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funding and the obligations of a financer arising from the finance contract between
the financed party and a financer. Regarding these complexities it is also important
to recall that a TPF is not a party to arbitration proceedings.
9
The very first publicly known case where the question of security for costs
was present was
Guaracachi America, Inc and Rurelec, plc v. Bolivia
. The tribunal
on one side conceded that “investment treaty tribunals clearly hold the power to
grant provisional measures, on the other side warned that an order for posting of
security for costs remains a very rare and exceptional measure.”
10
For the tribunal, the
respondent did not submit evidence establishing a reason to accept its request. The
tribunal also refused to draw the conclusion that the claimant was insolvent just from
the mere existence of third party funding. As to “the claimants have promptly paid all
the requested deposits of costs,”
11
the tribunal refused to grant security.
The issue of security for costs was at the centre of the tribunal’s decision and in
two separate opinions in
RSM Production Corporation v. Saint Lucia
. The decision
granting security for costs in an amount of USD 750,000 was based on the claimant’s
financial limitations and the need to preserve the rights of the respondent. The tribunal
found a claimant’s “history or track record of not paying costs in other ICSID and
non-ICISD proceedings”. This constituted the main reason to grant the respondent’s
request for security. As a supporting reason the tribunal identified the claimant’s role as
a ‘repeat player’ in ICSID procedures against States and the existence of a TPF.
According to the tribunal, the involvement of a TPF brought the claimant’s
solvency and liquidity into question: “Moreover, the admitted third party funding
further supports the Tribunal’s concern that claimant will not comply with a costs
award rendered against it, since, in the absence of guaranties being offered, it is
doubtful whether the third party will assume responsibility for honouring such
award.”
12
Having doubts that the TPF would likely take responsibility for the costs
in case of the claimant’s default, the tribunal decided in favour of the respondent’s
request. Given all these findings, the tribunal concluded that the exceptional
circumstances under Article 47 of the ICSID Convention were established.
Next to the decision, both co-arbitrators filed separate opinions. Dr Griffith
pointed out an increasing trend of outside financing of BIT claims. As the ICSID
Convention does not regulate “a new industry of mercantile adventurers as professional
BIT claims funders, actions to recalibrate this matter should be undertaken in order
to expose funders for costs orders.” For this purpose Dr Griffith proposed in his
9
EDOUARD BERTRAND, ‘The Brave NewWorld of Arbitration: Third-party Funding’ (2011) 29(3)
ASA Bulletin
, p. 613.
10
Guaracachi America, Inc. and Rurelec PLC v. The Plurinational State of Bolivia
, UNCITRAL, PCA Case
No. 2011-17, Procedural Order No. 14 (11 March 2014), para 6.
11
Ibid
., para 7.
12
RSM Production Corporation v. Saint Lucia
, ICSID Case No. ARB/12/10, Decision on Saint Lucia’s
Request for Security for Costs (13 August 2014), para. 83.