429 / 536
415
CYIL 7 ȍ2016Ȏ
THIRD PARTY TO PICK UP THE BILL?…
Assenting Opinion reversing the burden of proof: “once it appears that there is third
party funding of an investor’s claims, the onus is cast on the claimant to disclose
relevant factors and to make case why security for costs orders should not be made.”
13
Also a dissent of Edward Nottingham concentrated on this issue, when in his view,
“the general concerns about third party funding and security for costs can and should
be addressed by the Administrative Council of ICSID in its rule-making capacity, if
there is a problem that needs to be dealt with.”
14
It is possible to identify an approach close to the reasoning of the tribunal in
Guaracachi America, Inc and Rurelec plc v. Bolivia
in
EuroGas Inc and Belmont Resources
Inc v. Slovak Republic
. The tribunal recalled that security for costs may only be granted
in exceptional circumstances, “for example where abuse or serious misconduct has
been evidenced,” and observed facts in
RSM Production Corporation v. Saint Lucia
as “rather exceptional since the claimant was not only impecunious and funded by
a third party, but also had a proven history of not complying with cost orders.”
15
Considering the claimant’s payment discipline and seeing third-party funding as an
increasingly common practice, which “do not necessarily constitute
per se
exceptional
circumstances” to grant security.
16
In
Ticaret Ltd. Sti v. Turkmenistan
the relationship between security for costs and
third party funding was highlighted by the tribunal. In its Order the tribunal stated
that, after the host State “indicated that it will be making an application for security
for costs”, it would be unclear what basis there would be for such application, “e.g.
claimants’ inability to pay respondent’s costs and/or the existence of a third-party
funder”.
17
Reviewing the cases described above, it is easy to conclude that there is no uniform
or prevailing trend towards the issue of security for costs. Although presence of a TPF
does not itself establish a sufficient reason
per se
to grant security, tribunals increasingly
recognise its significance while considering claimants’ financial dispositions. As
third party funding is increasingly used by large, solvent, companies to balance the
risks involving the commencement of investment arbitration, a concluded funding
agreement is not evidence that the claimant is impecunious.
18
13
RSM Production Corporation v. Saint Lucia
, ICSID Case No. ARB/12/10, Assenting Reasons of Gavan
Griffith (12 August 2014), paras 17-18.
14
RSM Production Corporation v. Saint Lucia
, ICSID Case No. ARB/12/10, Dissenting Opinion of
Edward Nottingham (12 August 2014), para 20.
15
EuroGas Inc. and Belmont Resources Inc. v. Slovak Republic, ICSID Case No. ARB/14/14
Procedural
Order No. 3 Decision on the Parties’ Request for Provisional Measures (21 June 2015), paras 121-122.
16
Ibid
., para 123.
17
Muhammet
Çap
& Sehil Inşaat Endustri ve Ticaret Ltd. Sti v. Turkmenistan
, ICSID Case No. ARB/12/6,
Procedural Order No. 3 (12 June 2015), para 10.
18
ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration,
Draft Report on
Security for Costs and Costs
(1 February 2016), p. 16.