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

More documents

Recommendations

Info

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. 552 <strong>29</strong> ASA BULLETIN 3/2011 (SEPTEMBER)
T. ROHNER & M. LAZOPOULOS, RESPONDENT’S REFUSAL TO PAY ITS SHARE OF THE ADVANCE ON COSTS 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 <strong>29</strong> ASA BULLETIN 3/2011 (SEPTEMBER) 553
Page 1 and 2: Volume 29, No. 3, 2011 ISSN 1010-91
Page 3 and 4: SEPTEMBER 2011 No 3 Association Sui
Page 5 and 6: Respondent’s Refusal to Pay its S
Page 7: T. ROHNER & M. LAZOPOULOS, RESPONDE
Page 11 and 12: T. ROHNER & M. LAZOPOULOS, RESPONDE

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

Create successful ePaper yourself

Delete template?

Save as template?