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

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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. 29 ASA BULLETIN 3/2011 (SEPTEMBER) 551
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