1. Security for costs in investment treaty arbitration Jakob Ragnwaldh Mannheimer Swartling, Stockholm 10 September 2010

2. Introduction The topic: Can a State during the course of an arbitration obtain an order from a Tribunal securing its costs in the event that the State is ultimately successful in its defence? (Security for costs already awarded) (Security for costs of the arbitrators)

3. The issues Do international tribunals have the authority to issue orders for security for costs? Is there anything inherent in investment treaty arbitrations limiting that authority? What criteria should a tribunal consider when assessing an application for security for costs?

4. Do international tribunals have the authority to issue orders for security for costs? The arbitration rules –Rule 39(1) of the ICSID Arbitration Rules –Article 26 of the UNCITRAL Arbitration Rules –The SCC and the ICC Rules –Article 25.2 of the LCIA Rules The lex arbitri –Article 17 of the Model law –Article 38(3) of the English Arbitration Act

5. Is there anything inherent in investment treaty arbitration limiting the authority of a tribunal to order security for costs? No express prohibition or limitation in investment treaties An unconditional right to arbitration for an investor? Investor’s right to arbitration is subject to the terms of the applicable investment treaty, including the arbitration rules to which the treaty refers. No tribunal has held that it lacks authority on the basis that the investor has an unconditional right to arbitration

6. Relevant decisions Three publicly available decisions: Emilio Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7 (PO No. 2, 28 Oct 1999) Casado and President Allende Foundation v. Republic of Chile, ICSID Case No. ARB/98/2 (Decision on the Request for Provisional Measures, 25 September 2001) Libananco Holdings Co v Turkey, ICSID Case No. ARB/06/8 (Decision on Preliminary Issues, 23 June 2008) Two unreported UNCITRAL decisions

7. What criteria should a tribunal consider when being seized with a request for an order for security for costs? The relevant threshold Burden of proof Prospect of success A right to be preserved The investor’s financial situation Bad faith on the part of the investor? The conduct of the respondent making the request

8. Conclusion To my knowledge no tribunal in an investment treaty arbitration has issued an order for security for costs Available decisions suggest that extraordinary circumstances are required for a tribunal to order security for costs Available decisions suggest that orders for security for costs are more difficult to obtain in investment treaty arbitrations than in commercial arbitrations