Originally from Pro-Arbitration Revisited: A Tribute to Professor George Bermann from his Students Over the Years

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I. INTRODUCTION

It is a pleasure to submit these reflections in honor of Professor Bermann, who was as inspiring to Ank in his class on Transnational Litigation and International Arbitration in 1996 as he was to Stephen in his class on International Commercial Arbitration twenty-five years later in 2021. Professor Bermann’s 2018 piece, What Does it Mean to Be “Pro-Arbitration”?, is quintessentially Bermann-esque, offering an insightful discussion of the complexity underpinning the determination of whether a practice or policy serves or runs counter to arbitration’s aims.  As Professor Bermann points out, many policies and practices in international arbitration generate controversy because they impede certain values of arbitration while simultaneously promoting others. The procedural tool of security for costs is one such controversial practice.

Security for costs is an interim protective measure that requires a claimant to provide security for an eventual order that the claimant must bear all or part of the respondent’s costs of the arbitration. Failure to comply with an order for security for costs can lead to a stay of the proceedings or even dismissal of the claim.

Some voice concerns that requiring security for costs is anti-arbitration because it denies access to justice due to a claimant’s lack of financial resources.  Indeed, arbitral tribunals have demonstrated significant restraint toward orders for security for costs in both commercial and investor-State disputes, setting high standards that are difficult to meet and rarely granting applications (which claimants make infrequently to begin with).

Our thesis is that the procedural tool of security for costs is not anti-arbitration, but rather pro-arbitration, if properly applied.