on costs, has 

any remedies to claim immediate reimbursement for the substituted advance on 

costs from the defaulting respondent. If so, under what conditions and in which 

form should the arbitral tribunal grant such request? 

This article will examine whether the arbitral tribunal has, upon request 

of the claimant who substituted the respondent’s share of the advance on costs, 

* 

** 

1 

2 

3 

Dr. Thomas Rohner, LL.M., is a partner with Pestalozzi in Zurich. 

Dr. Michael Lazopoulos, LL.M., MCIArb, is an associate with Pestalozzi in Zurich. 

KLAUS PETER BERGER, International Economic Arbitration, Deventer (1993), at 386. 

See, e.g., article 30(4) ICC Rules of Arbitration (“ICC Rules”). 

See, e.g., article 30(3) ICC Rules; article 41 Swiss Rules of International Arbitration (“Swiss Rules”); 

article 70(a) WIPO Arbitration Rules (“WIPO Rules”); article 45(3) SCC Arbitration Rules (“SCC 

Rules”); article 34(2) VIAC Rules of Arbitration (“VIAC Rules”); article 25 DIS Arbitration Rules 

(“DIS Rules”); article 41(1) UNCITRAL Arbitration Rules (“UNCITRAL Rules”); article 26.2 SIAC 

Arbitration Rules (“SIAC Rules”); article 42.1 ACICA Arbitration Rules (“ACICA Rules”). 

29 ASA BULLETIN 3/2011 (SEPTEMBER) 549

ARTICLES 

the power to order the defaulting respondent to reimburse the claimant for the 

substituted payment. If so, whether such decision should take the form of a 

partial award or an order. This article will not deal with the question whether 

the claimant has a claim for specific performance against the defaulting 

respondent to pay its share of the advances to the arbitral tribunal, or – as the 

case may be – to the arbitral institution. 4 Such a claim requires that the initial 

performance is still capable of being performed. 5 In practice, this will rarely 

happen, because the time-limit set to the claimant by the arbitral tribunal or the 

arbitral institution to substitute the respondent’s share of the advance on costs 

would usually have expired before a partial award for specific performance 

could be obtained and enforced. 6 

In addition, this article will not deal with possible remedies involving 

the support of state courts, 7 or the question whether the claimant is entitled to 

bring its claim before a state court. 8 

4 

5 

6 

7 

8 

See MATTHEW SECOMB, Awards and Orders Dealing with the Advance on Costs in ICC Arbitration, 

ICC ICArb. Bull. 1 (2003), at 67, with reference to two unreported ICC cases in which the defaulting 

parties have been ordered to make the advance payment directly to the ICC. 

MICHA BÜHLER, Non-payment of the advance on costs by the respondent party – is there really a 

remedy?, in: ASA Bull. (2006), at 299. 

MICHA BÜHLER, supra note 5, at 299. 

See ANDREAS REINER, Handbuch der ICC-Schiedsgerichtsbarkeit, Wien (1989), at 153; LISA BENCH 

NIEUWVELD, ICC Advance on Costs: Strategical Games, in: Int’L Practicum, New York (2007), at 

114 and footnote 10; LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, International Chamber of 

Commerce Arbitration, 3 rd ed., New York (2000), at 269; YVES DERAINS/ERIC SCHWARTZ, A Guide 

to the ICC Rules of Arbitration, 2 nd ed., The Hague (2005), at 345 et seq.; XAVIER FAVRE-BULLE, Les 

conséquences de non-paiement de la provision pour frais de l’arbitrage par une partie, in: ASA Bull. 

(2001), at 243 et seq.; JEAN ROUCHE, Le paiement par le défendeur de sa part de provision sur les frais 

d’arbitrage: Simple faculté ou obligation contractuelle?, in: Révue de l’arbitrage (2002), at 842 et seq.; 

German courts seem to accept that the claimant may file a claim before the state courts against the 

defaulting party; see thereto DETLEV KÜHNER, in: Arbitration in Germany – The Model Law in 

Practice, Böckstiegel/Kröll/Nacimiento (eds.), Austin, Boston et al. (2007), Commentary on ICC 

Arbitration in Germany, at 847, with reference to two decisions of the Amtsgericht Düsseldorf dated 

13 June 2003 and the Landgericht Bielefeld dated 21 October 2003. 

Some legal scholars submit that the respondent’s unjustified failure to pay its share on the advance on 

costs may – under certain circumstances – give the claimant the right to rescind the arbitration 

agreement and to bring its claim before a state court; see MARKUS WIRTH, in: Basler Kommentar 

Internationales Privatrecht, Heinrich Honsell et al. (eds.), Basel (2007), article 189 no. 58, at 1752 et 

seq.; KLAUS BERGER, supra note 1, at 389 et seq.; YVES DERAINS/ERIC SCHWARTZ, supra note 7, at 

345 et seq.; LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 269; XAVIER FAVRE- 

BULLE, supra note 7, at 244; JEAN ROUCHE, supra note 7, at 843 et seq.; JÖRG RISSE, in: Arbitration 

in Germany – The Model Law in Practice, Böckstiegel/Kröll/Nacimiento (eds.), Austin, Boston et al. 

(2007), Commentary on the Arbitration Rules of the German Institution of Arbitration (DIS Rules), 

section 25 note 3, at 748; ANNETTE MAGNUSSON/PATRICIA SHAUGHNESSY, The 2007 Arbitration 

Rules of the Arbitration Institute of the Stockholm Chamber of Commerce, in: SIAR (3/2006), at 64 

footnote 133; ANDREAS REINER, Impecuniosity of Parties and its Effect on Arbitration – From the 

Perspective of Austrian Law, in: Financial Capacity of the Parties, German Institution of Arbitration 

(ed.), Frankfurt a.M. (2004), at 40. 

550 29 ASA BULLETIN 3/2011 (SEPTEMBER)

T. ROHNER & M. LAZOPOULOS, RESPONDENT’S REFUSAL TO PAY ITS SHARE OF THE 

ADVANCE ON COSTS 

II. 

The Legal Basis for the Arbitral Tribunal’s Power to 

Issue a Partial Award for Immediate Reimbursement of 

the Substituted Advance on Costs 

A. Specific Provisions contained in the Arbitration Rules which 

Empower the Arbitral Tribunal to Decide on the Immediate 

Reimbursement of the Substituted Advance on Costs 

Some arbitration rules explicitly state that the arbitral tribunal has the 

power to render a partial award for immediate reimbursement of the advance 

on costs paid by the claimant on behalf of the defaulting respondent. 

Respective provisions are, for instance, included in the SCC and LCIA Rules: 

Article 45(4) SCC Rules 

“If a party fails to make a required payment, the Secretariat 

shall give the other party an opportunity to do so within a specific 

period of time. […] If the other party makes the required payment, the 

Arbitral Tribunal may, at the request of such party, make a separate 

award for reimbursement of the payment.” (emphasis added). 

Article 24(3) LCIA Rules: 

“In the event that a party fails or refuses to provide any deposit 

as directed by the LCIA Court, the LCIA Court may direct the other 

party or parties to effect a substitute payment to allow the arbitration 

to proceed […]. In such circumstances, the party paying the 

substitute payment shall be entitled to recover that amount as a debt 

immediately due from the defaulting party.” (emphasis added). 

These relatively new provisions express the parties’ obligation to pay 

their respective shares of the advance on costs and entitle the party who is 

substituting the share of the defaulting party to seek immediate 

reimbursement for such amount. Furthermore, this type of rule expressly 

vests the arbitral tribunal with the power to issue a partial award if the 

respondent should fail to pay its share of the advance on costs. 9 By choosing 

arbitration rules that include such provisions, the parties manifest their 

intention that these rules shall form an integral part of their agreement and 

that they should be binding upon them. 

However, the decision whether to render a partial award or not is 

always within the arbitral tribunal’s discretion. It is nevertheless submitted 

9 

See ANNETTE MAGNUSSON/PATRICIA SHAUGHNESSY, supra note 8, at 66; PETER TURNER/REZA 

MOHTASHAMI, A Guide to the LCIA Arbitration Rules, Oxford (2009), at 211. 


ARTICLES 

that the arbitral tribunal should be rather reluctant to dismiss such a request. 

In this respect, an arbitral tribunal under the SCC Rules held that “[…] such 

separate award should henceforth as a main rule be rendered in SCC 

arbitrations at the request of a party, which has been forced to pay twice the 

amount that it would have paid if both arbitrating parties had loyally paid 

their shares of the deposit […]”. 10 The request for the issue of a partial award 

should be dismissed in cases where the respondent’s refusal to pay its share 

of the advance on costs was justified. Possible reasons for such justification 

are outlined at p. 561 et seqq. below. 

B. The Arbitral Tribunal’s Power to Decide on Immediate 

Reimbursement even absent a Specific Provision in the 

Applicable Arbitration Rules 

1. The Respondent’s Contractual Obligation to Pay its Share of the 

Advance on Cost 

Most arbitration rules, however, do not contain a specific provision for 

immediate reimbursement of the advance on costs substituted by the claimant 

on behalf of the defaulting respondent. They usually only provide that the 

claimant has to pay the entire amount of the advance on costs where the 

respondent refuses to pay its share. 11 The main reason for this is that the 

arbitration rules mainly govern the parties’ relations with the arbitral tribunal 

and the arbitral institution and not the relationship between the parties 

themselves. 

However, the lack of a specific provision for immediate reimbursement 

of the substituted advance on costs in the applicable arbitration rules should 

generally not excuse the respondent from making the required advance 

payment. In this respect, the ICC Court’s Secretariat stated that non-payment 

is in no way accepted: 

“It is appropriate to note in this connection that it is not an 

accepted practice in ICC arbitrations for a party to refuse to pay all 

or part of its share of the advance on costs and to leave it to the other 

party to pay the balance of the advance on costs in lieu of a defaulting 

party in order to allow the arbitration to go forward, this should in no 

10 

11 

Separate arbitral award in SCC Case 113/2007, publ. in: SIAR (1/2008), at 139. 

See, e.g., article 41(4) Swiss Rules; article 30(3) ICC Rules; article 70(c) WIPO Rules; article 54 

AAA Rules; article 34(4) VIAC Rules; article 41(4) UNCITRAL Rules; article 42(6) ACICA Rules. 




way be seen as an acceptance or endorsement by the ICC of the nonpayment 

by a party of its share of the costs.” 12 

By signing the arbitration agreement, each party undertakes to ensure 

that any subsequent arbitration proceeds as it should. 13 This undertaking 

generally forms a contractual obligation between the parties which is 

enforceable. 14 The payment of advances is one of the prerequisites to having 

disputes adjudicated by an arbitral tribunal. Legal scholars therefore conclude 

that the arbitration agreement imposes equal contractual obligations on both 

parties to pay the required advances to allow the proceedings to go forward. 15 

In international arbitration, it is common practice for each party to pay 

an equal share of the advance on costs, unless the parties agree otherwise. 

This is reflected in most institutional arbitration rules. 16 Arbitration rules 

form “by reference” an integral part of the arbitration agreement and are to be 

treated like any other terms of the contract. 17 Accordingly, the respondent 

who fails to pay its respective share of the advance on costs is in breach of its 

contractual obligation under the arbitration agreement towards the claimant 

(and towards any other party to the arbitration agreement, if any 18 ), who is 

forced to substitute the respondent’s share of the advance payment to have 

the dispute adjudicated by the arbitral tribunal. 19 

12 

13 

14 

15 

16 

17 

18 

19 

Note from the Secretariat of the International Court of Arbitration to all Parties, for information 

concerning the Application of the Schedule of Conciliation and Arbitration Costs of 1 January 1993, 

publ. in: The ICC ICArb. Bull. (1993), at 27. 

IBRAHIM FADLALLAH, Payment of the Advance to Cover Costs in ICC Arbitration: The Parties’ 

Reciprocal Obligations, in: ICC ICArb. Bull. 14 (2003), at 55; PHILIPP SIEBER, Respondent’s refusal 

to pay the advance on costs: The contractual and the procedural approach, in: SAA Vol. 1: Selected 

Papers on International Arbitration, Berne (2011), at 65. 

PHILIPP SIEBER, supra note 13, at 65. 

FRANZ SCHWARZ/CHRISTIAN KONRAD, The Vienna Rules, A Commentary on International 

Arbitration in Austria, Austin, Boston et al. (2009), at 741; MARCO STACHER, in: Swiss Rules of 

International Arbitration, Tobias Zuberbühler/Christoph Müller/Philipp Habegger (eds.), 

Zurich/Basel/Genf (2005), article 41 note 20. 

See, e.g., article 41(1) Swiss Rules; article 30(3) ICC Rules; article 70(a) WIPO Rules; article 45(3) 

SCC Rules; article 34(2) VIAC Rules; article 25 DIS Rules; article 26(2) SIAC Rules; article 42(2) 

ACICA Rules. 

MATTHEW SECOMB, supra note 4, at 62; see also partial award dated 17 June 2002 in ICC Case 11330 

(unreported), cited in: MATTHEW SECOMB, supra note 4, at 63; ANNA-MARIA TAMMINEN, The 

Obligation to Pay the Advance on Costs under the Vienna Rules and Austrian Law, in: Austrian 

Arbitration Yearbook 2009, Vienna 2009, at 284. 

For reasons of simplification, this article deals with two-party proceedings only. The same 

considerations, however, apply mutatis mutandis in multi-party proceedings, where, for instance, the 

second respondent has to pay the share of the advance on costs of the first respondent. 

LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 267; FRANZ SCHWARZ/CHRISTIAN 

KONRAD, supra note 15, at 743 et seq.; IBRAHIM FADLALLAH, supra note 13, at 55 note 7; PIERRE 

KARRER, Naives Sparen birgt Gefahren – Kostenfragen aus Sicht der Parteien und des 

Schiedsgerichts, in: SchiedsVZ (2006), at 116; ALEXANDER NERZ, Vor- und Nachteile eines 

Schiedsverfahrens nach der Schiedsgerichtsordnung der Internationalen Handelskammer, in: Recht 


ARTICLES 

Some legal scholars do not share the view that non-payment of the 

requested advance on costs constitutes a breach of the arbitration agreement. 

They consider that the parties’ obligation to pay their shares of the advance 

on costs is a mere procedural issue and not a matter of substance. 20 The main 

argument used is that most arbitration rules already provide for immediate 

consequences for the respondent’s failure to pay its share of the advance on 

costs, namely that the claimant has to substitute the respondent’s share of the 

advance payment. Thus, the claimant, who is substituting the share of the 

defaulting respondent’s advance on costs, has no remedy to seek immediate 

reimbursement and the arbitral tribunal no jurisdiction to rule on the 

immediate reimbursement of substituted advance on costs. The fact that most 

institutional arbitration rules leave the financial matters, including the 

determination of the amount of the advance on costs, to the arbitral 

institution, and not to the arbitral tribunal, is brought forward as an additional 

argument in support of such view. 21 However, various reasons speak against 

this approach: 

The mere fact that some arbitration rules contain a rule on how to 

proceed, if the respondent fails to pay its share of the advance on costs, 

should not exempt the respondent from its contractual obligation under the 

arbitration agreement. These respective arbitral provisions contain procedural 

consequences and have no effect on the parties’ mutual contractual 

obligations under the arbitration agreement. By not paying its share of the 

advance on costs, the respondent breaches its contractual obligation towards 

the claimant under the arbitration agreement. The respondent remains in 

breach of its obligation under the arbitration agreement, regardless of 

whether the claimant makes the substituting payment or not. That is only of 

relevance for the question as to whether the claimant sustained damage due to 

the respondent’s breach of the arbitration agreement (see p. 559 et seq. 

below). 

20 

21 

der Internationalen Wirtschaft (RIW) (1990), at 352; JEAN ROUCHE, supra note 7, at 841, 854; OTTO 

SANDROCK, Claim for Advances on Costs and the Power of Arbitral Tribunals to Order their Payment, 

in: Global Reflections on International Law, Commerce and Dispute Resolution, Liber Amicorum in 

Honour of Robert Briner, Paris (2005), at 709 et seq., at 724; MATTHEW SECOMB, supra note 4, at 62 

et seq.; MARCO STACHER, supra note 15, article 41 note 20. 

XAVIER FAVRE-BULLE, supra note 7, at 238 et seq., 245; THOMAS RÜDE/REINER HADENFELDT, 

Schweizerisches Schiedsgerichtsrecht, 2 nd ed., Zurich (1993), at 223 et seq.; MARKUS KNELLWOLF, 

Zur materiellrechtlichen Bedeutung der Schiedsabrede, in: Beiträge zu Grenzfragen des Prozessrechts, 

Stephen Berti, Markus Knellwolf, Karoly Köpe, Martin Wyss (eds.), Zurich (1991), at 59 et seq.; 

DEBROSAV MITROVIC, Advance to Cover Cost of Arbitration, in: ICC ICArb. Bull. 7 (1996), at 89; 

PHILIPP SIEBER, supra note 13, at 41 et seqq., provides an in-depth comparison between the doctrines 

of the “contractual” and the “procedural approach”. 

DEBROSAV MITROVIC, supra note 20, at 89. 




With regard to the argument that the arbitral tribunal has no authority 

to render a decision on the reimbursement of the substituted advance on costs 

because most institutional arbitration rules leave financial matters to the 

arbitral institution, and not to the arbitral tribunal, the following can be 

stated: First, the fact that most institutional arbitration rules put the arbitral 

institution in charge of the collection of the advance on costs is not 

inconsistent with the arbitral tribunal’s power to adjudicate disputes 

regarding the non-payment of the advance on costs. The collection of the 

advance payments is an administrative service of the arbitral institution in 

support of the arbitral tribunal. In cases where the arbitration is not 

administrated by an arbitral institution, such administrative work has to be 

undertaken by the arbitral tribunal itself. Thus, the respective institutional 

arbitration rules do not transfer any power from the arbitral tribunal to the 

arbitral institution. Particularly, they do not empower the arbitral institution 

to compel the respondent to pay its respective share of the advance on costs. 22 

Second, the arbitral tribunal’s power to grant a request for immediate 

reimbursement of the substituted advance payment is not (only) based on the 

respondent’s breach of an (institutional) arbitration rule, but rather on the 

respondent’s breach of its contractual obligation under the arbitration 

agreement. The latter is not a procedural obligation, but a matter of 

contractual substance. 

The respondent who agrees to arbitration, but later refuses to pay the 

requested share of the advance on costs does not only breach its contractual 

obligation under the arbitration agreement, but also behaves inconsistently 

with the requirements of good faith. 23 Good faith is a fundamental principle 

in international arbitration and follows on from the nature of the arbitral 

process itself and a party’s duty to its contractual obligations. 24 In this regard, 

the Swiss Federal Supreme Court held that the parties to arbitration are bound 

by the duty of good faith to omit all conduct which might delay the normal 

process of the arbitration proceedings. 25 

22 

23 

24 

25 

YVES DERAINS/ERIC SCHWARTZ, supra note 7, at 343. 

IBRAHIM FADLALLAH, supra note 13, at 55; FRANZ SCHWARZ/CHRISTIAN KONRAD, supra note 15, at 

745 et seq.; ANNA-MARIA TAMMINEN, supra note 17, at 286 et seq. 

GARY BORN, International Commercial Arbitration, The Hague (2009), at 1012; WERNER 

WENGER/CHRISTOPH MÜLLER, in: Basler Kommentar Internationales Privatrecht, Heinrich Honsell et 

al. (eds.), Basel (2007), article 178 no. 79, at 1554 et seq. 

Decision 108 Ia 197 of the the Swiss Federal Supreme Court dated 10 May 1982: “Les parties qui 

compromettent sont dès lors tenues par les règles de la bonne fois d’éviter tout ce qui pourrait 

retarder sans nécessité absolue le déroulement normal de la procédure arbitral.” 


ARTICLES 

2. The Arbitral Tribunal’s Power to Issue a Partial Award for 

Immediate Reimbursement 

a. The Arbitral Tribunal’s Competence to Decide on the Immediate 

Reimbursement of the Advance on Costs 

As stated at p. 553 above, the respondent’s contractual obligation to 

pay its share of the advance on costs is contained in the arbitration 

agreement. Disputes regarding the non-payment of the advance on costs are 

therefore generally considered to be covered by the arbitration agreement. 26 

The arbitral tribunal has the power to decide on all issues that fall within the 

scope of the arbitration agreement. Hence, the tribunal is competent to render 

a decision on the immediate reimbursement of the advance on costs 

substituted by the requesting claimant. 27 

b. The Form of the Arbitral Tribunal’s Decision and its 

Enforcement 

The vast majority of legal scholars share the opinion that the arbitral 

tribunal has to render the decision on the immediate reimbursement of the 

substituted advance on costs in form of a partial award. 28 This is mainly 

because the claimant’s request for immediate reimbursement is a matter of 

substance (i.e. the respondent’s breach of its contractual obligation under the 

arbitration agreement) which requires a final and binding decision. 

The arbitral tribunal’s decision on the immediate reimbursement of the 

substituted advance on costs must be distinguished from its (or the arbitral 

institution’s) previous decision regarding the costs to be advanced by each 

party. The decision on the amount of advance on costs is an administrative 

26 

27 

28 

ANDREAS REINER, supra note 7, at 153; partial award dated 2 September 1996 in ICC Case 7289 

(unreported), cited in: Revue de l’arbitrage (4/2002), at 1004. 

See also IBRAHIM FADLALLAH, supra note 13, at 56; SIGVART JARVIN, Wenn die beklagte Partei ihren 

Anteil des Kostenvorschusses nicht bezahlt, in: Festschrift für Ottoarndt Glossner zum 70. Geburtstag, 

Alain Plantey/Karl-Heinz Böckstiegel/Jens Bredow (eds.), Heidelberg (1994), at 158 et seq.; PHILIPPE 

FOUCHARD/EMMANUEL GAILLARD/BERHOLD GOLDMAN, International Commercial Arbitration, in: 

Emmanuel Gaillard/John Savage (eds.), The Hague 1999, at 685; MICHAEL BÜHLER/THOMAS 

WEBSTER, Handbook of ICC Arbitration, 2 nd ed., London (2008), article 30 no. 30-33, at 427 et seq., 

436; MARCO STACHER, supra note 15, article 41 note 20. 

LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 268; YVES DERAINS/ERIC 

SCHWARTZ, supra note 7, at 346 et seq.; PHILIPPE FOUCHARD/EMMANUEL GAILLARD/BERHOLD 

GOLDMAN, supra note 27; JEAN-FRANCOIS POUDRET/SEBASTIEN BESSON, Comparative Law of 

International Arbitration, 2 nd ed., Zurich 2002, at 509 et seq.; ANDREAS REINER, supra note 7, at 152; 

other opinion: BERNHARD BERGER/FRANZ KELLERHALS, International and Domestic Arbitration in 

Switzerland, London (2010), at 415, submit that the arbitral tribunal’s decision ordering the defaulting 

respondent to immediately reimburse the claimant should not take the form of a partial award, but 

merely that of an order for provisional or conservatory measure. 




directive which can be amended or revised by the arbitral tribunal (or – as the 

case may be – by the arbitral institution) at any time. 29 

The request to issue such partial award is a separate claim which is 

independent of the final allocation of the costs between the parties at the end 

of the arbitral proceedings. 30 It is irrelevant that the final allocation of the 

arbitration costs between the parties will only be known at the time of the 

final award. 31 It would be inconsistent with the purpose of the advance on 

costs to base the decision on reimbursement on the outcome of the final 

award. 32 Its purpose is to finance the proceedings up to the final award and to 

ensure the payment of the accrued fees and expenses of the arbitral tribunal 

and the arbitral institution (if any). 33 There is no reason to postpone the 

decision on the reimbursement of the substituted advance on costs until the 

end of the arbitration. 

In several ICC cases, partial awards have been rendered on this issue. 

In ICC Case 13139 34 , for instance, the arbitral tribunal held in this respect 

that “[…] the decision […] must indeed be issued in the form of an award 

which deals in a final manner with a separate claim that is independent and 

not preliminary to other claims in this arbitration” 35 . A similar view was 

taken in ICC Case 11330 36 , where the arbitral tribunal found it appropriate to 

render a partial award instead of an order due to the “independent and 

autonomous character of the parties’ obligation”. Similar in ICC 

Case 17050, where the arbitral tribunal considered that a claim for the 

reimbursement of the advance on costs “[…] is a contract claim, and that it 

can be decided in an award, rather than in an order on interim measures.” 37 

In contrast to a procedural order or an interim measure, the partial 

award for the reimbursement of the advance on costs should be a final 

29 

30 

31 

32 

33 

34 

35 

36 

37 

See decision 4A.399/2010 of the Swiss Federal Supreme Court dated 10 November 2010, para. 4.2; 

SÉBASTIEN BESSON, in: Swiss Rules of International Arbitration, Tobias Zuberbühler/Christoph 

Müller/Philipp Habegger (eds.), Zurich/Basel/Genf (2005), article 31 note 6. 

LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 268; MARCO STACHER, supra 

note 15, article 41 note 20; PETER SCHLOSSER, Das Recht der internationalen privaten 

Schiedsgerichtsbarkeit, 2 nd ed., Tübingen (1989), at 567; ANNA-MARIA TAMMINEN, supra note 17, at 

299; PETER TURNER/REZA MOHTASHAMI, supra note 9, at 216. 

LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 268. 

IBRAHIM FADLALLAH, supra note 13, at 56. 

MICHA BÜHLER, supra note 5, at 291. 

Partial award dated 2005 in ICC Case 13139 (unreported), partially publ. in: Journal du Droit 

International (2010), at 1418 et seq. 

Partial award dated 2005 in ICC Case 13139 (unreported), supra note 34, at 1421. 

Partial award dated 17 June 2002 in ICC Case 11330 (unreported), cited in: MATTHEW SECOMB, 

supra note 4, at 63. 

Interim award dated 12 November 2010 in ICC Case 17050, para. 26 (unreported), publ. in: ASA 

Bull. (2011), at 634 et seqq. 


ARTICLES 

arbitral award and therefore enforceable under the Convention on 

Recognition and Enforcement of Foreign Arbitral Awards (“NYC”). 38 The 

Swiss Federal Supreme Court has confirmed such view in a 2003 decision 

and granted the enforcement of a French partial arbitral award rendered under 

the ICC Rules for the reimbursement of the advance on costs paid by the 

claimant on behalf of the defaulting respondent. 39 The same view was taken 

by the Arbitration Court of St. Petersburg of the Russian Federation (the 

“Arbitration Court”) in a 2009 decision 40 , where a Swedish claimant sought 

the recognition and enforcement of a partial award rendered under the SCC 

Rules for the reimbursement of a substituted advance payment including 

accrued interest. 41 The Arbitration Court reasoned that the arbitral tribunal’s 

decision regarding the parties’ obligations to pay the advances on costs is 

final, regardless of the later adjudication on the merits, including the final 

allocation of the costs of the arbitration between the parties. 42 The SCC 

partial award was therefore held enforceable under the NYC by the 

Arbitration Court. 

In arbitration conducted under the ICC Rules, the arbitral tribunal 

should be aware that article 27 ICC Rules 43 requires that the arbitral tribunal 

must – before issuing a partial award for immediate reimbursement of the 

substituted advance on costs – submit a draft form of the award to the ICC 

Court for scrutiny and approval. In order to provide immediate relief to the 

claimant without this formality of an ICC award, the arbitral tribunal may in 

the first instance – instead of issuing a partial award – issue an order in which 

it could make clear that the claimant may apply for a partial award, if the 

respondent fails to comply with this order. 44 

3. The Requirements to be Demonstrated by the Claimant to Obtain 

a Partial Award for Immediate Reimbursement of the Substituted 

Advance on Costs 

a. Preliminary Remarks Concerning the Applicable Law 

The Swiss Federal Supreme Court held that awarding damage due to 

the breach of an arbitration agreement is a matter of substance and not a 

38 

39 

40 

41 

42 

43 

44 

LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 268; MATTHEW SECOMB, supra 

note 4, at 70. 

Decision 4P.173/2003 of the Swiss Federal Supreme Court dated 8 December 2003. 

Decision A56-63115/2009 of the Arbitration Court of St. Petersburg dated 11 December 2009. 

SCC Case 142/2008 dated 4 June 2009. 

Decision A56-63115/2009 of the Arbitration Court of St. Petersburg dated 11 December 2009. 

Article 27 ICC Rules: “Before signing any Award, the Arbitral Tribunal shall submit it in draft form 

to the Court […].” 

This approach was taken in ICC Case 10169, Order No. 1 dated 10 September 1999 (unreported). 




procedural issue. 45 The parties’ obligation to pay their respective shares of the 

advance on costs forms an integral part of the arbitration agreement (see 

p. 552 et seq. above). Hence, the law to be applied to the arbitration 

agreement should determine the specific requirements to be demonstrated by 

the claimant to obtain a partial award for reimbursement. 

Assuming that Swiss law applies and the non-payment is qualified as a 

contractual obligation, the general rule of article 97 of the Swiss Code of 

Obligations (“CO”) should apply. 46 According to article 97 CO, the claimant 

who is seeking compensation for damage incurred as a result of the 

respondent’s contractual breach has to prove the following requirements: 

– the existence of a damage (see p. 559 et seq. below); 

– the breach of an obligation (see p. 561 below); and 

– the causal link between the breach of the obligation and the 

damage suffered (see p. 561 below). 

Pursuant to article 97 CO the existence of fault is presumed. However, 

the respondent should not be liable under article 97 CO, if it can prove that 

there was no fault on its part (see p. 561 et seqq. below). 

b. The Existence of Damage 

The claimant has to demonstrate that it sustained damage caused by the 

respondent’s non-payment in order to obtain a partial award for the 

reimbursement of the substituted advance on costs. 47 

In general, the amount of damage should be simple to demonstrate. 48 It 

is the difference between the actual financial situation of the aggrieved party 

and the hypothetical situation in which it would have been in case of a proper 

performance (the so called “positive interest”). 49 The amount of the damage 

suffered by the claimant usually corresponds to the amount of the substituted 

45 

46 

47 

48 

49 

Decision 4A.444/2009 of the Swiss Federal Supreme Court dated 11 February 2010, para. 4.1.2 

Article 97(1) CO: “If the performance of an obligation cannot at all or not duly be effected, the 

obligor shall compensate for the damage arising therefrom, unless he proves that no fault at all is 

attributed to him.” In an unpublished ICC case cited in the decision 4A.444/2009 of the Swiss Federal 

Supreme Court dated 11 February 2010, the arbitral tribunal confirmed that article 97 CO is the 

relevant legal basis for a liability claim due to the breach of an arbitration agreement. 

Interim award dated 12 November 2010 in ICC Case 17050, para. 35 (unreported), supra note 37; 

according to IBRAHIM FADLALLAH, supra note 13, at 57, no proof of damage is required. The author 

qualifies the claimant’s request for immediate reimbursement as a claim for performance of a 

contractual obligation, rather than for compensation for damages or loss; similar MATTHEW SECOMB, 


LAURENCE CRAIG/WILLIAM PARK/JAN PAULSSON, supra note 7, at 268. 

INGEBORG SCHWENZER, Schweizerisches Obligationenrecht, Allgemeiner Teil, 5 th ed., Berne 2009, at 

479. 


ARTICLES 

advance payment made on behalf of the defaulting respondent. 50 This amount 

creates a debt of the defaulting respondent towards the claimant. This legal 

consequence is explicitly stated in article 24(3) LCIA Rules and also 

confirmed in ICC Case 13853 51 : 

“The Tribunal considers that payment should be made direct to 

the Claimants rather than to the ICC. The Claimants’ submission 

that this is a contract debt is accepted. That debt is owed to the 

Claimants and if it is they, not the ICC, who should receive payment.” 

(emphasis added). 

It is irrelevant for the determination of the amount of damage that the 

final allocation of the arbitration costs between the parties will be fixed in the 

final award at the end of the arbitration. It is the parties’ mutual obligation 

under the arbitration agreement to pay their respective shares of the advance 

on costs in due time. This is different from their mutual obligation to 

reimburse each other for the costs of the arbitration, which has to be 

determined by the arbitral tribunal in the final award. The first obligation is 

independent of the outcome of the arbitral proceedings and owed upon the 

arbitral tribunal’s (or the arbitral institution’s) request to make such payment, 

while the latter obligation generally depends on the extent to which each 

party prevails in its claims and is owed once the final award is rendered (see 

p. 557 above). 

In this regard, the Swiss Federal Supreme Court held in a 2003 

decision 52 that a partial award ordering the defaulting respondent to reimburse 

the claimant for the substituted advance on costs does not prejudge the 

outcome of the arbitral proceedings which has to be decided in the final award: 

“[…] Cette condamnation à payer une avance de frais de 

24’000 US$ ne vise que la part des frais d’arbitrage incombant à la 

recourante, que celle-ci n’a pas payée mais qui a été avancée par les 

intimées pour permettre le déroulement de la procédure arbitrale. 

Dans la mesure où l’autorité arbitrale a ordonné en cours de 

procédure le remboursement de cette avance faite par la partie 

adverse, et non pas le paiement de l’intégralité de la provision pour 

frais d’arbitrage, soit 48’000 US$, la sentence partielle du 2 mai 

50 

51 

52 

Dissenting MICHA BÜHLER, supra note 5, at 298 with reference to ICC Case 12491, publ. in: ASA 

Bull. (2006), at 281 et seq., who considers that it is difficult to argue that “the claimant’s substitute 

payment of the advance immediately results in damages in the same amount or that damages are 

independent from the out-come of the final cost decision.” 

Partial award in ICC Case 13853 (unreported), cited in: MICHAEL BÜHLER/THOMAS WEBSTER, supra 

note 27, at 436; PETER TURNER/REZA MOHTASHAMI, supra note 9, at 216. 

Decision 4P.173/2003 of the Swiss Federal Supreme Court dated 8 December 2003, para. 4.2. 




2002 ne peut raisonnablement pas être interprétée comme une 

décision préjugeant de l’issue de la procédure arbitrale et de la 

solution adoptée dans la sentence finale […]” 53 . 

c. The Respondent’s Breach of its Obligation 

The claimant has further to demonstrate that the respondent breached 

its contractual obligation under the arbitration agreement by not paying the 

requested advance on costs. 

d. The Causal Link between the Respondent’s Breach of its 

Obligation and the Claimant’s Damage 

Finally, the claimant has to demonstrate causation between the 

respondent’s breach of its contractual obligation under the arbitration 

agreement (i.e. the non-payment of the requested advance on costs) and any 

damage incurred thereby. In other words, the claimant has to show that the 

claimed damage would not have occurred, if the respondent had paid its share 

of the advance on costs. 

4. Possible Reasons to Excuse the Respondent from Paying the 

Requested Share of the Advance on Costs 

The respondent’s contractual obligation arising out of the arbitration 

agreement to pay the requested share of the advance on costs should not 

apply without exception. There might be reasonable circumstances which 

excuse the respondent’s non-payment of the advance on costs. According to 

the general rule of evidence, the respondent who alleges the existence of an 

excuse usually bears the burden of proof for all the facts in relation thereto 

(see p. 559 above). 54 

For instance, one could argue that a valid reason to excuse the 

respondent from paying its share of the advance on costs is an attempt of the 

claimant to intentionally deteriorate its financial situation after the conclusion 

of the arbitration agreement. Consequently, there would be no or only little 

53 

54 

Free translation into English: “[…] This condemnation to pay an advance on costs of 24,000 US$ only 

effects the part of the arbitration costs imposed on the appellant [defaulting party], which has not 

been paid by the appellant, but have been advanced by the appellee in order to proceed with the 

arbitration proceedings. Insofar as the arbitral tribunal has ordered in the course of the procedure 

the reimbursement of this advance on costs paid by the opponent, and not the payment of the entire 

arbitration fees, i.e. 48,000 US$, the partial award dated 2 May 2002 cannot reasonably be 

interpreted as a decision prejudging the merits of the arbitral proceedings and the outcome decided 

in the final award that was rendered on 23 December 2002.” 

See also interim award dated 12 November 2010 in ICC Case 17050, para. 31 (unreported), supra 

note 37, where the arbitral tribunal held that “[…] it is for the party that refuses to pay its share of the 

advance on costs to invoke such circumstances that would justify the non-payment.” 


ARTICLES 

prospect for the respondent to recover the advance on costs at the end of the 

proceedings. 55 Such a situation arose in ICC Case 11330 56 : 

“[...] [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 nonexistent 

in the event that it loses the case while it will continue to exist 

in good standing, if it wins the case.” (emphasis added). 

Another possible example could be where the arbitral tribunal’s 

jurisdiction is prima facie lacking. 57 That could be the case, if the respondent 

could establish prima facie evidence that there is no valid arbitration 

agreement between the parties. This is because the respondent should not be 

required to advance the arbitration costs if it never agreed to arbitration. 

Under Swiss case law, the arbitral tribunal would – in cases where its 

jurisdiction is contested – not even be empowered to render a partial award 

without first affirming its own jurisdiction in a fully-fledged evidence 

proceeding. 58 In cases where the respondent justifies its non-payment of the 

advance on costs by bringing a plea of lack of jurisdiction, it is for the 

claimant to show that the arbitral tribunal indeed has jurisdiction, 59 and that 

there is no valid excuse for the respondent’s non-payment. This is an 

exception to the general rule of evidence mentioned at p. 561 above. 

The mere fact that the claimant is domiciled in a country where it 

could be difficult for the respondent to enforce a possible cost award against 

the claimant for its paid advance on costs should not excuse the respondent 

55 

56 

57 

58 

59 

A serious deterioration of the claimant’s financial status compared to the time when the arbitration 

agreement was concluded is generally also considered as a valid reason for ordering security for costs; 

see thereto BERNHARD BERGER, Security for Costs: Trends and Developments in Swiss Arbitral Case 

Law, in: ASA Bull. (2010), at 7 et seq., with numerous references to arbitral case law. 

See Partial award dated 17 June 2002 in ICC Case 11330 (unreported), cited in: MATTHEW SECOMB, 


See interim award dated 12 November 2010 in ICC Case 17050, para. 33 (unreported), supra note 37; 

separate arbitral award in SCC Case 113/2007, publ. in: SIAR (1/2008), at 139; CHRISTER 

SÖDERLUND, Oberservations to the separate arbitral award in SCC Case 113/2007, in: SIAR (1/2008), 

at 142 et seq.; YVES DERAINS/ERIC SCHWARTZ, supra note 7, at 347. 

See decision 121 III 495 of the Swiss Federal Supreme Court dated 20 December 1995, where the court 

held that the arbitral tribunal may not affirm its jurisdiction merely based on the claimant's allegations 

without having decided with unfettered power of review on its own jurisdiction; see thereto URS 

HOFFMANN-NOWOTNY, Doppelrelevante Tatsachen in Zivilprozess und Schiedsverfahren, 

Zürich/St. Gallen 2010, at note 148 et seq., with further references. In ICC Case 10439 (unreported), cited 

in: MATTHEW SECOMB, supra note 4, at 63, the defaulting party stated that one of the reasons for not 

paying its share of the advance on costs was that it contested the jurisdiction of the arbitral tribunal. In its 

partial award dated 8 April 2002, the arbitral tribunal dismissed the claimant's request for immediate 

reimbursement of the substituted advance on costs on the grounds that the issue of jurisdiction is still 

pending and thus the relief sought by the claimant cannot be granted. 

WERNER WENGER/CHRISTOPH MÜLLER, supra note 24, article 186 no. 50, at 1670. 




from making the required advance payment. It is each party’s own duty to 

consider possible enforcement difficulties before signing the arbitration 

agreement. A possible exception to this general rule may be where the 

claimant changes its legal domicile after signing the arbitration agreement to 

deteriorate the enforcement of a possible award. 60 

Neither should the fact that the claim is frivolous or abusive generally 

be seen as a valid excuse for the non-payment of the advance on costs. 61 

Whether a claim is frivolous or abusive is a question of merits and has to be 

decided by the arbitral tribunal in its final award. This was confirmed in ICC 

Case 13139 62 : 

“47. The Arbitral Tribunal’s view is that the defense [of the 

Respondent] that the request of [the Claimant] is frivolous is not a 

valid excuse. It will be for the Arbitral Tribunal to decide on the 

merits of this dispute in its Final Award. At that stage the Tribunal 

will make its decision on the arbitration costs – a decision which may 

or may not be influenced by the frivolous nature of a claim, or its 

seriousness.” (emphasis added). 

Notwithstanding that a frivolous or abusive claim should generally not 

be considered as a valid reason for non-payment, there may be possible 

situations where the respondent could be excused from not paying its (entire 

or part of its) share of the advance on costs. One may think of the situation 

where a well funded claimant files an exorbitant claim. In such situation the 

respondent may be excused from paying its share of the advance on costs if it 

could show on a prima facie basis that this claim is manifestly unfounded, 

and that by making the requested advance payment (if possible at all) it 

would face serious financial difficulties. 

There may be further possible reasons to excuse the respondent from 

paying its share of the advance on costs. All reasons must be considered by 

the arbitral tribunal based on the circumstances of each individual case. 

60 

61 

62 

Such “bad faith manoeuvres” are generally also considered as a valid reason for ordering security for 

costs; see in detail BERNHARD BERGER, supra note 55, 12 seq. with references to arbitral case law. 

MATTHEW SECOMB, supra note 4, at 59 footnote 7; according to PHILIPP SIEBER, supra note 13, at 57, 

it is very unlikely that an arbitral tribunal will seriously consider this kind of exception. This is 

because it would require that the arbitral tribunal would give its preliminary view on the merits of the 

case, which the arbitral would most likely want to avoid, in order not to seem prejudging the case, or 

to lose its neutrality and impartiality. 

Partial award dated 2005 in ICC Case 13139 (unreported), supra note 34, at 1420 et seq. 


ARTICLES 

C. Case Law 

Numerous arbitral tribunals under various arbitration rules have 

confirmed that a respondent’s unjustified failure to pay its respective share of 

the advance on costs constitutes a contractual breach which allows the 

claimant to request the grant of a partial award for reimbursement of the 

substituted advance on costs: 

In ICC Case 13139 63 , the arbitral tribunal considered that by entering 

into an arbitration agreement referring to the ICC Rules, each party 

undertakes the contractual obligation, save special circumstances, to pay its 

share of the advance on costs in the case that it should become a respondent 

in an arbitration pursuant to the arbitration agreement. It held that the 

respondent had no valid reason to refuse to pay its share of the advance on 

costs and due to its non-payment it had breached its contractual obligations 

towards the claimant. Hence, it granted the relief requested by the claimant 

and ordered the respondent to reimburse the claimant for the advance paid to 

the ICC in place of the respondent. 

“38. The Arbitral Tribunal agrees that by entering into the 

separable Arbitration Agreement […] contained in the Distribution 

Agreement and referring to the ICC Rules, [the Respondent] 

undertook, save special circumstances, to pay its share of the advance 

should it become a respondent in an arbitration pursuant to the 

Arbitration Agreement […]. 

41. In the view of the Arbitral Tribunal, the agreement to 

arbitrate is a separable contract which differs in its nature from the 

contract on the merits inasmuch as it is a contract of a procedural 

nature, but it is a contract nevertheless, giving rise to a procedural 

obligation to provide the advance on costs. 

42. The Arbitral Tribunal is of the view that [the Respondent] 

accordingly had an obligation to provide the advance on costs, unless 

he is excused from this. 

49. Thus, in the Arbitral Tribunal’s view [the Respondent] is not 

excused from its obligation to make the advance on costs, and breached 

its contractual obligation in this arbitration by not doing so. 

61. […] [the Respondent] shall pay [the Claimant] USD 

210,000 within 28 days of the date of receipt of this Award, in 

63 





reimbursement for [the Claimant] having paid this sum to the ICC in 

place of [the Respondent].” 64 (emphasis added). 

In ICC Case 7289 65 , the arbitral tribunal concluded that the ICC Rules 

impose a contractual obligation on the parties to bear half of the advance on 

costs and affirmed its jurisdiction to rule on financial matters such as the nonpayment 

of the advance on costs: 

“[…] En acceptant sa mission, l’arbitre s’engage à respecter et 

à faire respecter les pouvoirs de la Cour, et il n’a pas à s’immiscer 

dans les mesures d’ordre administratif ou financier que celle-ci a 

prises ou prendrait encore. 

[…] Si la Cour, dénuée de pouvoir juridictionnel, se refuse à 

trancher ce litige, l’arbitre, en revanche, ne devrait pas se déclarer 

incompétent, lui que les parties ont choisi comme juge pour trancher 

tous les différends qui les opposent sur le fond ou en matière de 

procédure arbitrale. 

[…] Il ne fait pas disparaître l’obligation de fond qui pèse 

contractuellement sur chaque partie d’avoir, dans l’arbitrage CCI, à 

participer également au paiement de la provision pour frais, 

obligation que chaque partie contracte réciproquement à l’égard de 

l’autre. […]” 66 (emphasis added). 

The same view was taken in ICC Case 17050 67 : 

“[…] By choosing to submit all their disputes to arbitration 

under the ICC Rules, the parties to the arbitration have thus agreed to 

pay half of the advances on costs.” 

In ICC Case 10526 68 , the arbitral tribunal affirmed its jurisdiction to 

rule on financial matters. It further stated that the reference in the parties’ 

64 

65 

66 

67 

68 


Partial award dated 2 September 1996 in ICC Case 7289 (unreported), supra note 26, at 1004 et seq. 

Free translation into English: “[…] In acceptance of his appointment, the arbitrator engages himself 

to respect and enforce the competences of the Court and he has no right to interfere with the 

administrative or financial measures which had been taken or will be taken by the Court. 

[…] If the Court, lacking judicial power, refuses to settle this dispute, the arbitrator on the other hand 

has no right to decline his jurisdiction, since the parties have chosen him as a judge to rule on all 

disputes relating to the merits of the case or to the procedure of the arbitration. 

[…] [by making the substitute payment] the material obligation contractually imposed on the parties 

to pay each half of the advance on costs in ICC arbitration does not disappear, an obligation to 

which each party agreed reciprocally towards the other […].” (emphasis added). 

Interim award dated 12 November 2010 in ICC Case 17050, para. 27 (unreported), supra note 37. 

Partial award dated 2000 in ICC Case 10526 (unreported), publ. in: Journal du Droit International 

(2001), at 1182. 


ARTICLES 

agreement to the ICC Rules imposes a contractual obligation of the parties to 

each pay half of the advance on costs: 

“[…] Cette demande, précisément parce qu’elle a un objet 

distinct de la demande relative à la répartition des frais, n’est pas une 

demande de mesure provisoire: d’une part elle ne se fonde pas sur 

une simple apparence, d’autre part la décision à intervenir à son sujet 

n’est pas susceptible d’être remise en cause par une sentence 

ultérieure. 

[…] La compétence du Tribunal arbitral ne serait exclue que 

dans la mesure où le Règlement lui-même attribuerait compétence à 

un autre organe, par exemple à la Cour qui fixe le montant de la 

provision, et non les arbitres. 

[…] En ne payant pas sa part de la provision, la défenderesse a 

méconnu son obligation contractuelle.” 69 (emphasis added). 

The same view was taken in a partial award under the ICC Rules dated 

27 March 2001 70 : 

“[…] L’obligation de chacune des parties de payer sa part de la 

provision est une obligation contractuelle résultant de la convention 

d’arbitrage. Elle est indépendante du sort que les arbitres réserveront 

aux prétentions des parties qui font l’objet du litige soumis à 

l’arbitrage. Elle est également indépendante de la décision finale sur 

la répartition des frais de l’arbitrage, que le Tribunal devra prendre 

dans le cadre de la sentence définitive en application de l’article 

31(3) du Règlement CCI. 

[…] il est normal que l’obligation de chacune des parties de 

payer sa part de la provision confère un droit de recours à la partie 

qui a payé au-delà de sa part. 

[…] Le recours du demandeur qui a dû payer la totalité de la 

provision ne constitue en rien, contrairement à ce que soutient la 

défenderesse, une mesure provisionnelle ou conservatoire. Elle tend 

en effet à l’exécution d’une obligation contractuelle autonome qui 

69 

70 

Free translation into English: “[…] This request, mainly because it is a separate matter compared to 

the request concerning the reimbursement of costs, is not a request for interim measures: on the one 

hand it is not founded on a simple emergence, on the other hand the decision taken on this matter 

cannot be challenged by a subsequent sentence.” 

[…] The jurisdiction of the Arbitral Tribunal is only excluded as far as the Rules themselves vest the 

competence to another organ, which fixes the advance, e.g. to the Court, and not the arbitrators. 

[…] By not paying the advance, the respondent has disregarded its contractual obligation.” 

Partial award dated 27 March 2001 (ICC Case 10671) in the matter X COMPANY, Panama vs. Y 

S.A., Suisse, publ. in: ASA Bull. (2001), at 288. 




s’épuisera par le remboursement au demandeur de la somme 

déboursée par lui pour le compte du défendeur. La décision du 

Tribunal arbitral sur ce point n’est ni provisionnelle, ni 

conservatoire; elle vise simplement à assurer le respect des 

engagements résultant de la clause compromissoire qui ont été 

méconnus par le défendeur. […]” 71 (emphasis added). 

A similar view was taken by an arbitral tribunal under the UNCITRAL 

Rules 72 : 

“[…] once a tribunal decides to request each party to deposit 

an equal amount of cost advances, there is no doubt that such a 

request becomes binding upon the parties. […] the obligation to make 

advance payments on costs, either in equal shares or as directed or 

requested by the arbitral tribunal, derives from the parties’ duty to 

co-operate in good faith in order to allow the arbitration to proceed 

[…]. Parties agreeing to arbitration are expected to know that an 

arbitral tribunal will incur costs and that it will request advances 

from them. Thus, the arbitration agreement may be viewed as the 

source of the parties’ duty to advance their shares of the costs of the 

arbitration.” (emphasis added). 

Also in ICC Case 10169 73 , the sole arbitrator affirmed that the claimant 

has a right to require from the respondent that it pays its share of the advance 

fixed by the ICC Court: 

“3.2.15 In view of these considerations I conclude that, in the 

present case, the Claimant has a right to require from the Respondent 

that it pays its share in the advance fixed by the ICC Court.” 

71 

72 

73 

Free translation into English: “[…] The obligation of each party to pay its share of the advance 

represents a contractual obligation resulting from the arbitral agreement. It is independent of the 

outcome which the arbitrators reserve with respect to the parties’ claims forming the subject of the 

dispute submitted to the arbitration. It is also independent of the final decision regarding the 

allocation of the arbitration costs, which have to be determined by the Tribunal in the course of the 

final sentence by applying Article 31 (3) ICC Rules. 

[…] It is normal that the obligation of each party to pay its share of the advance on costs provides the 

party who paid more than its share with a claim for regress. 

[…] Contrary to the defendant’s allegation, the regress of the claimant who had to pay the entire 

advance does not in any way constitute a conservatory measure. It is aimed at the execution of an 

independent contractual obligation which will diminish with reimbursement to the amount paid by it 

on behalf of the defendant. In this regard, the arbitration tribunal’s decision is neither provisional 

nor conservatory. It only ensures the compliance of the commitments arising from the arbitration 

clause, which have been disregarded by the defendant […].” 

Partial award under the UNCITRAL Rules dated 2008, publ. in: Yearbook of Commercial Arbitration 

(2009), at 24. 

Order No. 1 dated 10 September 1999 in ICC Case 10169 (unreported). 


ARTICLES 

In ICC Case 13139, the arbitral tribunal considered that even if the 

parties’ obligation to pay the advance on costs could only be considered as a 

procedural contractual obligation, it nevertheless has the power to issue a 

partial award for immediate reimbursement in favor of the party substituting 

the advance on costs on behalf of the defaulting party: 

“53. As a matter of legal doctrine, the Arbitral Tribunal finds 

the conclusion inescapable that if a contractual obligation, even if it 

is a procedural contractual obligation, has been breached, it has 

jurisdiction to issue immediately a Partial Award in favor of the party 

that substituted itself for the defaulting party. […]” 74 (emphasis 

added). 

The cases cited above illustrate the arbitral tribunal’s power to render a 

partial award on the immediate reimbursement in favor of the claimant that 

has paid the entire advance on costs, even if the applicable arbitration rules 

(e.g. the ICC Rules, UNCITRAL Rules, Swiss Rules, etc.) do not contain 

corresponding specific provisions. 

The arbitral tribunal’s power to render a partial award in favor of the 

claimant who paid the advance on costs on behalf of the respondent was also 

confirmed by the Supreme Court of the Canton of Zurich 75 : 

“Ob der Einzelschiedsrichter den Rückgriff für die Hälfte des 

Vorschusses in freier Ergänzung der Verfahrensordnung des 

Schiedsgerichtshofes oder in deren Ergänzung durch die ZPO 

eingeräumt hat, ist ohne Belang, weil ein Verfahrensgrundsatz, der 

dies verbieten würde, weder der Verfahrensordnung noch der ZPO zu 

entnehmen noch von der Beklagten nachgewiesen worden ist.” 76 

However, there are cases where some arbitral tribunals took a different 

view and considered that they do not have the power to issue a partial award 

for immediate reimbursement of the substituted advance on costs. For 

example, in ICC Case 12491 77 , the arbitral tribunal dismissed the claimant’s 

claim for reimbursement with the argument that only the ICC Court is 

competent in financial matters, and not the arbitral tribunal: 

74 

75 

76 

77 

Partial award dated 2005 in ICC Case 13139 (unreported), supra note 34, at 1421. 

Decision of the Supreme Court of the Canton of Zurich dated 29 April 1985, partially publ. in: ASA 

Bull. (1986), at 129. 

Free translation into English: “Whether the Sole Arbitrator granted the regress for half of the advance 

on costs based on a free amendment of the procedural rules of the Court of Arbitration or based in 

their extension by the Code of Civil Procedure is irrelevant because a procedural principle which 

would forbid [such recourse] can neither be derived from the procedural rules, nor from the Code of 

Civil Procedure, nor has it been demonstrated by the respondent.” 

Partial award no. 2 dated 1 June 2004 in ICC Case 12491, publ. in: ASA Bull. (2006), at 281; 

discussed by MICHA BÜHLER, supra note 5, at 294 et seq. 




“[…] Que l’acceptation contractuelle du règlement CCI ne peut 

pas donner à la demanderesse un droit (au remboursement de la 

moitié de la provision intégralement versée) que le règlement CCI ne 

lui donne pas; […]” 78 

A similar approach was taken in ICC Case 12895 79 . In this case, 

however, the arbitral tribunal dismissed the claimant’s request because the 

claimant did not make any substituted payment on behalf of the defaulting 

respondents, but rather asked the arbitral tribunal to order the defaulting 

respondents to pay their shares of the advance on costs. The arbitral tribunal 

left the question unanswered as to whether it would have granted a request 

for reimbursement had the claimant substituted the advance on costs of the 

defaulting respondents: 

“[…] Under the ICC Rules, it is the Court or the Secretary 

General, and not the Arbitral Tribunal, who has authority to deal with 

circumstances where a party fails to pay its share of the advance on 

costs. The underlying rationale for the Court or Secretary General 

being the competent authority is that the arbitrators have a personal 

interest in being paid their fees. If an arbitral tribunal were to order a 

party to pay its share of the advance on costs, its decision might be 

viewed as self-serving and lacking in independent and unbiased 

judgment. Such is not the case when one party has already paid the 

full advance on costs and requests the tribunal to order the nonpaying 

party to reimburse it […].” 

III. Summary 

Arbitration is a consensual mechanism of dispute resolution which 

implies the parties’ obligation to pay the advance on costs as requested by the 

arbitral tribunal, or – as the case may be – by the arbitral institution. The 

respondent who fails to pay its respective share of the advance on costs is in 

breach of its contractual obligation towards the claimant under the arbitration 

agreement. 

Disputes regarding the non-payment of the advance on costs fall within 

the scope of the arbitration agreement. Consequently, the arbitral tribunal has 

the power, upon request of the claimant, to render a decision on the 

78 

79 

Free translation into English: “The mere contractual acceptance of the ICC Rules does not give the 

claimant a right (to the reimbursement of half of the advance paid in total) that the ICC Rules do not 

provide for him […].” 

Procedural order no. 10 dated 2005 (unreported) in ICC Case 12895, cited in: MICHAEL 

BÜHLER/THOMAS WEBSTER, supra note 27, at 437. 


ARTICLES 

reimbursement of the substituted advance on costs paid by the claimant on 

behalf of the defaulting respondent, irrespective of whether the applicable 

arbitration rules contain a specific provision for this. As a general rule, such a 

request should usually be granted, unless the respondent can demonstrate 

reasonable circumstances excusing it from making the required advance 

payment. 

The claimant’s claim regarding the immediate reimbursement of the 

advance on costs is a matter of substance which requires a decision in form of 

a partial award. Such partial award provides the claimant with the possibility 

to enforce the arbitral tribunal’s decision under the NYC should the 

respondent refuse to voluntarily comply. 




Date 

Rules 

Case (form of 

the decision) 

02.09.1996 ICC Rules ICC Case 7289 

10.09.1999 ICC Rules 

undated 

[2000] 

ICC Rules 

27.03.2001 ICC Rules 

17.06.2002 ICC Rules 

ICC Case 10169 

(order no. 1) 


(partial award) 

ICC Case 10671, 




Source 

Revue de 

l’arbitrage 

(4/2002), at 1004 

unpublished 

Journal du Droit 

International 

(2001), at 1182 

ASA Bull. 

(2001), at 288 

MATTHEW 

SECOMB, Awards 

and Orders 

Dealing with the 

Advance on 

Costs in ICC 

Arbitration, ICC 

ICArb. Bull. 1 

(2003), at 63 

Summary 

Parties have a contractual 

obligation to pay their 

shares of the advance on 

costs. Request for 

reimbursement granted. 

Request for 

reimbursement granted in 

form of an order to avoid 

the formality of an ICC 

award. Claimant can apply 

for an interim award if 

respondent fails to comply 

with the order. 

Payment of advance on 

costs is a contractual 

obligation between the 

parties. Request to order 

respondent to pay its share 

of advance on costs is 

neither an interim nor a 

provisional measure, but a 

final decision. 



obligation between 

parties. Request for 





parties. Respondent 

exceptionally excused 

from paying its share 

because claimant 

conducted certain 

corporate restructuring to 

the extent that it will be 

insolvent in the event that 

it loses the case. Request 

dismissed. 


ARTICLES 

01.06.2004 ICC Rules 

undated 

[2005] 

ICC Rules 





ASA Bull. 

(2006), at 281 

Journal du Droit 

International 

(2010), at 1418 

Arbitral tribunal denied 

jurisdiction to rule on the 

immediate reimbursement 

of the substituted advance 

on costs. Request 

dismissed. 



obligation between the 



undated 

[2006] 

undated 

[2008] 

ICC Rules 

UNCITRAL 

Rules 

(ad-hoc 

arbitration) 


(procedural 

order) 

Case number not 

indicated 


undated ICC Rules ICC Case 13853 

undated 

SCC Rules 

12.11.2010 ICC Rules 

SCC Case 

113/2007 

(separate award) 


(interim award) 

MICHAEL 

BÜHLER/THOMAS 

WEBSTER, 

Handbook of 

ICC Arbitration, 

2 nd ed., London 

(2008), at 437 

Yearbook of 

Commercial 

Arbitration 

(2009), at 24 

MICHAEL 

BÜHLER/THOMAS 

WEBSTER, 

Handbook of 

ICC Arbitration, 

2 nd ed., London 

(2008), at 436 

SIAR (1/2008), 

at 137 

ASA Bull. 

(2011), at 634 

Request for 

reimbursement dismissed, 

because claimant did not 

make any substituted 

payment to the ICC. 

Obligation to pay advance 

on costs derives from the 

parties’ obligation to cooperate 

in good faith. 

Request for 




obligation to the other 

party and not only an 

obligation to the ICC. 

Request for 


Request for 










Thomas ROHNER & Michael LAZOPOULOS, Respondent's 

Refusal to Pay its Share of the Advance on Costs 

Summary 

It happens in arbitration that the respondent refuses to pay its 

share of the advance on costs, be it to obstruct the proceedings, to force 

the claimant to finance the arbitration alone, or for other reasons. In this 

context, the question arises whether the claimant, who substituted the 

respondent's share of the advance on costs, has any remedies to claim 

immediate reimbursement for the substituted payment. 

This article will demonstrate that the respondent has a 

contractual obligation under the arbitration agreement to pay the 

required advance on costs. If the respondent fails to do so without 

having justified reasons, it is in breach of its contractual obligation 

towards the claimant, who is forced to pay the entire advance on costs 

to allow the proceedings go forward. 

Since disputes regarding the non-payment of the advance on 

costs fall within the scope of the arbitration agreement, the arbitral 

tribunal has the power to render a decision on the immediate 

reimbursement of the substituted advance on costs. This article submits 

that for enforcement purposes, the arbitral tribunal’s decision on the 

reimbursement should be rendered in the form of a partial award. 

Finally, this article also provides a list of various arbitral awards 

dealing with this topic. 


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Aims & Scope 

Switzerland is generally regarded as one of the World’s leading place for arbitration 

proceedings. The membership of the Swiss Arbitration Association (ASA) is graced by 

many of the world’s best-known arbitration practitioners. The Statistical Report of the 

International Chamber of Commerce (ICC) has repeatedly ranked Switzerland fi rst for 

place of arbitration, origin of arbitrators and applicable law. 

The ASA Bulletin is the offi cial quarterly journal of this prestigious association. Since 

its inception in 1983 the Bulletin has carved a unique niche with its focus on arbitration 

case law and practice worldwide as well as its judicious selection of scholarly and 

practical writing in the fi eld. Its regular contents include: 

– Articles 

– Leading cases of the Swiss Federal Supreme Court 

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– Selected landmark cases from foreign jurisdictions worldwide 

– Arbitral awards and orders under various auspices including ICC, ICSID and the 

Swiss Chambers of Commerce (“Swiss Rules”) 

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Each case and article is usually published in its original language with a comprehensive 

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ASAB 29-3 Thomas Rohner Michael Lazopoulos - Pestalozzi ...

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