Originally from Navigating Maritime Arbitration: The Experts Speak

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Lawyers and their clients enter arbitration with the hope that, if they win their case, the losing party has the means to satisfy an award for damages. Unfortunately, the ability to secure a favorable arbitration award is not always available to the claimant (especially with the demise of Rule B attachment of electronic funds transfers) and, now more than ever, an arbitration proceeding may outlast the most stable company. Thus, claimants are often left weighing the cost of pursuing their arbitrable claims against the possibility that the losing party will become insolvent and judgment-proof. Some relief, however, is available to maritime claimants in the United States, where federal courts regularly sustain arbitrators’ authority to order pre-award security and other interim remedies. Awards by arbitrators that direct a party to post security in a pending arbitration are part of a general trend favoring interim measures in commercial arbitrations. Often in the form of an interim or partial final award, directives by arbitrators to post security are being seen with increasing frequency. Indeed, as courts have repeatedly stated, parties to arbitrations often have resort to security remedies that are often unavailable to litigants in a judicial setting. This chapter will examine the availability of pre-award security and other provisional remedies both from the practitioner’s and arbitrator’s perspective, focusing on the sources of the arbitrators’ authority to grant such relief and the factors that arbitrators will take into consideration in granting interim measures.